KEY POINTS 

  • Beacons are one of the most important new in-store technologies. These small, inexpensive pieces of hardware, which communicate with smartphone apps via Bluetooth, are helping brick-and-mortar retailers enhance customer loyalty, gather data about their customers, and provide an entry point for in-store shoppers to become more digitally engaged.
  • The businesses that could see the biggest lift from beacon programs are consumer packaged goods (CPG) brands and retailers. That's because CPG products are typically inexpensive items that are purchased frequently. This allows beacons to gather lots of data on shopping habits and use that data to send personalized, location-based messages.
  • In total, BI Intelligence estimates that $8 billion worth of CPG spending this year will be influenced by beacons, or about 2% of sales in the category. In order to receive beacon messages, shoppers must have a beacon-compatible app and have push notifications and Bluetooth turned on.
  • A number of top CPG retailers have rolled out beacons in their stores across the US. These retailers include Target, Rite Aid, Duane Reade, Walmart, and Walgreens. Major CPG brands — including Energizer, Hillshire Farms, Proctor & Gamble, Pepsi, and Unilever — are also testing out beacons. 
  • Besides pushing coupons and discounts to shoppers in-store, the technology is proving useful for a wide variety of CPG retail purposes. Retailers are using beacons to gather data to send more targeted messaging across other platforms; push related content, such as videos or suggested recipes; and help consumers discover new products and find items in-store.
  • But retailers will have to contend with barriers to widespread beacon influence. These include a number of requirements that must be met on the shopper’s mobile device in order for beacons to be able to push content, consumers' privacy concerns, and declining foot traffic in brick-and-mortar locations.

Introduction

Brick-and-mortar retailers are increasingly adopting digital technologies meant to improve the in-store experience. Among some of the newest technologies of the past several years, beacons — devices that communicate with shoppers' smartphones — are one of the most important. 

Beacons are small, inexpensive pieces of hardware that typically use Bluetooth signals to wake up specific apps on users' smartphones. The apps then run in the background and push location-based messages to customers' lock screens. Sometimes these push notifications explicitly incentivize consumers to open an app, often with the enticement of [...]