Back in 2013, beacons were supposed to be about to revolutionise the retail sector by – at long last – creating strong links between digital platforms and bricks & mortar outlets. Three years on, these small geolocation transmitters are still in search of a market.

Beacons: After the pilot tests, where does the future lie?

Once again this year, digital technology took pride of place at the Equipmag fair – ‘The Retail Experience event’ – held at Paris Expo Porte de Versailles last week, but beacons took a back seat this time around. When Apple introduced the iBeacon technology at its Worldwide Developers Conference in 2013, it aroused a great deal of interest in the retail sector. The promise of this small communicative Bluetooth transmitter was to at last bring together the digital world and the bricks and mortar world of physical stores.

Estimote quickly became the leader in this ‘nearables’ market, as the Polish company called it. Sales of these small geolocation transmitters soared and many retail firms began to test beacons and try to draw up scenarios for engaging in conversation with the customer inside their stores. This indoor geolocation system enables a store to entice passers-by into their premises, distribute electronic coupons from the shelves and display cases, and even arrange for the customer to make remote payments at the store exit.

Beacon technology first highlighted by Apple

Following Apple’s launch of the iBeacon, US fashion outlets Macy's and American Eagle were among the first to deploy beacons on their shelves. All the major US chain stores such as Best Buy, Walgreens, Target and Neiman Marcus then followed suit, and Marriott tested the beacons, coupled with its customer loyalty app, at its hotels. The technology seemed assured of success and many reports painted a bright future for it. In 2014, ABI Research announced that sixty million beacons would be shipped over the following five years, and studies meanwhile showed that consumers – smartphone users, 67% of whom read their alerts on their smartphones – were prepared to reveal their current location in exchange for a service. In 2015, Gartner even ranked iBeacons and Bluetooth beacons ‘At the Peak’ of its ‘Hype Cycle’, predicting that the technology would be widely adopted within a two-to-five-year timeframe.

Macy's ShopKick: this first use of the beacon – to push welcome and promotional messages when visitors arrived in the store – did not win over consumers, who mostly found it too intrusive.

Since then retailers’ enthusiasm for this proximity marketing approach has waned and nobody seems to find these banal push message mechanisms appealing. The first trials showed that the beacons were not being used very much, if at all, and many pilot projects were not followed up with a major rollout. "A year ago, French retailers were all fired up about Beacon technology, but today beacon use has largely shifted to other sectors," acknowledges Arnaud Decherf, founder of The Beacons, a Paris-based beacon manufacturer, explaining: "Beacons just didn’t catch on with users because agencies saw them as a way of pushing advertising on customers’ smartphones – which is highly intrusive and drives people to de-activate their notification functionality." Having a welcome message pushed to you on your smartphone as you enter a store is today regarded as a nuisance so marketers will have to use their imagination and common sense and come up with an approach that customers find more appropriate. Argues Arnaud Decherf: "The current systems don’t add any value whatsoever for users. You really need to think very hard about how to offer users a real service. For example, a beacon enables you to validate your ticket in a bus without having to take it out of your bag."

Beacons struggling with low audience numbers

In France, chain stores have remained fairly quiet about their beacon rollouts. Very few pilot projects have been followed up by large-scale deployment as the tests have not found much favour with French consumers. Yann Casanova, founder of loyalty app Fidall, believes that the success of this type of marketing effort depends on three things. "You have to bring together the winning threesome of a beacon network, a technical platform, and an audience. Today every store has its mobile app, but how many customers have installed it and really make use of it? I think this is the real hurdle for many retailers,"

he stresses. In a bid to link up its mobile app, which digitises loyalty cards, with beacons, Fidall has teamed up with Take & Buy, a startup which has installed a network of some 15,000 beacons throughout France, at such premises as newspaper shops, sports stadiums, and major shopping centres. Casanova points out: “Today far more brands and manufacturers than retailers are interested in beacons. The two most recent beacon ventures which we’ve been involved in were [Brazilian thong sandal maker] Havaianas for the popup stores which the brand has set up in large shopping centres in France. A beacon was installed on each stand and every time people passed by they received a message inviting them to go to the stand and win a pair of thong sandals on condition that they took a photo of their feet wearing the sandals. Another recent campaign was for the Raid brand of insecticides; the company wanted to be able to reach out to people in the vicinity of Carrefour supermarkets.”

A beacon-based campaign in shopping centres, run by Fidall on behalf of the Havaiana brand, with a view to attracting people into its popup stores

The business proposition of Take & Buy, which was founded just eighteen months ago, is to supply advertisers with a network of beacons strategically placed in town centres, shopping malls, stadiums and other key places. Unacast, which also came up with this idea of a network of beacons and a shared platform in the United States, today manages a fleet of two million beacons. "The main issue for retail is the size of the potential audience that a single store can reach with its mobile app," explains Patrick Chatanay, CEO of ‘mobile innovation enabler’ Ezeeworld, revealing: "During the past eighteen months, we’ve installed 15,000 beacons and we aim to reach 20,000 over the next few months. At the same time, a far more complex task for us – technically, commercially and from a marketing point of view – has been to embed our SDK into a large number of apps. We’ve now done this with nearly all the ‘shopping’ apps, including Fidall, MobileTag and Plyce, and the apps targeted specifically at young people such as S-Money and Izly for students, and so on. We currently have 20 million carriers and, with the new partnerships we’ve signed, we should be at 25 to 26 million in September."

What future for beacons?

Beacon manufacturers are currently exploring new markets for their devices. The Gimbal platform for example has been installed at a number of sports stadiums in the United States, and also at events such as the Cannes Lions International Festival of Creativity. Estimote, reckoned to be the market leader, is developing its products, looking to get out of the purely retail market and into the connected objects market. Its casing now has a GPIO (General-purpose input/output) pin, through which house appliance manufacturers and ‘maker’ enthusiasts will be able to connect their products. In this way the beacon is taking on the role of a Bluetooth modem, enabling operational data to be sent to a user’s smartphone so that s/he can control a toaster or washing machine remotely.

There are still a large number of beacon manufacturers. Their products differ quite widely in terms of operational lifetime and range and their use of either Bluetooth Low Energy or WiFi network technology.

Given these surprising developments, Ezeeworld has chosen to orient itself towards Customer Relationship Management (CRM). This French company, which supplies beacons to Take & Buy, has to date manufactured over 20,000 beacons, which are installed in Leclerc supermarkets, post offices and Coca-Cola communication vending machines. "We were working with Bluetooth technology long before Apple brought out the iBeacon in 2013 and we’ve followed the beacon’s adoption cycle so far," underlines Patrick Chatanay, pointing out: "The beacon was initially seen as a simple ‘push’ tool. This was the first use case but users may find this approach intrusive or even abusive. I reckon that today ‘push’ activities only account for 20 to 30% of beacon usage. The top use is collecting the data which enables an analysis of the customer journey – something which WiFi can’t do." Ezeeworld has expanded its range of beacons to include hybrid Bluetooth/Wifi versions, has extended their operating range from 60 to 450 metres, and is working on, for example, incorporating the IoT Sigfox and Lora networks. However, Patrick Chatanay argues that the real difference will be at data level: “The beacon as such will see improvements, will be a lot smaller and less expensive, but its true value is the intelligence behind it. Our approach is strongly geared towards CRM because we believe that the main value that a store can derive from a fleet of beacons lies in the data. It’s that ability to analyse the signal which gives it real meaning."

A report from UK IT and telecommunications consultancy Ovum, entitled The Future of E-commerce: The Road to 2026, supports Patrick Chatanay’s view. The Ovum analysts predict that the customer journey of the future will resemble a pretzel, with many layers of different technologies available to customers. Not only will stores have to incorporate a full range of media – Smart TV, connected household appliances, wearable devices and beacons – into their digital systems, but they will above all have to ensure complete seamlessness between all these customer touch points. This technical integration will enable stores to design much more subtle scenarios than simply pushing a promotion out to a customer’s smartphone when s/he crosses the threshold of a store. Analysts talk for instance about a scenario where a customer might stand looking at an article for several minutes without buying it, when s/he could be receiving additional information on the product. Analysts see the beacon as a useful tool for enabling hyper-local trade, where targeting will combine use of customer profile data and precise geolocation – which WiFi simply cannot do. Some experts say that instead of trying to interact with the customer, stores and brands ought to be sending a notification to the sales staff when a customer recognised by the system enters a store. Armed with a complete CRM profile displayed on his/her tablet, the sales associate will be well equipped to welcome, serve and satisfy the customer, they argue.

By Alain Clapaud
Independent journalist specialising in the new technologies