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

Apple iBeacon technology is bringing renewed hope to struggling retailers. However, if the technology is misused, it could do more harm than good.

Mar 11, 2014 at 4:06PM

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.

Apple Ibeacon

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.

How you can profit from this analysis 
You can make wealth-building profits by investing in growth stocks such as Apple, and thanks to our free report, finding winning stocks has never been easier! In our special report "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Making money in stocks is easier than you think. Click here to get your copy today -- it's absolutely free.

Tamara Rutter owns shares of Amazon.com and Apple. The Motley Fool recommends and owns shares of Amazon.com and 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