Are Beacons Approaching The Breaking Point?

It’s rarely the first adopters that get credit when a new technology or service hits it big but rather the startups and entrepreneurs at the helm of the movement when it hits critical mass that become the face of the future. That can be disheartening for the startups toiling behind the scenes to make beacon technology not only work but thrive as a popular platform among consumers, but new research points to a bright, not-so-distant future filled with beacon-based possibilities.

According to a report conducted by Juniper Research, beacons are approaching a veritable critical mass in discount coupon distribution, and within five years, billions of targeted messages will be sent annually with beacons. Thanks to the adoption of beacon networks by retail tentpoles like Macy’s, which installed more than 4,000 devices across its stores in 2015, the 11 million coupons delivered to customers in that same year will steadily balloon up to the 1.6 billion estimated by Juniper in 2020.

Dr. Windsor Holden, head of forecasting and consultancy at Juniper Research, told Luxury Daily that early retail adopters are starting to see measurable shopper response to beacons, but that doesn’t mean the sunny future of the tech is all but guaranteed.

“I would imagine that coupons will represent a key plank of any beacon-based proximity marketing strategy,” Holden said. “Redemption rates from coupons delivered via beacons are amongst the highest of any mobile channel. Earlier in the year, Chinese jewelry retailer CTF saw a 59 percent redemption rate amongst all beacon-delivered coupons, resulting in a $16 million uplift in sales.”

Holden did have some general advice for retailers just getting into the beacon game: Limit the number of per-visit notifications to two or even one if it can be managed. Any more than that and Holden explained that most consumers will see them as intrusions into their privacy as shoppers, even if they willingly agreed to participate in a push marketing program anyway.

That willingness just might end up being a saving grace for beacon-based personalized marketing. A study conducted by Swirl Networks found that while an Amazon-like level of customization has become a core desire of the average consumer, very few retailers other than the eCommerce giant have been able to deliver such an experience. Overall, just 25 percent of shoppers say that the average brick-and-mortar store is capable of incorporating individual customers’ wants and needs into their browsing and purchasing actions. Based on industry, the numbers tended to dip even lower:

Department stores: 24 percent

Warehouse clubs: 24 percent

Off-price retailers: 20 percent

These figures might seem like a negative for the average B&M retailer at first, but looked at from the perspective of shifting consumer preference, it’s clear that shoppers are now expecting a level of what was once called intrusive, active marketing actions based on their past histories. While only Amazon might be able to deliver on these expectations at the moment, an appetite for a more contextual and data-driven in-store shopping experience lays the groundwork for an explosion of not only consumer-facing interest in but also retailer-facing investment into advanced beacon capabilities.

“Mastering omnichannel marketing needs to be a top retailer priority in 2016,” Hilmi Ozguc, founder and CEO of Swirl Networks, said in a statement. “Beacon technology will play a pivotal role in bridging the physical and digital worlds so that retailers can deliver more relevant and personalized experiences across all consumer touch points.”

It’s taken a lot longer than even the most conservative pundits had estimated for beacon-based marketing to gain traction with consumers, and while the average shopper still isn’t clamoring for networks in every local mall, there has risen a clear and pressing desire for more personalized interactions from their favorite brands. Retailers have a tool to get the job done in beacons, but nothing is ever that certain when it comes to predicting what shoppers really want.