December 13, 2009...11:10 pm

Will Mobile Phones Change Retail Forever?

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There was a lot of passionate response to the post a few weeks ago “Will Mobile Phones Replace In-Store Retail Salespeople”.  Even more reason that these three announcements this week caught my eye:

  • The Aberdeen Group published a report  that stated in 2008, the total of digital signage market revenue stood at $766 million and is expected to reach $2.2 billion by 2014, growing at a healthy CAGR of 20%.
  • The London Daily Mirror reported   according to unnamed sources that Nokia is planning to begin rolling out embedded NFC (near field communications) kits into its entire line of Symbian phones beginning Q3, 2010.  The Finnish giant already has NFC in selected handsets, such as the 6216 Classic.
  • Malaysian manufacturer Fonelabs  will produce two million low cost (under $100) NFC enabled phones in 2010 

What do these three items have to do with retail?  First, just as a refresher, Near Field Communication (NFC)  is “a short-range high frequency wireless communication technology which enables the exchange of data between devices over about a 10 centimeter (around 4 inches) distance.”  In other words, if you have an NFC enabled phone and opt-in, your mobile phone will be able to communicate with another proximate electronic device automatically. 

The types of applications for NFC on mobile are numerous:

  • Electronic payments – swipe your phone and make a payment without a credit card.  NFC technology is already being used in Japan in more than 30,000 stores. Users can place $50 amounts, for example, into their smart phones to make payments or even use them in smart vending machines.
  • Mobile ticketing on public transportation – swipe your phone on readers placed in buses, airlines, and trains
  • Electronic keys – swipe your phone and open hotel doors or your house door
  • Smart posters – use your phone to read RFID tags on billboards and other signs to receive additional information and to let the “billboard” know you are there

Smart posters is the one that I find particularly intriguing. 

Let’s imagine for a second, that you walk into your favorite bookstore where you have purchased many titless in the past.  With your permission, as you walk past an internal electronic billboard, you allow the billboard to communicate with your phone.  Instantly, the billboard scans your past purchases and recommends new books to you that you might enjoy reading.  Or even better, a scanner reads your phone as you walk in and sends you an SMS with a customized offer to you for a discount on items you purchase that day as an opted-in frequent customer.

It’s kind of like going into your favorite pub where everyone knows your name.  Of course, downsides such as privacy cannot be underestimated (but, that is why it has to be on an opt-in basis). Imagine, though, how much more effective it would be to having a customized sales experience.  In clothing stores, sales people can know what you like, know your size, know if it is in-stock, and immediately bring you customized selection of new items.  Out of stock items could be posted to your customer ID and custom SMS messages could be automatically sent to let you know when the item is back in-store.

For the retailer, NFC gives unprecedented real time monitoring of consumer behavior in-store that could lead to better consumer in-store experiences – more accurate preference tracking of target audiences for better merchandise selection, display and pricing, and an ideal feedback channel for more detailed research.  Individually, salespeople could be more effective in providing consumers with more meaningful in-store experiences if they are familiar with their past interactions.

Will mobile phones replace in-store retail salespeople?  The consensus opinion from that last post was no, but it surely will change the playing field in a substantial way. The impending mobile NFC introductions are yet another way that the retail experience of the 21st century will never be the same.

Mobile Mandala will resume publishing on January 3, 2010.  Happy Holidays and Happy New Year.

7 Comments

  • I agree– smart posters is certainly the most interesting and useful implementation for this kind of technology.

    What Google has done recently, with its QR codes for local businesses, seems like a poor execution of (ideally) seamless mobile/real-world interaction–a commenter on one topical article had written, “It’s like staring at Big Ben and asking for the time.”

    I wrote a reaction to Google, and my own generative vision for something like you’ve described here (for smart posters)–with a little more of a social/two-way element mixed in, if you’re interested in checking that out: http://bit.ly/7U65Fg

    Nice post!
    -k

  • What’s just as likely to happen is that enterprise systems that track inventory, SKU data, product arrival dates, and the like will be extended to smartphones. Store personnel will be able to do lookups, find local stores that have items in stock, arrange direct-to-customer shipments, place orders, and so on. That same extension of existing back-end systems to smartphones can give managers details on overall, category, and product-specific sales by date, locale, time period, etc. — replacing desktops and laptops for most enterprise tasks (in the case of managers) and turning every member of the in-store staff into a mobile Customer Service counter.

    Retailers like Helzberg Diamonds are already connecting their regional sales managers to enterprise data through their smartphones, and Tesco is testing a mobile system that puts inventory and stocking data on the smartphones of its store personnel. The Helzberg managers can know, when they walk into any store, every conceivable KPI from sales based on price differentials to how many sales were paid for with cash, major credit card, store credit card, and debit card.

    With more information available on the sales floor, in the stock room, at suppliers, and elsewhere — all delivered through smartphones — retail employees are likely to be able to answer questions, solve problems, and facilitate sales in ways that etailers can’t (at the moment) readily replicate.

  • I do agree– smart posters is certainly the most interesting and useful implementation for this kind of technology.Beauty is that you may forget your Wallet but you won’t your phone which will help you to have ease to do transaction.

    I wrote an article in My blog. Check it

    http://auneasad.wordpress.com/2009/12/14/m-commerce-and-its-future/.

  • I agree that transactional uses of the new mobile communicators abilities will continue to grow, privacy issues not withstanding. I bet as the technology evolves, and with it the public’s savvy of protecting their privacy, we may see alternate devices deployed specifically for this wireless purpose.

  • You have several well selected articles that do offer trends for the future. Start with iTune and iPhone applications being purchased via phone- add Fandango and other purchase opportunities- then mix those who use the really slick BofA application for bill pay and I would say retail has already changed and will spread faster than the ATM card.

  • David H Stannard

    Mark,

    Yes and in ways that we don’t yet understand or can predict. I believe that payment, advertising, massively customized marketing, and even the shopping process are being changed and will continue to change. The mobile web usage is expected to surpass the desktop web usage. That alone will impact retail. And the usage of mobile / smart platforms with a host of existing and emerging sensors will enable this. IMO

    In the past, people went to stores to get information. Then they searched information using desktop web access before purchasing. At a recent 2009.12.02 SAO (Software Association of Oregon) conference, a very interesting example of evolution was presented. A clothing company called Moosejaw apparently uses proximity and loaner iPod Touches to eliminate the gap between the eShopping and the in-store shopping experience with improved customer satisfaction and increased revenues. The panel provided many other interesting comments and data which were not published, but my belief is that the mobile aspect is definitely causing a re-examination of how classical retail business is done and whether separation between e-Commerce and bricks & mortar business will remain.

    In Japan, this change started years ago when people started making purchases from vending machines via their cell phones. (Before RFID and NFC technologies.) I haven’t been back to Japan since 2002, other information suggests that not only did they advance the USA with permanent game changing technology such as MMS, but they continue to enhance the customer experience via mobile.

    In Canada, you could check-in at the airport with a Blackberry device using bar code on the screeen as the USA rolled out eTickets on paper. Made me jealous.

    I attended an interesting panel session at this past Monday’s (2009.12.14) MoMoSV in San Jose. To hear the panel talk of the size of the SMS market and to hear that other parts of the planet are pushing the boundaries of usage models impressed upon me how broad and diverse the changes could be.

    So based upon a limited sample size, discussions with people as I travel, the energy within the development community and the experiments by companies trying to find ways to benefit from new “frictionless shopping” (a term used by Steven Romero of Critical Path Software used in another SAO conference today – 2009.12.17), I believe that the answer is ‘yes’.

    Exciting times ahead

    Thanks for the article and the chance to comment,

    David

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