What is a beacon?

The word 'beacon' is a generic term for anything that will send a signal directly to a smartphone or tablet. Beacon technology promises to revolutionise the retail industry by allowing customers to receive signals from beacons via downloadable apps.

Why use them?

  • Gain fresh insight into consumer spending habits – track time spent in shops, establish items browsed and items bought, or guide customers to specific products in-store
  • Enrich existing marketing strategies and facilitate more effective product placement - send tailored offers directly to consumer's phones when they pass a shop
  • Streamline and enhance the high street shopping experience – allow consumers to order online by simply taking a photo of a product or introduce contactless card payments
  • Aid the recovery of ailing high street sales

Who's doing it?

  • Virgin Atlantic have started testing the technology at Heathrow Airport, sending travellers location-triggered welcome messages and allowing them to use their smart device as a boarding pass.
  • Apple has rolled out its own beacon technology called iBeacon which can be found in all 254 Apple stores in the US.
  • Every shop along Regent Street is being fitted with beacons which will beam special offers to potential customers as they walk past the door.
  • Mobile shopping application shopkick deployed the technology in 100 American Eagle and two Macy's stores.
  • PayPal is in the process of developing PayPal Beacon, which will allow payment to be made at stores via PayPal for fast, contactless check-outs.
  • Shopping centres in Hampshire and Sheffield launched Bluetooth-based beacon technology to connect retailers directly with consumers through their smartphones and deliver time-limited offers. In Hampshire there was a 100% uptake from the shops in the shopping centre and 2000 downloads were made in the first 2 months, with over 6000 shares on social media. In Sheffield the app was downloaded over 500 times in 2 hours, 460 people registered for the app and the 120 hotspot offers were all redeemed in the first 45 minutes.

What are the risks?

Beacon technology raises renewed queries over data protection, security and privacy. OpinionLab recently found that 69% of shoppers had worries about the security of their data and 67% found it comparable with spying. But more positively, over 50% indicated they would be more receptive if they received free or discounted items as a result of the technology.

Offering free wifi in shopping centres can allow all retailers to share an app and track consumers, whilst also making the app more accessible to shoppers. However open wifi systems can carry significant threats from hackers.

The risk of data theft now and in the future is real (highlighted by the recent publication of the usernames and phone numbers of more than 4.5 million Snapchat users). App developers and retailers will need tight and vigilant security systems in place and to keep aware of any potential liability.

Retailers will need to be wary of how many predictive offers to make and at what point they may be overstepping their mark. The risk of alienating customers by apparent intrusiveness should be a key consideration.

What can you do?

Taylor Wessing's top tips for staying smart when using beacon technology:

  1. Consent
  • Obtain positive consent from consumers
  • Consider data usage: the more you do, the more consent you'll need
  1. Choice
  • Marketing or bombarding? Give customers opt in / opt out routes for push notifications
  • Leave the option open with a disabling function
  • Consider tailoring opt in: do your consumers want generic or personalised offers?
  1. Clarity
  • Have transparency for the consumer from the get-go
  • They should know: what you'll do, how you'll do it, where you'll store it and how you'll keep it safe
  1. Compliance
  • Comply with the Data Protection Act 1998 and the expectations of the Information Commissioner
  • Consider anonymising or key-coding details to fall outside of some of the Act's provisions and acting as a further protective measure
  • Always process information carefully and correctly
  • Seek advice on local law when crossing jurisdictions
  1. Contain and control
  • Remember that privacy is a key concern for the consumer - retain personal information securely throughout its lifecycle
  • Transferring data from phone devices to servers? Keep data and processing trails clear and subject to robust security protocols