A diverse panel of industry executives gathered to discuss the short- and long-term potential for mobile retailing at the NRFtech Annual CIO Summit in La Jolla, California this week. Sahir Anand, Research Director, Retail Practice from The Aberdeen Group led the discussion.
The four panel members included Delaney Bellinger, CIO of Yum! Brands, Richard Crone, Principal of Crone Consulting, Jorge Fernandes, CEO of Mobibucks and Richard Mader, Executive Director of the Association for Retail Technology Standards (ARTS). The group presented to approximately 100 of the industry’s top CIOs at the invitation-only event presented by the National Retail Federation (NRF).
Among the topics debated during the discussion were business challenges, strategies for deployment, technology obstacles, industry standards and timeline for widespread implementation. While panel members took different positions on a number of issues, most agreed that the widespread use of mobile technology is inevitable and will likely become part of everyday business in U.S. retail within the next 2-5 years.
“We are early in the process of implementing mobile technology,” says Bellinger. “Customer acceptance and adoption will be the biggest obstacles but I expect to see widespread adoption within three years.” Currently Yum! is beta-testing text ordering at its Pizza Hut restaurant chain.
Three Waves of Opportunity
When retailers begin to look at the potential for mobile technology, Crone suggests they focus on three primary business opportunities:
- Self-Service- Mobile technology can enhance retailers’ ability to provide self-service purchasing for consumers.
- Payment Optimization- Retailers will benefit by facilitating mobile use of private label credit cards, pre-paid debit cards, and/or ACH tied to a loyalty program.
- Marketing- By offering opt-in mobile delivery of promotions and product and service information, retailers will build a more effective database of loyal customers.
Teens are Best Short-Term Target
To date, some of the most effective mobile promotions have been targeted at a young high-school- and college-age demographic. “Our single most effective promotion was aimed at high school students,” notes Fernandes. Mobibucks offered the teens the opportunity to “Text yourself a $2 coupon” for a local business, a promotion that received an immediate response from the majority of target consumers. Then the promotion received a second lift when the students received the offer for an additional $2 coupon if they sent the promotion offer to five friends.
“If your customer base is the younger generation, then your time is today for adopting mobile solutions,” says Fernandes.
Getting Started with Mobile Technology
Retailers looking to use mobile technology for marketing should start by “dissecting your customer base to build an enrollment base,” says Crone. Similar to email promotion, opt-in programs are most widely accepted by consumers who often reject offers from retailers who send too many unsolicited messages.
One of the first steps retailers should take is to make sure mobile phone numbers are collected in customer profile forms, says Crone. Additionally, retailers should activate an automatic number identification (ANI) system to help collect and store mobile numbers. “And don’t forget to collect numbers at the POS,” adds Fernandes.
Once an enrollment strategy is in place, retailers must determine a promotion plan. Both voice and text promotions show promise, according to Crone. “Voice can be an effective combined channel enabler,” he explains. Because at least 40% of consumers who walk into a store are already engaged with their cell phones, they are likely to respond to signage that asks them to dial a certain number to hear today’s specials.
Additionally, because response to text messages is exponentially faster than response to emails, mobile promotion shows great potential. Crone notes that the average opening time for a text message is 1-5 minutes versus 1-2 days for an email; and the average response time is five minutes for a text compared to 24 hours for an email.
Mobile Payment Faces Obstacles
A number of industry groups are working to develop an industry-wide payment strategy, says Mader, but costs, data security and customer acceptance are hurdles that may take time to overcome.
Currently mobile payment is in place on a small scale, mostly through mobile carriers, who offer services like ring tones to their customers. But the carriers are possibly the biggest beneficiaries of this service, since they typically take 50% of the price, says Crone.
While most industry experts would agree that establishing industry standards for mobile payment is essential, it may not be imminent. “There are groups working on establishing global standards,” says Mader, but it could be a few years or more before the global retail eco-system agrees on the terms.
In the meantime, Mader suggests, start with contactless payment as a means to increasing consumers’ comfort level with mobile. “While contactless payment is not mobile payment, it is a good first step.”