May 6, 2014, 4:28 PM

New York City drugstore pilots tracking via Apple’s iBeacon

Duane Reade, a chain of drugstores owned by Walgreens, rolls out an in-store tracking program to 10 Manhattan locations with the release of its new iPhone app. The app uses Bluetooth-powered beacons to pinpoint customers and present location-based offers.

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Think about these scenarios for a moment. A shopper is standing in front of a nail polish display, and her smartphone notifies her of nail polish reviews. She walks into her neighborhood drugstore, and her smartphone notifies her of a coupon for hair gel, which she has bought several times.

Such scenarios are made possible by tracking technology, which can literally pinpoint shoppers’ positions in stores using their smartphones. The iBeacon, Apple’s version of this technology released last year with iOS 7, employs hardware beacon transmitters that use low-energy Bluetooth wireless networking to communicate with smartphones. That enables a retailer to know that a customer who previously purchased nail polish is standing directly in front of a nail polish display.

This is valuable information for retailers trying to collect data on consumers and present them appealing offers while they’re present in bricks-and-mortar stores. The latest retailer to employ iBeacon is Duane Reade, owned by Walgreen Co.

Walgreen Co. announced this week that 10 of its Duane Reade stores in Manhattan will pilot Apple’s iBeacon technology in the retailer’s new iPhone app. The app will include coupon offers based on what the consumer has purchased in the past and product reviews based on where in the store the consumer is.

“Mobile interaction is at the core of our social media success as mobile and social are intrinsically linked; the addition of these new coupon and customer review features, as well as the integration of iBeacon technology, will continue to fuel our digital customer experience strategy, as we strive to push forward our ‘New York Living Made Easy’ mantra,” says Calvin Peters, digital communications manager for Walgreens.

Duane Reade operates more than 240 stores in the New York City area, and will decide whether to expand the use of the iBeacon technology based on the results of this test. Walgreen Co. is No. 43 on Internet Retailer’s Top 500 Guide and No. 31 in the 2014 Internet Retailer Mobile 500.

Retailers are pushing ahead with such tracking technology despite a recent poll showing 77% of U.S. adults with smartphones do not want retailers tracking their smartphones, according to customer feedback technology provider OpinionLab. What’s more, 43% of consumers say they are less likely to shop at a store that tracks mobile devices.

But that same survey found 61% of consumers would participate if offered price discounts and 53% would participate if offered free products. In its initial rollout, Duane Reade is offering consumers access to coupons.

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