Beacon Technology in Fashion Retail Industry

A disruptive Technology

Contents1. Executive Summary.......................................................................................................................32. Introduction.......................................................................................................................................42.1. What is Beacon?..........................................................................................................................43. Earl’s Multiple Methodology........................................................................................................54. Contextual Factors:........................................................................................................................55. What do Retailers offer?...............................................................................................................66. Radical or Incremental?................................................................................................................77. Is Beacon technology secure?....................................................................................................78. Marketing tool..................................................................................................................................89. Competitive Advantage of Beacon...........................................................................................810. Stake holders Benefits...............................................................................................................910.1.1. Tangible Benefits:.............................................................................................................1010.1.2. Intangible Benefits:...........................................................................................................1010.2. Customers................................................................................................................................1010.2.1. Tangible:...............................................................................................................................1010.2.2. Intangible.............................................................................................................................1110.3. Shareholders:..........................................................................................................................1110.3.1. Tangible................................................................................................................................1110.3.2. Intangible.............................................................................................................................1111. Recommendation......................................................................................................................1112. References...................................................................................................................................12

Beacon

A Disruptive Technology1.Executive SummaryThis report analyses the significance of Beacon Technology (BT) in fashion retail industry and the impact of this disruptive technology on its various stakeholders. The upsurge usage of smart devices has been massive in the recent years and is expected to grow up to 300% in next five years. This revolution is an opportunity for the Beacon Technology to create a huge impact on the fashion retail industry with respect to its profits, sales and brand image. To perform an impact analysis of this technology and gap analysis in the market, Earl’s Methodology is used in this report.Further, the report then identifies the various contextual factors which have had a straight impression on the disruptive technology like the development and merging of technology and advertisement, Rapid Advancement in smart devices in terms of usage and use of smart devices in retail stores for accessing product information. The report also identifies the technologies used by leading fashion retailers in UK to create a superior and competitive advantage in market. With growing implementation of technology, ensuring security is the main point of concern. The report describes how the security is guaranteed in the BT protocol. Moving further, the report analyses how the BT can be used an as a marketing tool to grab the major market share.

The report analyses the various stakeholders and explains the tangible and intangible benefits of each of them from this disruptive technology.Finally, this report points of the recommendations like identifying the various types of consumers, their acceptance level, adaptability and how retailers can use this technology to gain customers and achieve large market share.2.IntroductionAlthough, the growth in ecommerce industry has made online shopping very convenient, shoppers still prefer to visit a retail store for making any purchase. As per survey (businessnewsdaily,2015), 65% of the shoppers prefer traditional retail shopping over online shopping because of the following:

Customers get a real time hands on experience on the products. They want to avoid the delivery fees and easy returns. They love window shopping and other services offered by the retailers.

In today’s world, the consumers are fenced by technologies that promise to redefine their whole shopping experience. Technologies continue to expand and the retailers especially from UK fashion industry also has made technology investment to gain competitive advantage and create a superior brand image. Consumers are more likely to make a purchase if they love their shopping experience (The Guardian, 2015).

2.1. What is Beacon?Beacon is a broadcasting device which is used by retailers to notify the deals by using the push technology. Beacons are Bluetooth enabled devices that connect to mobile phones within the building, allowing retailers to send messages in real time based on a shopper’ location in the store. For instance, if a shopper is in the parenthood section of a retail store and have downloaded that store’s app, the shopper might get a message about a flash sale or discount the store is having on infant clothing. A beacon shares information with the retailer about customers’ shopping habits and movements through a store. 2.2. How does it work?A Beacon deployment consists of one or more Beacon enabled devices that communicate their own distinctive identification number to the local area. The receiving device which may be a smart phone or tablet looks for the beacon using the installed software to accomplish several functions, like notifying the consumer at the receiving end.

3.Earl’s Multiple MethodologyAs per Earl (1989), technology provides foremost business prospects by improving the performance and productivity; Beacon technology has the capability to deliver the business with a competitive advantage by providing customer with rich shopping experience and easy accessibility to the products. This is an external activity for the retail industry which will help the business to attain its objectives and create a distinctive mark(Appendix-1)

4.Contextual Factors:Like any other technology, the advancement of Beacon technology has been prejudiced by definite contextual factors: The development and merging of technology and advertisement- Digital technologies effect 36%, i.e. $1.1 trillion of in-store retail sales, enabling retailers to identify their crucial audience, in a specific corporal location, and directly communicate discounts and deals to their smartphone. The 2015 IHL Group Store Infrastructure Study indicates that nearly 90 percent of retailers plan to have next-generation in next 3 years (The Guardian, 2015). Rapid Advancement in smart devices in terms of usage: In order to be an order winner in the market, and gain the competitive benefit, Beacon must take advantage of this advancement and the gauge of which the smartphones have amplified in recent years. Consumers use smart devices in retail stores for accessing product information: According to the UK mobile Consumer survey, about 86% of the customers use mobile phones while shopping in retail stores (Deloite, 2015). Such a drive toward a new, Omni-chan-nel consumer poses both benefits, and possible risks for retail-ers. if the retailers don’t realize how and why customers use their phones in physical stores, they are putting the decision in the consumer’s hands to shop somewhere else(Figure-1)

Popularity of online shopping is a growing threat for the tradi-tion shopping- In this situation, Beacon can be a big advant-age and be a strategical move for the retailers.These aspects will have a huge impression on the business strategy and operations for the retailers. The main focus of the business should be on rich customer service and Beacon can provide efficient product information, rich user experience and quick and smart shopping.5.What do Retailers offer?Appendix-2 demonstrates the use technology which is currently being experimented by the major retailers in UK. Obviously, the retailers have identified the importance and need of this technology; However, the retailers do use beacon at a very basic level. But the question is ‘’ how can beacon be used to create a competitive and superior advantage?’’.The retailers from UK high street which uses technology is ‘’House of Fraser’’ which makes it clear that HOF has a strategy to use of this technology to disrupt the market and create a competitive advantage.

‘’House of Fraser’’ publicized beacon-equipped mannequins to offer its consumers with an additional attractive retail experience. When a shopper with an enabled smartphone app is within a radius of 50 metres of the store, the beacon directs a signal providing the customers with handy information: particulars about the attires, garments and accessories on the mannequin including the price, location of the items in the store and web links to buy the products straight from the retailer’s website, thereby creating a new market for the consumers. If ‘’House of Fraser’’ continues to improvise the use of this technology, they will be easily able to attract huge customers and disrupt the retail market.6.Radical or Incremental?The foundation of any Innovative technology is ‘’Knowledge’’, about the various elements of business, its industry and market, how the elements can and do fit together(Grant,2009).Beacon technology will have an impact on external and internal aspects of the business. Hence, it can be considered as a product innovation as well as service innovation, the service offered will change the way consumers shop and eventually, it will have an impact on the business internally, as it will need to re-design and re-engineer the organizational flow of activities.This technology has a massive potential to enrich the shopping involvement, building it faster and easier for consumers to access the products and information, or offer special discounts to their loyal customers. It can also offer retailers with important data about their shoppers’ shopping behaviours and practices. However, consumers will not be very adaptable to this technology at the very initial stage. Therefore, it has to be an incremental change in the business frameworks and new business models will develop which will have returns from this disruptive technology.

7.Is Beacon technology secure?Security is the major point of concern among consumers using any technology. Beacon in its initial implementation phase has security glitches such as beacon can be hacked easily, it can accumulate data about the consumers without their permission including their geographic location. The initial security is expected from the consumers by using a strong password to their smart devices.The common threat is if the consumer’s smart device is lost or stolen and is used by frauds.However, the beacon is designed with a multi-layer of security protocols and the following mechanism has been implemented to ensure security. A mechanism is deployed to identify unauthorized validation attempts Each Beacon user has a unique id number and password. The payload is frequently encrypted Timely firmware updates are notified to the users.The retailers must implement services to monitor how the beacon is being used by the consumers to identify any suspicious behaviour or transactions, so as to avoid and prevent any criminal or illegal activities

8.Marketing toolBeacon is a real time marketing tool used as proximity marketing. Beacon technology will provide the retailers with the consumer’s shopping habits, behaviours and patterns which is an opportunity for the retailers to use the technology as a marketing tool.The retailers can broadcast their discounts, flash sales and other offers to their consumers basing on the information captured. This process will also have an impact on the CRM.‘’The opportunity for this technology is massive as it is accessed by users with smart devices which is 3 times more than the PC users and can be accessed from anywhere, anytime that matches their lifestyle.’’(Riivari,2005).

9.Competitive Advantage of BeaconTo again competitive advantage from this technology, retails must understand the consumer requirements while implementing beacon and should aim to be market leader in providing the superior services. Increase sales: Deploying Beacon in stores will not involve a huge cost as the beacons are low cost LED Bluetooth devices. Therefore, it is low cost technology investment for the retailers. The retailers will have an opportunity to offer sales and discounts to their customers, with prices and similar products, location of the products in the store which makes the shopping easy for the shoppers and providing a rich shopping experience thereby increasing sales. Enriched Services- Consumers opt for superior customer service. The technology provides an enhanced shopping journey for the consumers which helps in retaining the customers and gaining new customers. Speed and security- The technology allows the customers to quick checkouts and as the technology in turn uses mobile payment, the process is highly secure. The retailers should promote the use of beacon technology as it will enhance the business and give the brand a superior competitive advantage.Beacons are small, low cost gadgets which are influencing the retailers all over US. In 2015, many US retailers have tested this technology including Target and Macy’s. In 2015, the beacon directly influenced over $4 billion worth of retail sales in US and is expected to grow 10 times in 2016(Business Insider, 2015)

10. Stake holders BenefitsIt is highly essential to analyse the impact of this disruptive technology on the stakeholders and identify the benefits of Beacon.The implementation of BT will have a definite impact on customers, staff, shareholders.10.1. Staff:BT will have a massive impact on the store staff and employees. The staff will need to improve their technology knowledge as well as how to manage the BT enabled components such as mannequins. The deployment of this technology will also impact the employees. When the BT users grows, the organizational structure will also be affected as less staff will be needed at store, managing customers will be easier, and promoting products will be more convenient so the advertising department need to redefine itself as BT is a strong advertising tool.

10.1.1. Tangible Benefits: Staff will have less face-to-face customer interaction which means there will be less customer complaints to manage at retail stores. Employees will have better promotional activities thereby giving the retailers a new dimension to promote their deals, flash sales and discounts in stores.

Handling customers will be easier at stores because BT enables quick checkouts and easy payments techniques.10.1.2. Intangible Benefits:

The risk of frauds by human errors is lowered. Lowers work pressure in the store. Improves customer service with efficient and more personalized communication.

10.2. CustomersCustomers will need to acclimate to this technology. However, the level of reception will vary from customer to customer and it is essential to analyse and provide the precise ways in letting the consumers to adapt to this technology. The main idea is to make the customer realise the advantages of BT in their shopping experience.10.2.1. Tangible:

Offers and discounts: Customers can receive real-time personalized and relevant discounts and offers from their Beacon enabled retailers. This technology will be very helpful for the customers during black Friday week, Christmas holidays by receiving notifications on discounts, products in stock, products left, new products and their prices. Reduced Waiting Time and Queuing- The technology enables the customers to make online shopping and pick it up from the store without delay. Relevant Information in Real-Time- The customers can receive relevant information on shopping. Like which shoes would match up with the dress the customer is currently trying on.

10.2.2. Intangible More relaxed, enriched and superior shopping experience. Less hassle selecting relevant products. Make payment easy without queueing.

10.3. Shareholders:BT is a revolution in fashion retail industry; proving the business with large customer base, massive profits and superior brand value.10.3.1. Tangible

Expand business growth Huge profits Increase market share

10.3.2. Intangible Better brand image and brand value Better reputation

11. RecommendationFor Beacon technology to expand in next 5 years, the retailers must implement the following:1. The retailers must identify the various types of customers and adapt the BT based on their requirements, the level of reception will differ and not all consumers will be willing to use this technology for accessing money because of security issues. So the retailers must discover a right balance in providing the services.2. The staffs must be educated about using this beacon technology through training and video links. This will help the staff to use the technology easily without any hesitation.

3. The retailers will need to educate the customers regarding the benefits of using this technology, the offers and discounts and demonstrate the exclusive personalised benefits.4. The retailers should integrate the technology with the 3rd party apps such as PayPal which helps them to ensure customers a secure mode of payment.5. Incentivising customers on use of this technology can help retailers to capture the market using BT, offering special discounts and adds on sales on using BT. 12. References1. Steven Skinner. (2014). Beacon technology offers plenty of opportunities for retailers. Available: http://www.theguardian.com/media-network/media-network-blog/2014/sep/04/beacon-technology-house-of-fraser-waitrose. Last accessed 2nd jan 20152. Cooper Smith. (2015). How beacons — small, low-cost gadgets — will influence billions in US retail sales. Available: http://www.techinsider.io/beacons-will-impact-billions-in-retail-sales-2015-2. Last accessed 2nd jan 2015.3. DeLone, W. H., and McLean, E. R. (2003) The DeLone and McLean Model of Information Systems Success: A Ten-Year Update. Journal of MIS. 4. Grant.k.(2009).Strategic Information Systems Management.Andover:Andover:Cengage Learning

13. Appendix

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