Using micro-location technology, stores can fully contextualize the way they use their communication tools to interact with the customer.

Apple’s iBeacon functionality helps to contextualize the customer experience

How best to combine the physical and the digital is an issue of enormous importance for the retail sector. Although numerous studies emphasizing how bricks-and-mortar stores are nowadays being transformed into mere ‘showrooms’ have been published, some developers are also coming up with mobile applications designed to squeeze more value out of the physical retail space. In this spirit, iBeacon, the latest functionality for the iPhone, uses Bluetooth Low Energy technology to help create a seamless customer experience. Using sensors installed in-store, this functionality seeks to get the most out of a customer’s journey, boosting both his/her immediate and future purchasing activity.

Micro-location technology the key

iBeacon enables a retail outlet to target relevant promotional information at a smartphone user as soon as s/he enters a ‘connected’ area near or inside a store. This personalized information will be based on the recent online searches the user has made, purchasing history and other demographic data, which is gathered directly by the phone. Estimote, a San Francisco-based startup, is one of the first companies to develop an app-and-sensors system for retail stores. The sensors – known as ‘beacons’ – constantly emit signals within a certain range, and the iBeacon app detects and reworks these signals automatically in the form of personalized messages. Explains Estimote founder Jakub Krzych: “If you think about your smartphone, it has no idea that you are in a retail store […] because it lacks micro-location context,” pointing out that “GPS satellite signals don’t provide accuracy inside buildings, but people spend 80% of their time inside buildings.” The micro-location technology enables the store to tailor its advertising pitch according to the precise position of each customer in the store and his/her known shopping habits.

Getting the most out of customer data and interactions

This smartphone functionality now enables a bricks-and-mortar store to make use of the analytical tools that have been developed for e-commerce. They can follow a customer’s itinerary through the store and note the time s/he spends in front of each display, targeting product information in a way likely to boost sales conversion rates. The new functionality marks a further step towards transforming stores into exhibition/showroom spaces designed to inform and educate consumers and expose them to new products. However, this new approach might also help restore the balance in favor of the physical outlet when it comes to influencing the final purchase act. Krzych cites a scenario where it is the targeted interaction of the sensors in the store with the customer that stimulates the buying decision but the actual purchase is finalized on an e-commerce website. The store assistants’ job will then center on establishing an environment conducive to the sale. Apple’s decision to feature this new functionality in its phone is sending a strong signal to app developers and a number of related apps are now in the process of being launched. Boston-based Swirl Networks for example functions as a shopping assistant, pushing notifications such as coupons to targeted users, depending on their exact current location inside the store. According to one of the developers, this promising trend arising from the Internet of Things movement could soon be used in many other environments as well. Museums, airports and universities could all benefit from using micro-location technology.

By Thomas Meyer
Journalist, Business Analyst