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How Big Is The Beacon Marketplace For Retail?

It could very well be worth $40 billion in the US alone this year. Proximity industry veteran Stephen Statler does the math.

This much we know: There are 5 million sensors currently in place around the world — with beacons comprising 4 million of them, according to ABI Research. That number was recently confirmed by proximity marketing platform Unacast in its Q4 Proxbook, and the overarching message is this: beacons aren’t a niche or transitional technology.

But trying to put an actual figure on the revenue generated from beacons in retail establishments is proving difficult. It’s been a year since Business Intelligence’s oft-cited report claimed beacons were producing $4 billion for retailers and that it was on track to increase “10-fold” by the end of 2016.

Known Unknowns

But there’s no consensus on that bold prediction. Other noteworthy projections have been considerably more cautious. In a client note released a month after BI Intelligence’s report, Borrell Associates estimated that it would take until 2019 for proximity-based marketing to drive an approximated $5 billion in spending by brands.

While we’ve asked several prominent companies in the space for their best estimates on potential spending, both on beacons and revenue generated from the Bluetooth powered devices, most of them have demurred, suggesting that the ostensible value behind these proximity marketing tools is still murky.

What We (Mostly) Know

That said, some companies have made bold predictions about small slices of the beacon market. Retailers’ use of beacons and proximity marketing initiatives are expected to account for $7.5 billion in U.S. Millennial spending this holiday season, according to November 2015 data from location targeting platform inMarket.

Meanwhile, on its own beacon platform Shopkick said in December it helped drive 1.2 million verified store walk-ins during the evening of Thanksgiving through Black Friday.

And in one of the most high-profile combinations of geofencing and beacons, Hearst’s Elle Magazine’s ShopNow! Program delivered 500,000 in-store visits and more than 12 percent content engagement rate for participating retailers, Barnes & Nobles, Levi’s, Guess, and Vince Camuto, across the country during last September and October.

But it remains difficult to place a dollar figure those uses and to apply it  ot cases throughout the rest of the industry.

Four Tailwinds Plus A Headwind

Still, the former head of Qualcomm Retail Solutions’ Strategy and Solutions Management, Statler Consulting LLC’s Stephen Statler, whose forthcoming book, The Hitchhiker’s Guide to the Beacosystemtracks the rise of proximity technology, points to four “tail winds” that are propelling the beacosystem forward, noting that these weren’t a factor last year.

Plus, there is one headwind that is moderating the lift from those other examples, Statler says:

Beacon Networks are going mainstream: 2016 is the year of substantial mainstream production deployments of beacons, and it’s the beacon network that is key to those.   Apple’s deployment of beacons in all its retail stores was an exception that caught peoples’ attention but it was an outlier. Shopkicks’ deployment of tens of thousands of beacons in large stores was more significant, but it was only for use on its app. (But soon, Shopkicks may be opening up its platform to third parties as well.)

Rite Aid’s 4,600-store beacon rollout: Rite Aid’s national beacon deployment  has a clear ROI thanks to inMarket’s beacon network approach to driving usage by a number of well-used apps (Epicurious, List Ease, ShopSavvy …) all driving alerts from the beacon. And then there is LinkNYC, a massive infrastructure project with the full backing of the Mayor’s Office. The company is building beacons behind every high-definition out-of-home advertising display, replacing 500 phone booths in prime locations this year with thousands to follow.

2016 is the year of the “Beacon mashup.” This like Monty Python’s Spam song, everything on the menu has spam on it … or, in the case of retail, beacons in it. NFC devices, LED Visual Light Communication, Computer Vision and Wi-Fi real time location systems are all bringing beacons into the mix. Choose any any of them and it’s likely you will get a beacon on top.

Mainstream IT infrastructure companies are now selling beacons: Having the top wi-fi infrastructure providers selling beacon and w-fi together is a huge deal. Cisco, HP Aruba, and Zebra all have beacon inside.

Now when the CIO and CMO decide they want to do beacons, they can feel confident that this space is legit, because their traditional suppliers all sell the things. Whether the startups manage to get in there and show they have the focus and the backing to be better partners for this project is the opportunity and the question.

The top thirty retailers almost without exception have a significant budget for beacons this year. We heard this from the infrastructure suppliers who have the kinds of relationships that allow them to know these things (unlike the startups). This means we should expect more deployments at the end of the year.

How Big Is it?

How big a deal is this last point? Its big, Statler insists.

Depending on whose numbers you believe (Statler gives his nod to the US Census), retail may or may not be a $4.4 trillion dollar market.

Based on Statler’s analysis of National Retail Federation’s data, $1.7 trillion comes from the top 30 players of the retail market.

“In a country with 3.8 million retail establishments, that’s a hell of a long tail,” Statler notes. “Based on this we can expect spending on beacons to increase in 2016 by a couple of orders of magnitude.”

As for the headwind, Statler says Apple and Google have done a wonderful job in creating iBeacon and Eddystone, “but their approach is killing us, literally—lives are potentially being lost and its strangling the Beacosystem” namely because of the level of control those systems exert.

So while a precise dollar figure remains elusive, we’re working on nailing that down. But suffice to say, the beacon system is looking bigger than it was last year, no matter whose numbers you go by.