What’s Going On with Beacons?

Many retailers are happy with their implementations, but adoption remains low

July 15, 2016

Two years ago, retailers were excited about beacons—excited about gathering data based on in-store shopping behavior, driving sales through triggered messages and better understanding a customer’s journey through the technology. But have retailers moved past the experimental phase, and are they still excited about the technology?

In 2014, Macy’s announced that after a test run in New York and San Francisco, the company would expand its beacon program to all of its store locations nationwide. The retailer worked with shopkick to install shopkick’s shopBeacon technology within various departments throughout its locations. As shoppers entered Macy’s, they were reminded to open their app to receive notifications, such as promotions, deals or discounts. Similarly, American Eagle Outfitters, which also worked with shopkick, was another early adopter of beacon technology.

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Those retailers weren’t the only ones. Companies like Alex and Ani, Lord & Taylor and Sephora deployed beacons within their store locations. Furthermore, Apple—who launched iBeacon in September 2014—has as well. But years later, beacons have not revolutionized in-store shopping, and there is little news, results or even chatter about them. So what happened?

Many retailers have employed the technology in-store, and some are happy with it. Indeed, in February 2016 Retail Systems Research found that nearly a quarter of US retailers had implemented beacons and were satisfied with them. Additionally, 22% of retailers had also implemented beacons, but were planning a change. Around four in 10 retailers surveyed agreed beacons were valuable.

But not everyone is on board with beacons. The same survey found that almost a quarter of retailers had no plans to implement beacons within their locations.

Beacons are just one of many in-store technologies that retailers use—and far from the most common. More US retailers use QR codes than beacons, research from Forbes Insights and EY revealed.

In fact, more retailers said they used other in-store digital technologies like smartphone apps, digital rewards programs, digital screen messaging and web-connected store systems than beacons.

It seems beacons aren’t as much of a priority for retailers as they once were. For instance, one of the allures of beacons is the technology’s personalization capabilities, as well as their ability to enable targeted offers. Though some retailers currently use beacons for this purpose, fewer plan to use them in the next 18 months, according to April 2016 research from TimeTrade.

And according to that same survey, retailers are currently more invested in customer experience personalization tactics like targeted marketing campaigns, training in-store associates and collecting data on customers’ preferences than they are on in-store technologies such as beacons.

But perhaps retailers are no longer enthusiastic about beacons because consumer interest has proved low. Epsilon found in 2015 that although 30% of smartphone owners said in-store beacons sounded interesting enough to look into more, 37% of respondents said they weren’t interested in beacons. What’s more, 15% of respondents said they had concerns about the technology.

Walgreens director, product management and mobile commerce Kartik Subramanian told eMarketer that no one had cracked the code yet.

“Walgreens launched a small beacon pilot in about 10 Duane Reade stores in New York a couple of years ago,” he said. “We got a lot of insight from our experience that is influencing our decision to move forward with an appropriate in-store [beacon product].

We haven’t nailed it yet and in fact, nobody in the retail space has nailed what that in-store [beacon] solution should be—maybe with the exception of Apple