That sound you don’t hear is a pay-at-the-pump customer getting a “beacon” message on his or her smartphone for a two-for-one drink promo inside the store.
That other sound you don’t hear is the concern gripping retailers the more they look into beacon, a low-energy Bluetooth opportunity.
For c-store retailers, the allure of messaging fuel-only customers with enticing in-store deals has undeniable appeal. However, those beacons are pinging into nowhere—at least for now.
“A customer could receive an alert: ‘Sign up for loyalty rewards program and get a tank of gas’; ‘Come on inside, we’ve got hot dogs on special, two for three’; or ‘We just received a new product, York Peppermint Minis,’ ” says Ralph Acosta, spokesperson for Los Angeles-based SkuRun, a provider of beacon technologies. “What happens is up to the marketer.”
The tool involves a low-energy Bluetooth signal, similar to the way Bluetooth connects cellphones to headsets for hands-free calling without the high-energy battery drain.
The drawback? With beacon messaging, the signal needs to be heard, Acosta says. So the phone has to have a mobile app that’s activated (in most cases) so it can pick up the message.
Nevertheless, the marketing potential is significant and capturing retailers’ interest across all channels. New York-based Business Insider, a technology information firm, says beacon-technology will be installed on 4.5 million active devices by the end of 2018. Half of the top 100 U.S. retailers are testing beacons this year, and an estimated 570 million Android and Apple smartphones are Bluetooth- and therefore beacon-compatible.
But the speed bumps are numerous:
▶ The app issue: Acosta calls it a “distribution” problem. Retailers don’t understand that for the beacon to work, a phone has to have an open application running, he says. Many people already have apps running on their phones without realizing it, but in this use case, the customer needs to have downloaded a store’s app and have it open for messages to ping.
▶ Lack of ROI: In and of itself, the ability to message customers may not justify the cost and effort of initiating a beacon program within a store.
▶ Set infrastructure: Companies may already have a high degree of technology at the store level to do much of what beacons can do. Replacing that may be a barrier.
Still, the promise exists. The technology allows for direct communication to customers’ cellphones while they’re on site—an obvious advantage, especially for an industry driven by impulse.
“As retailers, we would love to know when customers are on our real estate, when they arrive, the frequency of visits ... . We would like to be able to provide them with offers that may be specifically tailored to them,” says Scott Hartman, president and CEO of Rutter’s Farm Stores, York, Pa. “It’s digital signage but in a mobile way.”
Beacon setups may also offer operational advantages, Acosta says. Just in the way homes are being equipped with smart thermostats, window blinds and door locks, the “Internet of things” can apply to the store, with beacon technology connecting everything from environmental controls to loss-prevention devices, all on a retailer’s cellphone.
And beacons aren’t the only radio-wave technology poised to enhance c-store operations. Near-field communications (NFC) is also in play, allowing for payment at the pump. At the same time, manufacturers and technology providers are working to allow for stores to communicate with cars passing by, opening up options for both marketing and payment.
The potential extends even to data collection and business intelligence, suggests Greg Gilkerson, president of PDI, Temple, Texas. “If I get near [a device] and it starts talking to my phone, which then talks to the cloud, there will be a lot of collected data that was not available before or had to be input manually,” he says. “I don’t think there’s any end to the number of different ideas that can come from technology that’s available today, much less what will be available in the future.”
CONTINUED: Testing in the Field
Field Tests
Hartman’s team is experimenting with beacons, saying retailers have a lot to learn. Some are practical, such as how far a receiver can be from a cellphone. Others fall to customers and what they’re willing to do or use.
“Speed of adoption is hard to predict,” Hartman says. “There’s a lot for us and for our customers to learn; it isn’t as simple as people think.”
Several well-known providers are also traveling up the learning curve, conducting tests and creating new partnerships. In forecourt development, Gilbarco Veeder-Root, Greensboro, N.C., says it is testing technology from San Diego-based Qualcomm, specifically its beacon communications to deliver news, information and advertisements, tying the cellphone relationship to screens in the pump.
“Consumers sit there for 2 to 4 minutes doing nothing [while filling up their tanks],” said Travis Bouck, Gilbarco’s vice president of marketing, in a release about the technology. “We’ve invested a lot of effort to make that 2 to 4 minutes more meaningful.”
For Hartman, the use of screens can extend to car consoles. Communicating to people while they’re driving by is yet another state of marketing bliss, potentially influencing drivers at a critical moment.
An announcement on this front came just last spring from SAP, which said it is partnering with Toyota and San Jose, Calif.-based VeriFone to connect the dots.
In its model, the driver is notified when the vehicle is low on fuel. Then the telematics system from the Mountain View, Calif.-based Toyota InfoTechnology Center USA (ITC) kicks in, with the vehicle recommending a gas station based on the car’s location and its fuel level. It also takes into account a driver’s pre-entered personal preferences such as favorite gas brand and which stations have opted into a specific loyalty program.
When the car arrives at a station and stops at the pump, the driver can authorize the transaction with a single click from the car console or mobile app. Gas stations may also provide discounts, reward points and other coupons based on the driver’s profile.
Once fueling is completed, the driver receives an electronic receipt. Drivers can view all previous fueling transactions and export them to other systems, such as an expense report. The system uses beacons to help complete many of these actions.
As car communication technologies advance, Hartman of Rutter’s hopes retailers will become an active voice in their development. “When the leadership from [our] industry and leaders from the automotive manufacturers talk and start exchanging ideas, that’s the way … things get done right,” he says.
The thought process from promise to execution is a tangled one. Brave souls will always lead the charge, but for most, the first issue is one of education.
The reason beacon technology is hot today is because Apple said so. The Cupertino, Calif.-based electronics company, and subsequently Mountain View, Calif.-based Google, says it’s the only protocol that they will allow retailers to use to communicate with customer applications, Acosta says.
But beyond that anointment, it’s the only technology that can consistently establish exactly where a person is and reach that individual in a targeted way. Cellular systems and Wi-Fi aren’t that accurate or consistent.
“[Apple] has not revealed why, but they’re dead serious that it’s the only protocol you can use,” Acosta says.
A Connected Store
But the benefits—and the ultimate ROI—occur when retailers expand their vision of beacons, says Acosta of SkuRun. He calls the idea “connected retail,” similar to the “connected home” where multiple devices get hooked up to a single hub.
“It’s like installing a home automation kit,” he says. “There’s a mothership that communicates with a node. Yes, it can communicate with customers, but it can also monitor other elements of the store that are of interest.”
These could include temperature equipment, refrigerator doors that get left open, potentially even inventory. In many ways, it mimics the efforts done in the 1990s by the likes of Wal-Mart Corp., Bentonville, Ark., with radio frequency identification (RFID). At that time the mega-retailer was interested in tracking all products, literally every item in the store, with RFID chips attached to every item.
Though that science never became commonplace, it’s an opportunity that could resurface to further propel beacon technology. From his perspective, Acosta believes the use of beacons to deliver coupons may not be enough to inspire mass implementation.
“[It has to be] wrapped up into a smart retail solution that not only gives the store the ability to communicate with the customer, but allows owners to also communicate with their store,” he says. “Both need to happen.”
What could be at stake here is not simply information but CPG marketing dollars, suggests Gray Taylor, executive director of Conexxus, Alexandria, Va. He follows emerging automation trends as head of NACS’ technology standards and advocacy group. Retailers have an opportunity to deploy the technology and use it to track individuals in the same way so-called heat-map studies do—but digitally.
Essentially, people with apps (either a retailer’s own app or a third-party app that’s associated with the retailer) meander through a store and as the beacon devices detect them, the customers’ collective interest in, say, cooler door No. 2 may become evident. Why that door is popular may require a bit more legwork, but it sets up the opportunity for CPG companies to now battle over shelf space and placement, he says.
“Beacons are coming,” Taylor says. “Retailers have to figure out a way to profit by it—they have to make the strategic decision that they’ll start selling the data vs. the other way around. We’re sitting on shale oil and we need to ‘frak’ data.”
CONTINUED: Addressing Limits & Infographic
Discussing Limits
Beyond obvious equipment fees, a hidden cost of the beacon technology would certainly be the distribution issue that Acosta alluded to earlier. Without that app in peoples’ phones, beacons are ineffective.
So a retailer would have to build up a critical mass of people having its branded mobile app open on their phones, which is a formidable task. Acosta says it’s within reach of retailers of significant size or if a store partners with a third party, such as a loyalty company, interested in nurturing that distribution system.
“The beacon in and of itself can’t do much,” he says. “It requires a friendly application listening for its signal.”
For Hartman, time and scalability are essential ingredients. “Wireless connections are all going to have to get more mature,” he says. “Because we’re not just talking about one store … or one [type of] pump. It all has to be thought through in terms of support, costs and deployment.”
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.