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The Supermarket Slump: Why Is The Grocery Industry So Behind On Beacons?

Beacons are shining bright for many retailers. But for grocery stores? Not so much.

Over the past year, retailers warmed up to beacons in a big way. We saw major brands like Urban Outfitters and American Eagle dive deep into beacon testing, and others like Macy’s and Lord & Taylor roll out beacons in all of their store locations. It’s not just apparel retailers either that are jumping on the beacon bandwagon. Shelfbucks rolled out its beacon technology in Tarrytown Pharmacy last February, and last December, Estimote partnered with mobile guest engagement platform GuestDriven to start bringing beacons to hotels. 2015 is already shaping up to be an explosive year for the Bluetooth technology. The mobile ad company Opera Mediaworks just announced the Strategic Beacon Alliance, a committee of eight beacon providers including RoximityPulsatePinpoint MobileSignal360, and four other unidentified companies to help navigate the highly charged space. But in all the beacon frenzy, where do supermarkets stand?

With its brimming aisles and whirlwind of coupons and limited-time offers, the average grocery store seems like it would be a golden fit for beacons. But the industry as a whole seems less than avid when it comes to getting serious about the technology. Only a handful of grocery stores are even flirting with it. 

Resisting Mobile

GPShopper's Maya Mikhailov
GPShopper’s Maya Mikhailov

Maya Mikhailov, EVP and co-founder of mobile commerce platform and beacon provider GPShopper, asserts that with a few notable exceptions like “Kroger or Whole Foods,” and GPShoppers’ own grocery client, Lunds and Byerly’s, the grocery industry has been “a little slack in picking up mobile” in general.

“When you talk about mass market grocers, we haven’t seen a tremendous amount of mobile adoption,” Mikhailov says, pointing out that the resistance could be attributed to a wide variety of factors.

“Part of it could be because they’re used to using a very different type of advertisement. They’re used to the circular, or to posting a sign in the window —those type of ads.” Another reason could be chalked up to the thinness of a grocery store’s margins as compared to a clothing retailer’s, which Mikhailov says, typically “has very different margins to play with.”

When you take into account the underlying issue — that most grocery stores haven’t adopted much mobile technology — it’s obvious why they’re not leaping to beacons. “Beacons are not your first step in mobile marketing,” says Mikhailov. “A grocery store wouldn’t say ‘Oh, I’ve done nothing in mobile. I don’t have a mobile website. Let’s go to beacons.’”

New Comers And Late Comers

Alexis Rask, CRO at the location-based shopping rewards platform and beacon provider Shopkick, adds that beacons are still new to the retail world as a whole, and that regardless of one’s vertical, mass adoption will take time.

“We’re still in the early phase,” says Rask. “I think the beacon thing is probably like a marathon more than a sprint because retailers tend to be thoughtful and do a lot of planning and business scenario forecasting.”

With any new technology there will be, as Rask says, “a set of early adopters who have a vision of the future, and when they see things that fulfill that vision of the future, they dive in and take calculated risks because they believe the upside is so much greater than the downside.”

Shopkick's Alexis Rask
Shopkick’s Alexis Rask

In the beacon category, Rask asserts that we are only just beginning to see the early adopters in the horizon. “Then it will be more mass market, and then, as always, there will be some late adopters,” Rask says.

Most grocery stores may fall into the family of late adopters, but not all. As Mikhailov pointed out, there are few that stick out of the pack. One of them is Giant Eagle, who partnered with Shopkick back in 2011 as part of its loyalty program directed at in-store shoppers. Shoppers were given “kicks” — Shopkick’s version of rewards — when they purchased products manufactured by Procter & Gamble, Kraft Foods and Unilever at a Giant Eagle store.

A Take-Off…And A Landing

“Giant Eagle implements a strong mix of traditional and non-traditional media to educate its customer on its high quality offerings and great overall value,” says a Giant Eagle spokesperson. “This mix consists of traditional TV and radio advertisements, a weekly circular and also digital and social media communications.”

Giant Eagle’s campaign with Shopkick let shoppers redeem kicks for various rewards including gift cards from other Shopkick retail partners for song downloads, movie tickets, and travel vouchers. It also tied in social media by allowing buyers to redeem Facebook credits to play games online.

Back when the campaign debuted, Rob Borella senior director, marketing at Giant Eagle stated, “We believe that Shopkick’s location-based shopping app is a valuable addition to our growing array of mobile customer offerings, led by our Giant Eagle app and eOffers digital coupon program.”

While the current Giant Eagle spokesperson did not respond directly to the question of whether it is still working with Shopkick, the rep did say that the stores are not using beacons at this time.

“Giant Eagle takes seriously the sensitive balance between delivering value in a manner that is relevant and convenient, and acting in such a way that is viewed as disruptive by our customers. For this reason, the company is actively evaluating additional opportunities to offer more features through our mobile apps, but currently does not utilize beacon technology.”

A Matter Of Taste

The delicate balance between enhancing a consumer experience and merely interrupting it with beacons is one that marketers and beacon providers have been actively concerned with, and it’s interesting that a supermarket should suggest this as the reason it’s not using beacons. Consumers are certainly no less open to saving time and money in a grocery store than they are in a department store, so why put up the “Do Not Disturb” sign, so to speak?

While there’s legitimate reason for all retailers to be cautious, this particular resistance could have quite a lot to do with the consumer mindset and what it expects of a grocery store at this time. Since most grocery stores aren’t heavily in tune with mobile, consumers may not seek out a mobile experience let alone invite an interruption by one, no matter how helpful.

Mikhailov points out that Lunds and Byerly’s, which is very invested in mobile, is not your average grocery store.

“Their audience is very, very different than that of a bulk grocery buyer,” says Mikhailov. “These are people that care about whether something is gluten-free, whether it’s nut-free… I think that audience and the mobile audience overlap a lot.”

Driving Traffic And Learning Shoppers

It’s up to grocers to get more mobile, and then to seamlessly guide their audience into their mobile-friendly environments. Once they’re established as mobile savvy, they can do substantial work with beacons, and, as Rask suggests, reap a lot of benefits.

“Grocery right now needs tremendous help driving [traffic to] the center aisles and re-winning some of that share [from the club stores],” Rask says. “There’s also so much impulse that happens around food and beauty products and things that are immediately consumable that are sold at a relatively low price point, so beacon messages inside a store with personalized offers, or with coupons that are compelling, or with recipe tips would be so great for that model.”

Not only could beacons move product in lesser-traveled grocery aisles, it could improve a grocer’s marketing game down the line by enabling it to learn more about its shoppers.

“Beacons can give some intelligence,” Rask says. “It all has to be anonymized data, of course. You don’t want them looking at too much personally identifiable information, but as long as they can respect consumer privacy, they can use it as an analytics tool to understand things like ‘Which departments do people spend more time in and less time in? Which categories of food are more and less popular?’

“A retailer who is really leveraging this to the fullest extent is probably putting beacons at their entrances, beacons in their individual departments and aisles, beacons up near the register so that they can influence the consumer behavior all over the store and drive incremental sales,” Rask adds. “But then they can also measure and optimize where they can be more effective as a merchandiser.”