Will bea­cons be the next big re­tail strat­egy?

Lotte and SK lead the way in send­ing sales info based on lo­ca­tion

JoongAng Daily - - Front Page - BY PARK EUN-JEE ej­park@joongang.co.kr

With the Korean pop­u­la­tion’s affin­ity for new tech­nol­ogy, the coun­try is of­ten con­sid­ered a rich test­ing ground for un­der­stand­ing how tech de­vel­op­ments im­pacts peo­ples’ daily lives. And the lat­est tech­nol­ogy Korea is ex­plor­ing are bea­cons.

The coun­try’s lead­ing con­glom­er­ates have re­cently jumped on the bea­con band­wagon, mulling how to de­ploy them in align­ment with the busi­nesses they of­fer.

Bea­cons are a Blue­tooth low en­ergy (BLE) tech­nol­ogy de­signed to lo­cate a cus­tomer in a store by de­tect­ing sig­nals from mo­bile de­vices. The range of ap­pli­ca­tion is broad, but it is most com­monly used to send real-time mes­sages about spe­cials, coupons and loy­alty pro­grams to shop­pers.

At the fore­front of the bea­con ex­per­i­ment are Lotte and SK groups. SK Planet, an SK af­fil­i­ate that spe­cial­izes in mo­bile so­lu­tions, in­te­grated the Blue­tooth tech­nol­ogy into its mo­bile shop­ping ap­pli­ca­tion Syrup in June.

When the app user en­ters a part­ner shop of SK, bea­cons will send the shop­per dis­count coupons for that store.

SK Planet has part­nered with more than 200 stores in Myeong-dong, cen­tral Seoul and Sin­chon in western Seoul, in­clud­ing ABC Mart, Hollys Cof­fee and A Two­some Place.

SK wants to broaden the ap­peal of bea­cons by con­nect­ing its busi­nesses with the tech­nol­ogy. For ex­am­ple, OK Cash­bag, an SK Planet loy­alty pro­gram in which mem­bers can col­lect and re­deem points for re­wards, will use bea­cons to is­sue more points to mem­bers’ mo­bile de­vices when they visit stores that have joined with SK.

Bea­cons are linked with a larger theme in the re­tail sec­tor: a seam­less con­sumer ex­pe­ri­ence, re­ferred to as omni-chan­nel re­tail­ing, which stores want to achieve by elim­i­nat­ing the di­vi­sion be­tween on­line shop­ping malls and brick and mor­tar shops.

“Bea­cons will al­low Syrup to of­fer a seam­less shop­ping ex­pe­ri­ence,” said Cho Young-hoon, a man­ager at SK Planet’s com­merce business di­vi­sion. “We plan to uti­lize the Wi-Fi ser­vice to more ac­cu­rately lo­cate cus­tomers and of­fer more di­verse ser­vices.”

A seam­less re­tail strat­egy is ex­actly what Lotte Group, the coun­try’s No. 1 re­tail player, is look­ing for. Lotte Mart be­came the first su­per­mar­ket to adopt bea­cons last month at its branch in Lotte World Mall in Jam­sil, south­ern Seoul.

When con­sumers down­load the Lotte Mart app, they will re­ceive spe­cials and dis­count coupons when they en­ter cer­tain sec­tions of the store or ap­proach shelves con­tain­ing sale items.

The bea­con ser­vice at the mart, how­ever, is only able to track the “gen­eral” vicin­ity.

When a re­porter vis­ited the dis­count chain to test the bea­con-en­abled app last week, coupons for prod­ucts that were three to four aisles away were sent, rather than in­for­ma­tion only for the items di­rectly in front of the shop­per.

But this bea­con is­sue is not unique to Lotte Mart. The sys­tem can’t tell ex­actly how far the de­vice is from a cer­tain prod­uct, and its ac­cu­racy is low — it works best when the de­vice is within a few me­ters of the sale item.

Lotte Mart said that to more pre­cisely pin­point a cus­tomer’s lo­ca­tion it would have to col­lect lo­ca­tion data.

“Now, it is a one-way sig­nal, so we don’t store any con­sumer data,” said Park Jae-han, a se­nior man­ager at Lotte Mart’s E-Business di­vi­sion.

“But if we are go­ing to of­fer a more ac­cu­rate ser­vice, col­lect­ing spe­cific lo­ca­tion data will be in­evitable,” he added. “But since there were se­cu­rity is­sues re­gard­ing cus­tomers’ data be­fore, the group is cau­tious in ad­vanc­ing into more so­phis­ti­cated lo­ca­tion de­tec­tion.”

The se­cu­rity is­sue was a data leak in which a Korea Credit Bureau em­ployee stole and sold per­sonal in­for­ma­tion be­long­ing to more than 100 mil­lion cus­tomers of three ma­jor credit card com­pa­nies — Lotte, NH and KB cards.

The se­cu­rity breach ap­pears to have made Lotte more con­ser­va­tive about pair­ing bea­cons with its pay­ment ser­vices.

“So far, we don’t have any plan to in­te­grate bea­cons into our pay­ment sys­tem,” Park said.

He added that an av­er­age of 100 peo­ple per day use a dis­count they re­ceived from the bea­con sys­tem.

“The num­ber might seem small. But we are now in the sec­ond week of the trial, so I think we are off to a good start,” he said. “The vast majority of Kore­ans now use smart­phones, es­pe­cially women in their 30s, 40s and even 50s. They make up the largest con­sumer base at dis­count su­per­mar­kets and they are al­ways look­ing for good bar­gains. So, I think there is high po­ten­tial for growth.”

While the use of bea­cons is largely con­fined to re­tail, it has also started to per­me­ate health care and even re­li­gious com­mu­ni­ties.

Do­mes­tic company BC Card is in the trial stage of us­ing bea­cons to serve Chi­nese tourists. The company sends pro­mo­tions and in­for­ma­tion about attractions in Seoul.

At Seoul Na­tional Univer­sity Bun­dang Hos­pi­tal in Gyeonggi, vis­i­tors can turn to the hos­pi­tal’s app when they have trou­ble find­ing a spe­cific di­vi­sion within the hos­pi­tal.

The hos­pi­tals’ app shows a 3-D map, pin­points the vis­i­tor’s lo­ca­tion, and then guides the per­son to their des­ti­na­tion.

Myeong­dong Cathe­dral, the coun­try’s rep­re­sen­ta­tive Catholic church, gives 3-D lo­ca­tion in­for­ma­tion about the build­ing through its bea­con app.

At the en­trance to the church, vis­i­tors’ de­vices will be con­nected to the church’s web­page. As they walk past the con­fes­sional, in­for­ma­tion is sent to the vis­i­tor re­gard­ing time avail­able for con­fes­sions. The app has been used by about 600,000 peo­ple.

“We thought the app and bea­cons could pro­vide timely in­for­ma­tion to be­liev­ers,” said a rep­re­sen­ta­tive of the church.

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