Progressive Grocer Independent

AUG 2016

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34 | Progressive Grocer Independent | August 2016 David Diamond is an independent consultant to leading retailers, manufacturers and service providers in the grocery industry. He can be reached at [email protected] The Technology Pragmatist tool: ey are relatively inexpensive, the technology is relatively durable and proven, and the targeting they deliver represents a significant step forward from the current state of the art. Segmenting Consumers But let's take a deeper dive into what makes beacons work. It's not just that they can deliver a specific message at a specific place; there's an older, cheap- er, easier way to do that — we call it signage. Going back to the example above, if letting everyone who's shop- ping for avocados know that chips are on sale in aisle 4 is a good idea, just post a sign in front of the avocados. But if you want to move the state of the art forward, you need to segment consumers by their historical purchas- ing patterns. For the consumers who buy avocados but never buy chips — let's assume that they use the avocados on salads — send them nothing at all. For consumers who buy avocados and chips together but typically don't look for deals, tell them that the chips are in aisle 4, but don't mention any sale. For the consumers who buy avocados and chips together and are always looking for deals, let them know that Brand X chips are on sale in aisle 4. Beacon technology works when it is harnessed to deliver the right message, at the right place, to the right people. e leader so far in deploying beacon technology is Macy's, which has installed about 30 beacons in each of its stores across the country. e department store has partnered with Shopkick, a leader in the technology, to install the system. Shopkick VP of Retail Diane Sasseville Sweet declines to share specific metrics, but notes that Macy's has been a partner for five years and is very happy with the system. In addition, Sweet says that Shopkick has built a network of more than 23 million consumers who have downloaded the app across a variety of retail partners, so the technol- ogy has some significant traction in the retail marketplace, if not yet in supermarkets. Better Together While the technology behind beacons seems very promising, the value of mar- keting applications powered by beacons is still yet to be proved. Among other things, one of the critical issues regard- ing beacons is that they seem to have far more value when deployed in conjunc- tion with other marketing approaches than when deployed alone. When de- ployed alone, beacons simply provide signage micro-targeted by location. But when integrated with customer data, the targeting becomes far more precise and more interesting. Similarly, beacons rely on consum- ers to download an app — the Shop- kick app connects with consumers only when they have downloaded the Shopkick app on their smartphones — so retailers that have developed apps that have been widely downloaded are going to be able to derive far more value from beacons than those that are using beacons on a stand-alone basis. What does this mean for indepen- dent retailers? It depends. You need a robust frequent-shopper database with cell phone numbers to derive significant value from beacons. If you don't have that, your beacons won't be able to communicate at the level of sophistication needed to drive real value. Beyond the frequent-shopper database, you also need to have already developed an app that's been widely downloaded. Without that element, you won't have a mass of consumers ready to receive the highly targeted messages. So if you're considering beacons, first make sure that you have a solid frequent-shopper program in place and a popular app. If you don't have those two things, focus on developing one or the other of those two market- ing approaches while you wait for the beacon market to develop and mature. PGI While the technology behind technology behind beacons seems very beacons seems very promising, the value of marketing applications powered by beacons is still yet to be proved.

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