Why Apple's iBeacon Could Make or Break the Retail Industry

Brick-and-mortar retailers have been struggling lately as more consumers choose the convenience of online shopping over trekking to physical store locations. However, a relatively new proximity-based mobile messaging technology from Apple (NASDAQ: AAPL  ) could help change that.

Using strategically placed iBeacon devices inside stores, retailers are now able to send targeted messages and coupons to in-store shoppers. Apple's iBeacon is also helping some retailers unlock extra revenue. Let's dig into the facts to see how this technology will affect you as a customer, as well as the broader retail industry.

Apple unlocks the future of shopping
Will location-reading applications be the future of retail? Apple thinks so. The tech giant rolled out its iBeacon short-range positioning technology at 254 U.S. Apple stores in December. Moreover, because the technology works with iOS 7, this means that nearly 200 million devices could communicate with the beacons today. iBeacon has gained significant momentum since its debut, as retailers such as  Macy's and American Eagle Outfitters continue to jump on the iBeacon bandwagon.

Here's how it works. Apple's iBeacon uses Bluetooth low-energy, or BLE, technology to talk to nearby mobile devices such as smartphones and tablets. Once iBeacon pinpoints your location, for example, it sends you a push notification with an invitation to opt in to the service. Once you agree to the terms, nearby iBeacon transmitters send you target coupons or messages. In addition to the obvious benefits for retailers, iBeacons also help enhance customer experiences in retail stores, which could help bring more shoppers back into the stores.

Macy's tested Shopkick's iPhone app using iBeacons in November. The department store chain tested shopBeacon at its New York City and San Francisco stores last year. iBeacons throughout the store would then send special promotions and product recommendations to participating iPhone devices as the customer navigated through the store.

This technology creates the opportunity for brick-and-mortars such as Macy's to enhance a customer's experience while they shop in the company's physical stores. One way Apple is using iBeacons to transform the shopping experience at its retail outlets is by enabling customers to make purchases on their own without ever needing the help of an Apple staff member.

In addition to retailers, sports teams are also finding creative ways to use this technology. The Miami Dolphins football team tested 22 separate ways to use iBeacon transmitters during the final games of its 2013 season, according to Fortune magazine. Using 50 iBeacons strategically placed around Sun Life Stadium, the Dolphins' marketing team was able to send fans mobile notifications about which nearby food stations had the shortest lines as well as digital coupons for snacks and other merchandise.

These iBeacons also give physical retailers a way to track and analyze customers' behaviors as they shop, much like the way online retailers such as Amazon monitor how we navigate their websites. In fact, "the more a user passes by a single beacon, the system will be aware that it's the same device and activate a notification or change the dynamics of the app to be relevant to its surroundings," says Mike Crooks from IT Pro Portal.

Creating value for the customer
iBeacon technology holds plenty of promise for the retail industry. However, for this tech to really be a game changer, retailers need to make sure these micro-location beacons actually create value for their customers. Bombarding shoppers with in-store mobile marketing gimmicks alone could end up turning users off the service. Apple's iBeacon technology has the potential to transform the retail industry. The question now is whether retailers will use this opportunity wisely.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 12, 2014, at 11:36 AM, rbagdonas wrote:

    I completely agree with the retailers having to manage the number of ads they push. Otherwise we as consumers wil just turn it off. That is why when we created Mahana (http://www.getmahana.com) we decided to have no ads.

    We instead simplify the life of the consumer by automating things they normally did manually. We use iBeacons to make that possible.

    If you haven't heard, Mahana worked with the Bluetooth Special Interest Group (SIG) to announce the new name for BTLE/BLE/BTLE4.0. It is now officially "Bluetooth Smart" which should simplify life for folks with acronym fatigue. :-)

  • Report this Comment On April 21, 2014, at 8:33 AM, simpalm wrote:

    off course iBeacon can change the retail marketing. because it provides the message and alert to ios device. whenever you touch a any item in shop. so it will definitely improve retail marketing.

    i am working with simpalm as mobile developer i have implemented iBeacon technology in some project.

    http://www.simpalm.com/

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