January 25, 2017, 5:48 PM EST
The Essential Guide to Technology in Retail
Developments and insights in retail and payments technologyDOWNLOAD
limited to videos, geolocation, mobile apps and mobile wallets. It is no longer enough to track
the developments of current tech trends. Retailers must be proactive—developing action plans and strategies to attract and retain customers using any and all available tools
Table of Contents
Today’s retailer must explore a slew of new technology related tools. They include but are not limited to videos, geolocation, mobile apps and mobile wallets. It is no longer enough to track the developments of current tech trends. Retailers must be proactive—developing action plans and strategies to attract and retain customers using any and all available tools. Today, 67% of smartphone users say they have used their phones to perform some kind of shopping task.2 Ultimately, retail technology is no longer an interesting trend to watch. It is now an essential tool to employ.
The next several pages will highlight the technology revolution that has taken place in the past 30 years, and show how it has completely transformed the retail shopping experience. The information is split into two areas of focus—Retail Technology and Payments Technology.
Section A: Retail Technology
There has been a shift in the way customers make purchases. Initially, the shift was from in-store to e-commerce and then to mobile commerce. Today, the shift is to IoT, where purchases happen automatically using a device, on demand (e.g., the Amazon Dash Button), or made verbally by interacting with the computer in a very simple, natural way through conversational commerce. The benefit for customers is increased convenience and access to more information. IoT technology enables consumers to buy whenever they want—in the comfort of their home, or whenever their busy schedule allows it.
The payoff for merchants is more data collected in more places, providing rich insights into consumer behavior, market trends, buying patterns and customer engagement. There is an opportunity to harness the current shift in buying patterns, technological upgrades and data footprints, which will allow for personalized interactions with customers. IoT helps retailers add new revenue streams via new products and services. It also leads to increased use of technology, which can improve efficiency while reducing operational costs.
Video streaming: Consumers use videos to decide where to shop and what to buy. Online video streaming has taken off, particularly among millennials. Using video streaming in a sales context, retailers can answer consumers’ online questions, explain a product’s chief benefits and/or demonstrate how to use it.
Virtual Reality: Imagine feeling like you’re in an ATV with fast terrain and mud flying everywhere, all as part of the buying experience. A benefit of VR is that it enables customers to experience products in a way they couldn’t before. 85% of customers say they are more likely to make a purchase after watching a product video.4
Retail applications such as those for video can help enhance the customer experience and increase sales.
Beacons give retailers the ability to track where a particular customer is, how long they’ve been there, and where they have been. They can track if a customer is in the store, which departments they have been in, and for how long. Retailers now have the ability to send a custom offer or helpful information to a specific phone, targeting the shopper’s store location, preferred purchases and purchase history.
Beacons are also a great way to gather information on customer behavior in the store. They can allow a merchant to heat-map their stores to gather information on where customers spend most of their time, which departments they visit, and in what order. This provides deep insights into customer behavior and enables on-site offers through mobile devices, customized to shoppers’ preferences and habits. For example, Apple stores use beacons for hyper-located ads, as well as to facilitate checkout. A beacon converts the Apple mobile app to “in-store mode,” enabling customers to purchase products directly from their device without ever seeing an associate or waiting in line at the register.
Biometrics technology is in various stages of adoption in the retail environment. Retailers’ apps can use biometrics to enable seamless checkout. For instance, if someone is in a store and wishes to purchase an item, they can open the retailer app and using fingerprint authentication, immediately make their purchase. As detailed in the following Payments section, the technology is being widely embraced by Apple, Android and Samsung smartphone mobile wallet users. Adopting the technology for physical, POS in-store purchases, however, is in its early stages.
Section B: Payment Technology
Technology in the payments field has gone through a huge transformation. Until recently, payment methods were virtually unchanged for 30 years and included cash, check, credit card and debit card. The advent of EMV and mobile wallets heralded a shift in payment technology not seen since credit cards were first introduced in the United States. The following pages outline the types of new payment technologies and their implications to retailers and consumers.
Authentication has always existed. In the past, banks had local branches and bank associates knew their customers personally, so it was very difficult to steal a customer’s identity. With the shift to electronic payments and cloud-based solutions, it has become increasingly important to authenticate and protect against hackers. Banks require increased fraud-prevention tools to keep up with the ongoing threat to their security and their brand. Authentication tools and their various forms continue to evolve today, ranging from EMV Pin to biometrics.
The advent of new payment vehicles has launched a world of new POS capabilities that enable better use for both plastic-based and mobile solutions. Today, companies of all sizes invest in these new POS solutions. Current technology provides an opportunity to shift from terminal, POS card-based solutions, to biometrics, chip-enabled and mobile-based solutions.
Some companies providing this new, innovative POS-based technology include POYNT, Square and Clover. Below is a snapshot of each.
Another key element of the current POS technology initiative includes mobile payments. According to the same Forrester study, 68% of retailers said they planned to implement at least one digital payment feature in the coming year. Additionally, two growing populations—small business owners and millennials—are on the lookout for new transaction methods, including leveraging their digital devices to create a virtual cash register and POS terminal.
For a generation that’s grown up with digital technology and that views digital purchasing as the norm, the mobile wallet is a natural evolution. Similar to keeping calendars and loyalty cards on their mobile devices, once consumers understand and appreciate the convenience and enhanced security of the technology, adoption will be rapid and irreversible.
A recent Forrester Research study found that 63% of retailers believe consumers will use mobile/digital payments once more features become available—including elements such as coupons, offers and loyalty programs.8 In addition, the use of mobile wallets as marketing and advertising vehicles is increasing. Many brands now provide consumers with links that download customized offers to the Apple or Android wallet app.