Comment: Tesco’s One Stop lights a beacon in convenience retail

One Stop has announced that, in a venture with IPC Media, it will be putting Apple beacons into stores to allow targeted product promotions. The campaign will begin on September 1 across One Stop’s entire store footprint and will allow consumers to receive discounts for certain relevant magazines when browsing.

In itself the scope and ambition of the undertaking is modest. The promotions will only apply to a limited range of best-selling titles such as Chat or Woman.

Additionally customers who want to participate will not only need to own smartphones but also to download the One Stop or Appflare Redeem app and ensure that notifications and bluetooth are both switched on when in a One Stop outlets.

These check-in requirements present a lot of hoops to jump through just to pick up a cheap copy of Pick Me Up. Given that One Stop only has 740 stores,finding a store to test the offers in will not be easy either.

Beacons are not a new technology when it comes to consumer engagement. PayPal has developed beacon technology with a range of stores and chains to allow consumers to ‘check-in’ and buy goods using the PayPal app as a form of contactless payment.

Other beacon initiatives are also beginning to take hold on the high street.

Australia-based Proxima has developed beacons for small businesses to use as a means of snagging passing trade with special offers. Where once smartphones and ‘showrooming’ were seen as a threat to the high street, now they are being repackaged as potential saviours by alerting nearby shoppers to special offers.

Low take-up

Nonetheless the adoption of beacon technology by a national general retail chain is significant especially since the technology remains relatively underutilised.

High Street beacons remain something of a novelty and take-up by stores and consumers has been relatively low. PayPal’s check-in and payment system can be viewed as a little clunky when compared with the increasing prevalence and convenience of contactless debit cards.

The One Stop and IPC initiative is different for a number of reasons, not least because it is designed to engage consumers rather than act as a means of payment.

Beacons will target also consumers based on their location within a store, rather than from the street, allowing discounts to become active as certain shelves are browsed or passed.

In addition beacons will seek to use proprietary data to tailor discounts to individual users such as knocking money off women’s magazines for female consumers. This is already an area that eBay has been developing as part of it’s own retail associate platform, which can pass on consumer data through smartphone-check-ins to enable better customer service from store assistants.

Scaleable potential

However, the most significant factor in the initiative is that One Stop is owned by Tesco and the roll-out with IPC allows the UK’s largest retailer to test blueprint that could be adopted on a much broader scale.

While the impact of applying targeted discounts to random shoppers on magazines is limited, the potential to draw on a much deeper customer database—such as that which loyalty cards supply— is more revolutionary.

One Stop’s partnership with IPC could be the first step towards a mass rollout of beacons which will see smartphone users in supermarkets receiving a variety of targeted discounts and promotions aisle-by-aisle based on a host of data.

Other innovations such gamification or interactivity for targeted promotional content could add another dimension to engagement, especially for younger consumers.

There are pitfalls, and Tesco has certainly been here before.

Tesco was the first UK retailer to introducer facial recognition technology that allowed outlets to deliver targeted marketing on instore screens based on age categories or sex.

This initiative was met with suspicion by many consumers and the media; especially against a backdrop of allegations over email and smartphone monitoring by the NSA and GCHQ. Beacons have the potential to open up a new front in the debate over the use and misuse of proprietary user data to drive targeted consumer engagement.

However, given the propensity of consumers to share personal details on social media such as Facebook it seems that any concerns over data will be overcome as beacon usage becomes more ubiquitous.

Roll-out is unlikely to be limited to Tesco. Other national supermarkets will no doubt follow suit and with smaller businesses also joining in it seems likely that within a few years beacons will be leading the charge in instore engagement as well as targeting passers-by in a bid to generate footfall.

Many years ago shopkeepers would stand in the street outside their business to usher shoppers in through the door and discounts would be haggled with the store owner at the counter. In the future smartphones and beacons will fulfil much the same purpose.

• Jon Copestake, Chief Retail Analyst at The Economist Intelligence Unit