I can’t speak for everyone, but department stores terrify me. I’m not sure if it’s the size, the variety, or shopping in general, but there’s not much about the experience that I genuinely enjoy. However, the in-store experience is ever-changing and Macy’s is on the cutting edge of re-shaping the way we do department stores.
Macy’s has long been the center of the department store experience. For more than a century, it has been America’s one-stop-shop for clothes, shoes, cosmetics, jewelry, appliances, and food. However, with so many options under one roof, the department store experience can be a bit overwhelming—as customers are often forced to explore multiple floors, sections, and racks for the merchandise they are looking for. Because of this, many consumers have moved much of their purchasing online, where they likely have an easier time finding what they are looking for at a cost they are willing to pay.
To combat this attrition, Macy’s was one of the first retailers to leverage the iBeacon technology in an effort to enhance the customer’s experience. This technology is a geo-mapping system that—through a smartphone’s Bluetooth technology—is able to provide real-time information on how customers are interacting with Macy’s at the department level (1). Based on a customer’s in-store and online purchasing and browsing histories and their current location in the store, Macy’s can push marketing collateral and offer promotions on products in nearby departments to the Shopkick app on their phone (2).
Former macys.com President Kent Anderson explained:
Say you’re in the housewares department standing next to our display of KitchenAid mixers, the ability to transmit to you information — a video about the quality of this product, the accessories that we have as part of our assortment that you may not see there — rich content that may, and should, help us close the sale, is where we potentially see the beacon technology going in our stores.” (3)
While the concept may sound somewhat invasive, Macy’s was pleased enough with the results of its pilots to roll out the program to nearly all 800 of its stores. For Macy’s, this technology offered new insights into which merchandise was of interest to which customers as well as how they should place products and potentially design stores to extract the most value from customer movement patterns throughout the store (4). And for shoppers, the value came through an enhanced shopping experience and additional savings.
Beacon technology has the potential to change the entire in-store shopping experience. In an industry that is struggling to keep up with the convenience of going online, Macy’s and others are using digital technology to pull customers back into the stores. By shifting from an operating model that previously relied on shoppers spending a lot of time in the store, moving from department to department, and interacting with sales reps, to a model that relies on beacons to pull shoppers from department to department while an app informs them of product benefits electronically, Macy’s is on their way to reducing labor costs and making the Macy’s shopping experience more fun and financially beneficial again.
Through the data they are collecting via the beacon systems, their value proposition could one day shift to a leaner, more-personalized experience that allows the shopper to spend less time in the store through leveraging data on their prior behavior. I picture a future state that is more interactive and pulls customers through the store by offering promotions that expire within minutes if they are not added to the cart quickly enough, while also allowing them to pay through mobile and removing the need for POS systems.
While the initial beacon rollouts did not do as well as they were expected to, the future remains quite bright. Many experts believe that hardware development typically lags software development, and in this case, beacon adoption was stunted by unpredictable hardware issues (5). However, as smartphone adoption continues to increase, I’m willing to bet the beacon’s place in retail will too.
- Umbel Corp, “iBeacons, Retail and Information Overload: How Macy’s is Kickstarting Retail’s Data Warehousing Needs,” https://www.umbel.com/blog/brands-agencies/macys-ibeacons/, accessed November 2016.
- Time Magazine, “The Creepy New Way Macy’s Tempts You to Make Impulse Purchases,” http://time.com/money/3432693/macys-shopkick-ibeacon/, accessed November 2016.
- CloudTweaks, “Beacons Flopped, but They’re About to Flourish in the Future,” http://cloudtweaks.com/2016/11/beacons-flopped-theyre-flourish/, accessed November 2016.