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Beacons Provide An Extra Boost To Holiday Sales — But How?

Beacon platforms like Swirl Networks and inMarket have cited evidence that beacons can generate greater sales and store traffic. The question remains: how much influence can these Bluetooth devices yield?

As retail stores experienced continued challenges from e-commerce this holiday season, beacons appeared to represent one tool that brick-and-mortars can use to boost sales.

Beacon platform Swirl Networks has come out with general performance numbers based on in-store shopper activity that provides an anonymous glimpse into how brands that used the Bluetooth-powered sensors performed during November and December:

  • A mall-based specialty retailer saw a 41 percent increase in average basket size and a 36 percent increase in mall to store traffic conversion rate
  • A branded apparel manufacturer saw a 7 percent increase in outlet store traffic and sales, resulting in a projected 7x return on investment
  • A leading department store increased traffic flow to targeted departments by 10 – 17 percent
  • A specialty apparel retailer saw a 13 percent increase in mall to store traffic conversion rate, resulting in a projected 5x return on investment   

Coming To Terms With Beacons’ Influence

Swirl’s holiday sales success claim offer another, albeit also generalized, sign of proximity marketing prowess from beacon platform inMarket, which said last month that its beacons were able to influence $14.5 billion in sales over Black Friday.

“These holiday program results demonstrate just how powerful this technology really is and how quickly it is scaling in the marketplace,” said Hilmi Ozguc, founder and CEO, Swirl.  We are excited to be working with some of the nation’s top retailers as they expand their beacon marketing programs to more public rollouts in 2017. The in-store beacon marketing ecosystem is quietly but steadily growing in scale as more and more retailers see the tangible impact that this technology is having on their business.”

Ozguc pointed to the proliferation of Bluetooth Low Energy signals that are “now available in the form of beacons, WiFi access points, payment terminals and light fixtures from the likes of Cisco, Verifone and GE, coupled with the massive audience of Eddystone-enabled smartphones created by Google’s recent release of Nearby Notifications”, as eliminating many of the early barriers to retailer and consumer adoption, especially as it relates to audience access and scale.

Reducing The Friction

As proximity targeting platform Unacast has argued, Apple’s decision to remove the headphone jack will require users to employ Bluetooth listening devices, thereby making the signal that powers beacons a natural, permanent part of using an iPhone. Apple’s action will likely influence other smartphone makers, spreading the use of Bluetooth even further.

But it’s worth wondering how far beacons influence can be extended. Beacons typically require consumers to opt-in to receive push notifications and direct contact via favored store/brand apps or, in Google Eddystone’s case, the browser-based Physical Web. Therefore, the people that have downloaded a brand’s app means that they’re already regular shoppers.

So it’s safe to conclude that beacons can help retain loyal customers. It’s not so sure how well they do in attracting new ones. Nevertheless, it can also be argued that anything that makes the in-store experience more convenient by being tethered to consumers’ most personal device, the smartphone, ultimately, retailers can strengthen sales and store traffic as a result.

For one thing, beacons can provide an additional form of virtual sales assistance, directing consumers exactly to the products they want. In essence, by reducing the frustration shoppers have in finding desired purchases, beacons can be said to provide a clear solution based on personalized service.

Still, even though many in the location tech space praise beacons for their ability to drive accurate connections between consumers and product marketing at the shelf level, there are some doubters like Doug Baldasare, the CEO of ChargeItSpot, a company that provides indoor wifi via its phone powering kiosks, who claims that beacon installations may have stalled at retailers last year. (In its most recent analysis of beacon installs, Unacast’s quarterly Proxbook notes that beacons have become mainstream among major store brands and that increased deployments are now spreading at airports and healthcare facilities, an indication that shows the Bluetooth devices are not running out of steam.)

Baldasare’s point is that unless beacons can provide greater balance between accessibility, relevance, and privacy, it will come up against the same walls that hindered initial tryouts.

“Users must choose to share their location and receive beacon-based communications at the app-level. In addition, they must also turn on Bluetooth functionality. This degree of friction makes it challenging for retailers to maximize the value of beacon technology. Many have simply not done so given associated costs and budget for devices and campaigns (beacons are not expensive, but building effective campaigns can be). For those retailers who have installed beacons, they are still struggling to understand accuracy and attribution. These barriers must become lower for beacons to meet their potential.

One Key Defense Against Showrooming

In any case, given the pressures from Amazon and other forms of online showrooming that promise store products at greater discounts, any tool that bridges the online and offline divide in offering customers increased convenience is a plus for brands.

“The results of Swirl’s beacon-powered holiday campaigns are impressive,” said J. Skyler Fernandes, Founder and Managing Director of Simon Venture Group, the corporate venture capital arm of Simon, an S&P 100 company, and the largest retail real estate company in the world. “With billions of consumer visits per year, shopping malls represent ground zero in the reinvention of retail.  At Simon, we’ve been supporters of innovative technologies like beacons, and we believe that this technology will play an increasingly important role in the future of retailing.”

About The Author
David Kaplan David Kaplan @davidakaplan

A New York City-based journalist for over 20 years, David Kaplan is managing editor of GeoMarketing.com. A former editor and reporter at AdExchanger, paidContent, Adweek and MediaPost.