To beacon or not to beacon?

It’s now a year since Apple announced it would be rolling out iBeacon technology across all its US stores. Since then there has been a plethora of retail destinations, retailers and brands following suit.

Regent Street, one of the most famous shopping destinations in the world and home to an Apple flagship store, is using beacons and an app to deliver offers to its tenants. Tesco began a trial in April at its Chelmsford store, integrating it with its MyStore app, and in May, Waitrose started a Beacon test at its concept store in Swindon. More recently UK publisher IPC Media has partnered with Tesco-owned One Stop, installing beacons in 740 convenience stores to drive magazine sales.

2014 has been the year of the beacon, a disruptive technology that seems destined to transform how we communicate in-store. Certainly, many see beacons as providing brands with the opportunity to direct more offers to shoppers in store, which will drive more sales. Right?

Well not necessarily. According to a 2014 survey of UK smartphone owners by eDigitalResearch, only 33% of consumers stated that personalised, direct messages sent to their smartphone would influence purchase decisions. So that means the majority, 67% of consumers, would be unmoved.

In a marketing landscape used to mass-market communication, where spends are still dictated by reaching the majority, the minority that would respond to ibeacons fade into relative insignificance.

Yet the marketing community is transfixed by digital technology – and most recently with ibeacons – even if it appears incapable of doing anything beyond simply digitising the traditional. TV spots are now viral films for the ‘YouTube generation’, old school promotion happens on facebook, instagram or twitter instead of in-store and beacons mean we can say goodbye to cardboard and paper to deliver a virtual coupon when consumers are within proximity.

There’s no question that this digital obsession is right, and for all the reasons we already know: people no longer follow a linear path to purchase, we expect our shopping experience to be everywhere, instant and personal. It’s just that to properly lever the connection between behaviour and technology, we need deeper, sustained insights into how the two play off each other.

Cheil is working on a number of beacon innovation projects for clients, and to truly understand this new technology it has built a solution that has turned our office into a living lab. When our London team of 200 people moved to a single location in Bankside we created an app called Cheil Break. It uses beacons to help people interact with the space and drive loyalty to the in-house café, Cash-only Tony.

CheilBreak1

In doing this we’ve learnt there are in fact three questions to ask when it comes to beacons:

  1. Are you enriching the experience?
  2. Are you delivering convenience?
  3. Do you have an opportunity to offer dynamic value?

People are on a mission when they shop and the best shopper-marketers understand that mindset, and the retail context, and so remove barriers to purchase. Most retail environments are already jam-packed with price messaging, discounts and promotion. The shopper does not want more clutter, they want clarity and simplicity. Yes they want offers, but they need to be relevant and most of all they need help in making the decision that is right for them. To achieve this, technology needs to enrich their retail experience, making it easier, more personal and more convenient.

Studying beacon location gives us much greater insight into context and enables us to target experience that is relevant. The loyal shopper may not want to know that there is a 2 for 1 on brand X in aisle 5, but, as she passes a beacon in aisle 15, she may be delighted to hear that they are opening a new check-out just for her.

Contextual integration

The Cheil Break app is activated by a beacon as employees walk through the front door so there is no need to open it or check-in. It is connected to searchable Pinterest profiles for our people so that we can use the app to search for specific experience or just locate people who are not at their desks. By encouraging and allowing more interaction between our people, the hope is that it will help them become even more creative for our clients.

It all starts in our café where we’ve replaced the traditional coffee shop loyalty card with a digital stamp in the café section of the app. Starbucks in South Korea, and Harris+Hoole in the UK, both do this well and have contextually integrated technology to make buying coffee more convenient and personal. They reward customers who sign-in to this service with recognition in-store, and allow pre-ordering and payment to circumvent the need to queue.

While Starbucks and Harris+Hoole achieve this with a sophisticated and expensive EPOS system, Cheil’s simply uses two beacons. The first activates the loyalty section of the app when a customer approaches and the second is tapped to deliver the digital stamp. In doing so, we made a breakthrough in understanding how to use proximity settings to enable a beacon behaviour not unlike RFiD/NFC, but which is recognisable by both iOS and Android.

Convenience trumps privacy

We’ve also found that people are prepared to trade some personal data for improved relevance and convenience. As a regular traveller I am looking forward to seeing how British Airways will broaden its use of beacons to enrich my experience of T5. With all the data it has on me through its Executive Club and the app I use to check-in and collect my boarding card the opportunities are almost endless. BA has started on the journey by using this new technology to ease an existing customer grumble and sending the wi-fi password to those with the BA app as they pass the beacon on the way into the lounge. It is a good use of beacon technology that is contextually integrated and will enhance my experience. In fact I probably will not even notice, because it is almost invisible.

The best technology is invisible technology

The concept of dynamic pricing is not new to retail. On-line specialists have become masters of this invisible technology to drive sales and beacon driven data may enable this in more traditional retail environments. There is also a broader opportunity to look at value and we are exploring how to use loyalty functionality in our own app to bring dynamic value to our staff. We’ve handed over this functionality over to the ‘Appreciation Society’ which runs our agency events and creates partnerships with local businesses that become Friends of Cheil. Our ambition is that we will learn more about the behavioural impact driven by dynamic pricing, but more importantly we will find new insight into ‘price plus’ that will be of real value for retail.

So, to beacon or not to beacon is not the question brands and retailers should be asking themselves. The real question is what are they doing with new technologies to solve their customers’ problems and enrich their overall experience?

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Can Amazon deliver emotion for Christmas with its first bricks and mortar store?

First published by the Drum on 15th October 2014

The news that Amazon is set to go physical this Christmas with the first bricks and mortar store in its 20-year history should be anything but a surprise. The category-leading retailer seems to have no fear when it comes to exploring the retail space, whether that’s by drone, digital or delivery van. Why not a physical store?

This year has seen a flurry of exciting innovations from the Seattle giant. In February, an update to its app called Flow introduced image recognition so products could be photographed and added to your shopping cart.

Then came Amazon dash in April, a Wi-Fi device combining voice recognition and barcode scanner to instantly add items to your Amazon Fresh shopping list. The retailer then added social to its own list of options with the buy button, social shopping cart link on Twitter.

Amazon continues to sell more products in more ways. It is the ultimate Everywhere, Instant and Personal retailer.

The Amazon store, in Downtown New York, is not primarily about sales. It’s a canny way of avoiding the logistical problem of ‘we called, you were out’ that can bedevil Christmas. This ‘conversion gap’ can also put consumers off at Christmas when it’s all about no fail shopping. It’s one reason why physical retail is still the largest element at Christmas. Who wouldn’t want a piece of that action?

The stores – and they will be multiple if New York is a success – are likely to be functional and more Argos than Apple as some commentators have suggested.

But is this anything more than a holiday gimmick? Seasonal stores have become a feature of a retail market in recent years, with no shortage of empty space and plenty of landlords willing to be flexible on short-term lets. Look at the boom in pop-ups in recent years. Is Amazon simply taking advantage of this to help it over a logistical hump?

The good news for customers is that the stores look likely to be putting customer service to the fore. This could be an interesting longer-term strategy for Amazon, which puts great store in its service offering. If returning goods to Amazon becomes as easy as doing so to M&S, that’s a great piece of service design.

This isn’t the first time Amazon has looked to get physical. It already has secure collection lockers in cities to make pick up easier. It has also used pop-ups to sell product and has sold Kindles through store groups Target and Walmart. It even looked to open stores in Seattle two years ago before going cold on the idea.

With the store development it will need to ensure that its famed slick online service is replicated in-store. The prospect of joining a queue to pick up Amazon deliveries could be more Royal Mail sorting office than titan of ecommerce. Same day delivery in New York or click and pick sounds great, but the experience needs to be Amazon-like.

Arguably Amazon is the most convenient retailer in the world: it delivers a huge assortment at highly competitive prices in a way that is simple to shop, and the more we shop, the more personal the experience becomes. We like that, but we don’t love it like we love other retailers. That is because other retailers, especially those that deliver an omnichannel experience like John Lewis, build emotion into everything they do, especially at Christmas.

Amazon isn’t scared of breaking boundaries and taking shopping everywhere. Perhaps the bricks-and-mortar format is an opportunity for Amazon to stand for more than convenience and price, and start to establish an emotional bond with shoppers at that most emotional (not to mention key trading) time of the year – Christmas.