Macy’s Tests Shopkick’s ShopBeacon at New York, San Francisco Stores

By Claire Swedberg

The Bluetooth tags enable the retailer to share promotional data about its merchandise with consumers who have downloaded and opted in to the Shopkick app.

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Macy’s is the first retailer to launch a limited pilot of an indoor positioning system known as shopBeacon, from Shopkick, a shopping mobile application developer whose Bluetooth low energy (BLE) ID tags gained a boost in September with the release of the BLE-compatible Apple iOS 7 operating system (see Companies Deliver New Apps for Bluetooth Beacons). BLE technology (which Apple calls iBeacon) transmits data via a Bluetooth connection to BLE-compatible devices, such as phones and tablets. The retailer is currently testing the technology within several departments at two of its stores, to send promotional information to participating shoppers’ mobile phones once the phone receives a transmission from beacons installed at one of the store locations.

More than 6 million consumers in the United States already utilize the app to receive promotions from participating stores via GPS technology in their smartphone, which identifies when a shopper is in close proximity to that business.

The Shopkick phone app

In fact, Macy’s has been working with Shopkick since the company’s July 2010 launch, to trial the GPS-based system that would bring location-relevant data to consumers via their mobile phones. Shopkick was established to develop the GPS-based app—which the company’s founders dubbed a “shopkick signal”—that verifies when a user is in-store via its longitude and latitude measurements, and then provides a “kick” to that person in the form of a promotional offer related to that store.

“We knew that an app that relies solely on GPS would not suffice as a shopping application,” says Cyriac Roeding, Shopkick’s CEO and cofounder. Most cell phones’ GPS measurements have what he describes as an error radius of as much as 500 yards, so pinpointing an individual’s location based on his or her phone’s GPS data was not possible. Instead, the company wanted a user’s app to begin offering “kicks” as soon as that individual reached a specific location, such as the store’s entrance.

Shopkick’s Cyriac Roeding

“Given our focus on creating the most amazing presence technologies possible,” Roeding says, “we started working on a BLE-iBeacon-compatible solution a year ago.” Shopkick already anticipated the inclusion of iBeacon technology in Apple’s new iPhone 5, and had determined that BLE’s relatively long read range—10 to 50 meters (33 to 164 feet)—made it more suitable than Near Field Communication (NFC) technology, which has a read range of only a few centimeters and is supported by Android smartphones and tablets, but not devices manufactured by Apple.

“We bet on this technology, not NFC, and built out a full retailer and consumer solution,” Roeding says, that includes software on a hosted server, a phone app and software to be used onsite by the store, “all working together securely.” The company also provides battery-powered shopBeacons, each of which function as an active RFID tag, emitting a 2.4 GHz signal encoded with a unique identifier to BLE-enabled smartphones and tablets within range. The app is available for download at the iTunes and Googleplay sites.

The shopBeacon system also includes an RF transmitter, known as the “Shopkick Signal,” that is installed at a store’s entrance or another key location and sends a user’s smartphone its first “wakeup” transmission, triggering the app to activate. A message is then sent to the phone, reminding the user to opt into the Shopkick service. The system does not operate unless a phone user opts in, so even if a shopper has downloaded an app, that user will still be asked to opt in each time his or her phone is detected, before that individual begins receiving data.

Once the opt-in has occurred, users can begin receiving rewards or promotional information based on their locations within the store, such as in a particular department.

The Shopkick Signal transmitter (top) and a battery-powered ShopBeacon ID tag

From that point forward, as a shopper moves around a store, the iBeacon or BLE technology built into his or her phone identifies when that phone has come within range of a beacon device (by receiving a transmission). Customers can also be invited to “like” a specific product, enabling them to receive promotional details specific to similar items. In that way, Roeding explains, consumers can be rewarded for browsing and buying specific goods.

The technology can also provide data to retailers indicating the number of people who walk through a specific area, based on the quantity of BLE tag transmissions received by the phones. That information can help stores gain a better view into the extent to which the Shopkick solution is influencing where customers go. For example, if shoppers receive details about shoes upon entering the store, the system can identify how many of those individuals then actually proceed to the shoe department.

Macy’s began working with Shopkick as it developed the shopBeacon technology, and agreed to trial the solution at two of its stores: Macy’s Herald Square in New York City, and Union Square in San Francisco. The trial, which began last month, consists of numerous beacons installed within specific departments. According to Shopkick, the shopBeacon technology is being tested by only select group of users, while the general public continues to use the GPS-based version of the app. Macy’s declined to provide details regarding the pilot, or about its future plans for the technology, for this story.

The shopBeacon solution works for those carrying iPhones with BLE capability, or Android phones (version 4.3 or later), which also employ BLE technology. This, Roeding acknowledges, is currently a small group of mobile phone users. “But since Americans exchange their cellphones, on average, every 18 months,” he adds, “we expect 75 percent of smartphone users in the U.S. to have BLE 18 months from now.”

Shopkick already has 15 retail partners, including Target, Best Buy, Old Navy, American Eagle, Crate & Barrel, JCPenney, and Sports Authority, the company reports, as well as the owners of more than 150 product brands, including Sony, Kraft, Procter & Gamble, Mondelez, Oreo and Ritz. Some of these companies, he says, are currently piloting or preparing to trial the shopBeacon solution.