Topics:

Macy's Shopkick Test Confirms Value of iBeacon

Tools

This week, Macy's (NYSE:M) began a pilot program testing Apple's (NASDQ: AAPL) iBeacon technology in certain stores, a step towards validating the long-time efforts by Apple to grow its Bluetooth location-sensing technology. In its partnership with rewards app Shopkick, Macy's has several Bluetooth transmitters in a few departments of its stores in New York and San Francisco. The test, with a few Shopkick employees to start out, will last for several weeks before being rolled out to a wider group. In actuality, Shopkick adapted the technology Apple built into its latest mobile software. Shopkick's shopBeacons enables shoppers with iPhones and some Android phones to have their Shopkick app "woken up" by a signal from Bluetooth transmitters when they enter Macy's, even if their phones are in sleep mode, according to The Wall Street Journal. Before now, shoppers had to remember to launch the Shopkick app themselves when visiting stores, but Shopkick has been working on perfecting the technology for about a year. Shopkick's shopBeacons transmitters were created based on a protocol embedded in Apple's iOS 7 mobile operating software. As a customer who has opted in walks through a Macy's store, they might see special offers based on the products they are near, Cyriac Roeding, Shopkick's CEO, told the newspaper. "You might get an offer for 30 percent off an item you've said you like right when you walk into the bags section," Roeding said. Shopkick may actually be the company that puts iBeacon on the map. With its 6 million users and alliances with major retailers such as Target and JCPenney, Shopkick's findings will certainly impact how iBeacon is used in the future. In addition to Macy's, Shopkick has plans to roll out the technology to retailers such as Best Buy, JCPenney, Macy's, Old Navy, and Target. It's not that iBeacon is unknown; it's just that many retailers have not yet figured out how to properly utilize it. While iBeacon is being touted for mobile payment systems – PayPal's (NASDAQ: EBAY) uses Bluetooth Low-Energy (BLE) beacons too – retailers and consumers are not sold on that idea. There's nothing about BLE beacons that suggests they will be any more successful when it comes to payments at U.S. stores than contactless, chip-and-PIN, QR codes or NFC. The problem isn't in the technology; rather, it's in retailers' willingness to push it for payments instead of mag-stripe cards. BLE beacons have the disadvantage that they haven't been tested, but they'll eventually get hardened up. But that won't make them a magic bullet for payments. However, retailers should be willing to at least test the low-cost BLE beacons in their stores. At least one vendor is already offering an iPhone app that will make the phone temporarily mimic a $35 BLE beacon. And because the messages that the beacons send out can be as simple as basic signage—"Bartlett pears for 89 cents a pound" —experimenting with BLE beacons really is low-cost and low-risk for retail IT developers. Meanwhile, Apple is expected to roll out iBeacon in its retail stores, and Major League Baseball plans to use the technology at some stadiums in the future.