Here’s some good news for the beacon community. A month after Macy’s announced an ambitious plan to roll out Shopkick devices to over 4,000 locations nationally, Lord and Taylor appears to be following suit.
During a panel at the Location-Based Marketing Association’s Retail Loco Summit in Chicago Wednesday, Ryan Craver, senior vice president of strategy at the The Hudson Bay Company, said that the firm plans to expand a small pilot in its Lord and Taylor locations to stores across North America by the end of November. The company is currently testing the proximity messaging technology in ten locations across the U.S. and Canada, and Craver says the results have been “extremely compelling.”
The small, thumb-sized devices use bluetooth low energy, a short-range radio signal, to communicate with shopper’s mobile devices nearby. Last summer, Apple added new iBeacon protocol to its then-new mobile operating system that provided an easier way for developers to allow applications to interact with beacon signals passively, opening the door for more widespread adoption over the past twelve months.
In the pilot program, the company installed four to six beacons in each test store, and used a centralized system to send discounts and editorial content to devices which already had the retailer’s application installed. The in-store messaging ran alongside a more traditional geo-fencing program in which the retailer alerts sends a notification to users whenever they come within a certain distance of a location.
Craver told the audience that “across the board” the company saw an 18% engagement rate for in-store messages, with discounts performing higher in more lower-end locations and content performing better in higher end stores. For some context, the average engagement click-through-rate for a mobile banner ad is less than .4%.
“We’re currently in this wave of disruption and we’re not sure which technology will win, but we do know that if we place countervailing bets, we can start to see what intrigue customers,” said Craver. “We are still serving a customer that is along a continuum, where some are still clipping coupons and others are using their devices to showroom. For that customer who is showrooming, beacons, right now, are the answer.”
To an extent, it’s the retailers own struggles with their balance sheet that is driving the adoption of these new technologies. Craver said that cost cutting and reductions in staff have lead retailers to invest more heavily in technologies that can help customers navigate through the stores without the help of customer service agents.
“As this tug of war between this digital and in-store continues, we’re going to keep pulling hours from stores and even dedicate some of those in-store hours to go to fulfillment,” said Craver. “Less and less sales people, more and more self-sufficiency.”
Even with a strong economic rationale, beacons still face some infrastructural challenges. The main problem is that beacons can only interact with applications currently on a device, so retailers audience is limited to the small percentage of consumers who have downloaded their app.
Craver says the company has pushed the software development kit that runs its beacons into third-party applications, allowing the company to reach users beyond its own app.
“The biggest problem is that the ecosystem is not there. The biggest name in the industry is Shopkick, and they only have 8 million downloads. That’s still a tiny audience,” said Craver. “Until someone can build a user base with say 200 million users, then that’s going to get the big retailers excited because its going to make a difference, and not just a rounding error.”
Steven Jacobs is Street Fight’s deputy editor.