2 Retailers Implementing Futuristic Technology that Impacts You

One of these retailers has been well ahead of its peers in regards to technological advancement. The other retailer has been struggling, and this “could” be an upside catalyst.

Jan 30, 2014 at 5:00PM

As you might already know, Macy's (NYSE:M) has been a technological leader in retail thanks to focusing on an omnichannel approach, coordinating in-store, online, and mobile customers with similar promotional campaigns and allowing consumers the opportunity to shop when, how, where they want well before its peers. Macy's is now looking to gain another lead in regards to technological advancement, and this technological advancement is likely to impact you and your shopping experiences if you visit Macy's physical stores. 

If you don't shop at Macy's, then it's possible that you, one of your kids, or someone else you know, shops at American Eagle Outfitters (NYSE:AEO). This is relevant because American Eagle is implementing the same technology. Actually, in this case, American Eagle was ahead of Macy's. These aren't direct competitors, but it's worth pointing out considering American Eagle has been in the news more for bad reasons than good reasons over the past year. This negative coverage has primarily been related to waning demand and declining sales for teen retailers. The reason: teens are spending discretionary money on technology than apparel. 

Macy's and American Eagle are both relying on Shopkick's iBeacon to enhance the in-store experience for customers. This improved experience should then drive sales. The Apple (NASDAQ:AAPL) iBeacon is a location-based, Bluetooth 4-enabled device. But what will it do for customers, and what does it mean for investors?

iBeacon capabilities
This is how the iBeacon works. When you first walk through the doors of a retail store, the iBeacon will know you're there. It will send location-specific deals, discounts, and rewards to your mobile phone. An earlier version required an app; the app is no longer needed but still available.

Regardless of whether or not you're using an app, the iBeacon's messages to your phone will also remind you of the products you tagged or liked earlier. Additionally, the iBeacon will deliver department-specific offers. In the near future, the iBeacon will be capable of delivering deals, discounts, and rewards based on what department or area of the store you're currently standing in, though this function isn't yet available. 

Below is a quick video showing how the iBeacon will work at Macy's stores:

Now the question is: which retailer is likely to benefit from this technology more, Macy's or American Eagle?

Betting on the leader
Back in 2009, American Eagle used its first Shopkick iBeacon in Times Square. The beacon would trigger an app when a shopper walked through the door. Today, the iBeacon at American Eagle stores doesn't require an app, and the iBeacon offers more location-specific awards, deals, and discounts.

American Eagle is installing Shopkick iBeacons in 100 stores across the United States. This also includes Aerie stores. Macy's only recently completed a pilot of the Shopkick iBeacon, but it's very likely that Macy's will implement this technology in many of its stores. The technology is currently being used at the Macy's stores in Union Square in San Francisco and Herald Square in New York City.

As far as choosing between Macy's and American Eagle, this technology is more likely to benefit Macy's. Macy's has much larger stores, and shoppers will have more of a need for the iBeacon because it will help them find what they're looking for. American Eagle is a smaller format store, and most shoppers already have an idea what they're looking for. This isn't to say the iBeacon won't benefit American Eagle. It likely will benefit American Eagle given that it's a teen retailer and younger-generation shoppers have a deep connection with technology.

However, if you look at the one-year revenue comparisons for these two retailers, it's clear that Macy's management is doing a better job at navigating its company through a difficult consumer landscape than American Eagle's management:

AEO Revenue (TTM) Chart

AEO Revenue (TTM) data by YCharts

It's often said on Wall Street that the winners keep winning. With that principle in mind, you might want to consider looking at Macy's before to American Eagle. For Macy's, this is an added benefit. For American Eagle, it's a positive, but it likely won't be enough to turn the ship around.

It should also be noted that Shopkick believes other retailers might implement the iBeacon technology in the near future, including Best Buy, J.C. Penney, and Old Navy (owned by The Gap.) If you're going to consider an investment in any of these retailers, then you might want to begin with Gap.

The bottom line
Macy's has a knack for staying ahead of its peers in regards to technology. In this case, it's implementing iBeacons prior to its peers. As far as American Eagle is concerned, implementing iBeacons could lead to market-share gains over Abercrombie & Fitch and Aeropostale, but it's not likely going to be enough to turn this struggling retailer around. American Eagle is capable of a turnaround, but if this comes to fruition, the iBeacon isn't likely to be the primary catalyst. Please conduct your own research prior to making any investment decisions. 

Which companies will benefit most from this new trend? 
For the first time since the early days of this country, we're in a position to dominate the global manufacturing landscape thanks to a single, revolutionary technology: 3D printing. Although this sounds like something out of a science fiction novel, the success of 3D printing is already a foregone conclusion to many manufacturers around the world. The trick now is to identify the companies -- and thereby the stocks -- that will prevail in the battle for market share. To see the three companies that are currently positioned to do so, simply download our invaluable free report on the topic by clicking here now.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers