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Infographic: How retail beacons work

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By Brian T. Horowitz, Editor and Contributing Writer

In an attempt to keep loyal customers engaged, GameStop implemented a test launch of an in-store wireless beacon platform.

Part of a pilot at GameStop’s Texas locations, the beacon lets customers hold their phone over the sign on the store shelf to retrieve coupons, product reviews and detailed info about a game.

“GameStop is learning a lot about the shopper — what links do they click on when they’re in the store, a bunch of stuff to help them learn how to improve the store experience for the shopper,” Erik McMillan, CEO of Shelfbucks, told Tech Page One.

The Bluetooth Low Energy beacons are part of a Gimbal platform spun off by Qualcomm Labs. Gimbal also incorporates geofencing and analytics. By using the beacons, retailers can offer deals to customers, increase loyalty and optimize store traffic patterns.

In fact, 22 percent of business executives plan to install beacons in their stores in the next 12 months, according to a study by the National Retail Federation’s Standards Council, IHL Research and Retail Info Systems News.

“We call it the digitization of the physical space,” Jeff Donaldson, senior vice president of GameStop’s Technology Institute, told The Wall Street Journal.

GameStop plans to roll out its beacon platforms nationwide in 2015. Customers can download a store app to allow beacons to send coupons or more information about a product.

“A beacon is like a barking dog — it gets your attention.”

“Once the app is on the customer’s phone, they can walk up to that shelf and they can put their phone near that sign at that Xbox section or PlayStation accessory, and that alerts the app to go to our service and pull down content relevant for the shopper,” McMillan said.

Beacons are like Web links

“A beacon is like a barking dog — it gets your attention,” Kevin McCauley, director of retail market development at AirTight Networks, told Tech Page One.

They allow retailers to keep track of which customers are visiting specific departments of a store, such as the furniture or dinnerware sections. When customers have a store’s mobile app installed, they can receive personalized offers based on their unique shopping experience.

“Beacons and smart shelves put a website layer onto the physical store shelf that easily allows the shopper to engage in content similar to the Web site,” McMillan said.

Shelfbucks demonstrated the beacon technology at the National Retail Federation’s annual conference and expo from Jan. 11-14 in New York City. The company plans to incorporate beacons as part of Menasha Packaging’s smart display technology, which will be installed by grocers and drugstores.

Technology such as beacons and geofencing are “driving additional mobile devices in the hands of store associates to better engage with those loyal customers who opt into those programs,” Christian Conway, director of strategic accounts for retail at VMware’s AirWatch division, told Tech Page One.

Walking up to the smart sign in the store with a beacon is like clicking on a link on the website.

“The store can talk to you and give you online content relevant to the product category you’re standing in,” McMillan said. “For shoppers they’re like hotspot links. They can use links as a way to get content.”

Stores avoid being too intrusive with the beacons by only pushing one message to a phone and allowing customers to then the browse content within the app on their own, McMillan said.

Pulling content from the cloud

When shoppers access data sent from beacons to their mobile apps, they receive the data from a Bluetooth signal, and they can transmit data back to the store’s cloud platform using Wi-Fi or 4G. With the data the store platform receives from mobile phones, stores can use analytics to gain insight on customer behavior.

“We have a full measurement and analytics system for what’s happening in the cloud, and we have the SDK kit which goes into the GameStop app and allows the GameStop app to talk to the beacon on the shelves,” McMillan said.

Still, stores need to keep beacon signals secure to block competing retailers from accessing beacons in stores, McMillan said.

Will beacons increase sales for retail stores? That remains to be seen. Beacons may not take off for two to four years due to privacy concerns, Greg Buzek, founder and president of research firm IHL Group, told Tech Page One.

“If you have the app on your phone, the beacon can wake it up but as a consumer do I want that?” Buzek asked.

Before they invest in beacons, stores will need to prioritize support for EuroPay, MasterCard and Visa (EMV) cards over installation of beacons, according to Buzek.

Despite the privacy concerns, stores should educate consumers on how to gain incentives from mobile technology and encourage them to “opt-in,” said U.S. Rep. Marsha Blackburn, R.-Tenn., at the NRF conference.

“It’s more seamless and a richer experience,” she said.

Check out the infographic below to learn more about how beacons and mobile technology are changing the in-store retail experience.

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