CHICAGO — Since the introduction of Bluetooth beacons as enablers of in-store location-based marketing, many have seen a clear connection between beacons and mobile payments.
As the technology evolves, the connection is not quite as clear.
"Embedded payments is the next step, but the technology is not there yet, and for some stores, like a grocery store, it could take a long time," said Adam Silverman, principal analyst with Forrester Research.
Beacons are small nightlight-sized wireless transmitters that allow stores to communicate with shoppers' smartphones as they walk to different departments or aisles, providing an incentive to buy something they may have otherwise ignored. The concept is similar enough to that of a cloud-based mobile wallet that the next logical step would be to allow shoppers to pay for those items on the spot.
And as with any other mobile wallet project, these efforts quickly became a power struggle among the various participants who wanted control over the customer relationship and transaction data.
"Grocery stores have tried to use beacons to provide offers to shoppers, but some ended up with specific brands, like competing soda pop companies, wanting to handle that process and it took away from the store controlling that," Silverman said during a June 8 presentation at the annual Internet Retailer Conference and Exhibition.
Some are taking steps to resolve those conflicts. Verifone and its beacon technology provider Footmarks entered a partnership with Allrecipes.com and grocery retailer Marc's in Ohio last week to provide recommendations and offers to shoppers for certain ingredients needed for recipes that the beacon signals to the consumer.
For the most part, retailers today would be better off concentrating on beacon technology as a customer service tool, rather than a way to deliver offers to consumers, Silverman said.
Forrester Research surveyed thousands of consumers and merchants, finding vastly differing perspectives on what constitutes an excellent experience in a store. For consumers, it was customer service and being able to easily find the products they want to purchase. But merchants consider the special offers and deals they promote, or dazzling aisle displays as the elements that deliver a great experience.
"Early adopters of beacon technology were using it for offers and deals, and they were finding it was not working," Silverman said. "Customers don't want alerts because they are disruptive, plus they are challenging to implement because the merchant has to make sure the customer has the right technology to receive it."
Neither audience rated payments as a priority.
When asked what might "interest" them during a shopping experience, the consumers did rate special offers (52%), loyalty (50%) and rewards (49%) at the top of their list, while mobile payment options were farther down at only 35%.
Merchants operating physical stores know they have to engage their customers digitally, though many are uncertain what to do. In fact, many are closing physical stores because of the increase in e-commerce traffic, the research indicates. So far in 2016, 49% of all sales referrals are influenced by or occur online, Silverman said.
"But the flip side of this is that stores are not doomed because 89% of sales still occur in physical stores," he added.
The key will be to get e-commerce sites and physical stores working in unison to attract shoppers, engage them with customer service technology and make it easy for them to find products and, eventually, pay for them as part of a seamless process.
Still, some physical stores – particularly malls – are using beacons and payment data to entice shoppers to favor real-time mall loyalty programs over e-commerce.
In a walk-don't- run approach, merchants should focus on service first with beacons and mobile technology to create more value for customers, Silverman said.
"Target has put help buttons in their aisles, with beacons that will tell employees where you are so they can direct you to the product you want," Silverman added. "There are other cases of click-and-collect for pickup orders, using a beacon to alert the merchant you are in the store, so that an order paid for online can be brought right out."
Jeff Douglas, general manager for e-commerce at Nebraska Furniture Mart, a massive warehouse-style retailer, said his company uses beacons every 50 feet within the 560,000 square-foot store.
The beacons operate with digital price tags and applications built through Aruba Networks and are essential to help customers find the products they are looking for amongst the 120,000 products on display, Douglas said.