iBeacon Market to Break 60 Million Units by 2019

A 60 million unit iBeacon market
New research released by ABI Research estimates that over the next 5 years, the iBeacon hardware market will grow to approximately 60 million units.

While the technology has caught dramatic attention in the retail space, the report identifies a larger opportunity, from a hardware perspective, in other sectors. These areas are Commercial/Enterprise, Connected Home, and Personal Asset Tracking.

Commercial & Enterprise iBeacon Market
Commercial/Enterprise applications have an enormous untapped potential. We’ve seen a lot of consumer-facing spins on iBeacon deployment, with smaller attention paid to less glamorous applications like inventory management, logistics, and manufacturing.

Think about the huge amount of office space square footage in the United States alone. Imagine your work-space powering up as you walk into the building, or manufacturing facilities with “smart” assembly lines. The possibilities really are limitless. Retail isn’t the only environment that might benefit from contextually aware messaging and interaction – wherever objects or people move within the physical world, there’s opportunity to add iBeacon functionality and location-awareness.

Smart Home iBeacon Market
Apple and Google have both indicated interest in the “Smart Home” of the future, and it hasn’t been subtle. With Google’s acquisition of Nest, which develops smart thermostats and smoke detectors, and Apple’s announcement of HomeKit, which aims to be the hub of the “Smart Home”, it looks like industry titans will be waging war to control the home of the future. It makes sense that the consumer home market is an attractive one, as almost any consumer appliance is primed for disruption by one of its “smart” cousins. It’s already happening with thermostats, door locks, lights, and garage doors.

Growth in Mobile Ad Spend. Source: eMarketer

What about Retail?
It makes sense that retail might be seen as having a smaller piece of the “iBeacon pie”, especially when that pie is measured in units. Retail locations are relatively small in square footage, and don’t need a tremendous amount of units for ample coverage.

The retail opportunity really sticks out, though, when thinking about the proximity-based technology market size as a whole, in dollars. Advertising dollars have begun chasing consumers as they rapidly move to mobile. This year, mobile ad spend is set to reach $31 billion, growth of almost 50% from 2013. By 2016, eMarketer predicts the market for mobile advertising to reach just under $60 billion. Geo-local technologies, iBeacon among them, are in prime position to capture a large share of this spend.

The hardware market will grow, but how will it evolve?
Another thing to think about is the rapid commoditization of the hardware market. Although iBeacon’s market size in units is projected to grow to 60 million in 2019, this translates to less than $500 million in revenue. As hardware unit prices plummet and differentiation amongst competitors becomes increasingly more difficult, hardware companies will have to find a way to expand their offerings into high profit margin services. We’re already in the midst of this transition, and it will be interesting who is still around in the next 5 years to take advantage of the 60 million unit market.

Just Desire

Rethinking retail: why brands are embracing the rise of the concept store

As consumer shopping habits rapidly evolve, retailers are looking to innovate beyond their four walls.

The rise of online shopping has sounded the death knell for many traditional bricks-and-mortar retailers. But innovative brands are reimagining the physical store, turning to magazines and museums for inspiration and creating spaces where the virtual and physical worlds collide.

A new wave of thinking about bricks-and-mortar retail has given rise to a surge in brands experimenting with concept stores. Apple and Burberry have been leading the pack when it comes to creating experience-focused retail for many years. But a wider range of brands is starting to experiment with concepts, and no longer just luxury ones.

General Electric, for example, is currently working with New York concept store Story as part of an exercise to promote one of its products.

Story is built on the concept of treating retail as media, curating its merchandise every month, like a magazine would with content, and getting a brand to sponsor it. This month’s theme is “cool” and the products on sale in the store – clothes, jewellery and gadgets – reflect that.

GE, which has partnered with invention platform Quirky for the curation, does not take a revenue share from product sales, but is using the store as a platform to promote a smartphone-controlled air conditioning unit. “A product tells a much bigger story than just a transaction and in Story every item has a long-tail narrative attached to it. That is really what we want to do. Not to enhance every transaction and sell more, but to tell the story behind our work through product, commerce and experience,” explains Sam Olstein, global director of innovation at GE.

Nestlé, on the other hand, aims to combine branding with direct-to-customer sales through its KitKat concept store in Japan.

The Chocolatory, located in a Tokyo shopping mall, sells exclusive and unique products, such as Sublime Bitter and Special Sakura Green Tea. Stewart Dryburgh, Nestlé’s global marketing head for KitKat , explains that creating unique products taps into the Japanese custom of buying thoughtful gifts for people, helping KitKat build an emotional connection with the consumer and reinforcing positive sentiment around the brand.

The store has attracted a lot of social media attention and requests for versions in other markets. “We did not open the store on a whim, but it is still quite early in evolution and we are doing a lot of testing and learning to understand how best we leverage it in other markets,” says Dryburgh.

While e-commerce is rapidly growing, particularly on mobile – eMarketer forecasts worldwide business-to-consumer e-commerce sales will increase by 20.1% this year to reach $1.5tn – not all commerce will shift online. The clicks-versus-bricks debate is wearing thin as more retailers embrace an omni-channel retail. And with eBay and Amazon having both experimented with physical retail concepts, and Google also reportedly planning a museum-style concept store in New York, even the most successful digital brands recognise the importance of physical retail.

People still love to shop as a social occasion, family day out or even holiday, but there is a crucial distinction between the act of shopping and where a purchase is made, says David Womack, executive creative director at R/GA. “Retail serves a number of complex functions beyond moving merchandise. The retail experience is an incredible part of the consideration process, it is just where they do transactions that will shift,” he says.

A concept store that leverages technology effectively can close the loop between digital and physical, overcoming the problem of attributing online marketing to offline sales. “As we are able to have single view of the customer from digital to retail, this will change the nature of the [physical] retail experience. Stores will become more like galleries,” Womack adds.

Tesco has been exploring omni-channel retail to power a new kind of shopping experience. In South Korea, Tesco created a touchscreen storefront in a subway, enabling commuters to buy groceries while waiting for their train.

“Our focus is on helping our customers shop whenever, however and wherever they chose to,” says Paul Wilkinson, head of technology research at Tesco Labs.

“The proliferation of channels, devices and services means that people can shop in a huge variety of ways and they expect a seamlessly connected experience. We are building our business around that,” he says.

One of the key challenges retailers face with concept stores is ensuring they add value. They are a big investment and if the technology falters, or the space has no buzz, it could create negative brand perception.

Logistics will also prove to be another battlefield. With delivery times speeding up – Amazon potentially will deploy delivery drones – bricks-and-mortar retailers will no longer be able to depend on instant gratification to give them the edge over their online competitors.

For Rachel Shechtman, founder of Story, the future of retail lies in experience, community, differentiation and mass customisation.

“We are barely scratching the surface, and while bricks-and-mortar is often referred to as dying, I think it will only give way to a new frontier with endless and untapped potential, light years beyond looking at sales per square foot,” she says.

Source: The Guardian