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The Road Ahead

BY Dan Berthiaume

Chain Store Age spoke to industry experts to get a sense of where four strong trends in retail technology — mobile payment, same-day delivery, Internet of Things and social commerce — are heading in 2016. We also offer a sneak peek at the burgeoning trend of visual search.

Mobile Payment: Calm before the Storm

Even though there was a big buzz about mobile payments during 2015, the penetration and adoption of mobile industry expectations. However, according to Ryan Grogman, VP of Boston Retail Partners, there are reasons to believe that mobile payment is still primed to be a disruptive in-store technology in 2016.

“Like any new technology, there is an adoption curve for mobile payments,” Grogman said. “Taking a card out of your wallet and swiping or inserting is an ingrained behavior that does not take a significant amount of incremental time over taking your phone out of your pocket or purse and holding it to a payment terminal.”

Despite the miss in expectations, Grogman said retailers are making significant investments to enhance their payment security.

“Payment security investments include the installation of advanced payment terminals that will inherently support mobile payments,” Grogman said. “Additionally, the sheer number of mobile payment options means that more customers will have access to using their smartphones for payments.”

Grogman concluded that the key to mobile payment truly gaining traction will be to convince customers of the advantages of choosing to use their phones instead of reaching for their payment card.

“The integration of store-based loyalty cards and specific promotions built around the use of mobile payments at checkout will help drive adoption,” Grogman said. “Walmart Pay is a merchant-driven solution, meaning they can incent their customer base by including promotions and benefits specific to their customer base, which should increase adoption.”

Internet of Things: A (Satisfying) Force Awakens

The Internet of Things (IoT), is a fairly broad term referring to “smart” devices, such as appliances, vehicles or consumer products, which directly connect to the Internet. Steve Rowen, managing partner at RSR Research, said IoT is currently at a stage similar to where another potentially disruptive retail technology was earlier in its development.

“In many ways we are reminded of the RFID bubble of the early 2000s,” said Rowen. “Almost every retailer of any size was doing something, but with the exception of Walmart’s supply chain mandate, those projects amounted to little more than pilots.”

However, Rowen said retailer optimism around IoT suggests it will have a quicker, more definitive adoption path than RFID. In addition, he said retailers are most interested in IoT use cases that relate to satisfying consumers, rather than the traditional RFID benefit of moving product.

“It’s somewhat startling to find retailers’ consumer-focused interest in IoT, rather than an inventory or maintenance focus, but not totally unexpected,” Rowen said. “Retailers, especially industry leaders, have been very focused on the customer in the last decade across all aspects of their business.”

And Rowen said retailers that are not industry leaders have their own rationale for seeing IoT as a tool for customer satisfaction.

“Their focus on customer now reflects how little they know, rather than a more extreme focus on the customer in the first place,” stated Rowen. “It is also interesting to note that the largest retailers see IoT as enough of a game-changer that they believe if they don’t invest, they could be left behind,” said Rowen.

Social Commerce: Here and Now

The immediate nature of social commerce, or consumer purchases made directly within social networks, makes it a strong trend for 2016.

“There are a couple of drivers behind the introduction and growing market for social commerce,” said Greg Girard, program director, worldwide omnichannel retail analytics strategies, IDC Retail Insights. “First, there are the twin factors of convenience and context. The two reinforce one another as they play off another driver — immediacy of two sorts, immediacy of purchase and of social expression of one’s persona.”

According to Girard, the addition of social expression to the convenience, context and immediacy already found on e-commerce sites and mobile apps makes social commerce unique. However, the highly personal nature of social expression may also pose some challenges to social commerce adoption.

“A preference for privacy might inhibit the spread of social commerce, both shopper by shopper and by type of purchase for each shopper,” cautioned Girard.

So far, social commerce is mostly occurring on more established social networks, such as Twitter, Pinterest and Instagram. Looking ahead, Girard said millennial-centric social networks like Periscope and Snapchat should also serve as ideal platforms for social commerce.

“Commerce through and complementary to Periscope’s comments and chat features are a natural,” said Girard. “Periscope mashes up venues, content and celebrity, a natural fit for commerce related to events like live TV broadcasts.”

Girard concluded by connecting the growth of social commerce to a broader retail trend.

“More consumers will expect ‘one-click’ commerce and fulfillment in more context from here on out no matter where they are,” said Girard. “With consumers spending more online time in social venues and media, we’re sure that they’ll bring their one-click commerce expectations to these venues.”

Same-day Delivery: It’s a Vertical Thing

Sucharita Mulpuru, senior analyst, Forrester Research, is less bullish on the prospects for same-day delivery in 2016 than many other experts.

“Not all same-day delivery is the same,” stated Mulpuru. “Grocery models that deliver from local stores won’t be massively disruptive.”

According to Mulpuru, food service is another retailer vertical where same-day delivery is an easy fit.

“Restaurant models have greater promise for same-day delivery due to frequency and the fact it’s an incumbent habit,” Mulpuru said. “People are used to ordering takeout delivery.”

However, despite the increasing prevalence of same-day delivery options being offered by retailers of various physical goods, Mulpuru has doubts about its viability in this vertical.

“Perishables are more likely to take off in a meaningful way with click and collect,” said Mulpuru. “But for chain stores, there is not enough volume to make same-day delivery economically viable. Delivery costs an average $7 to $10, and it’s not clear the customer is willing to pay.”

Mulpuru said even Amazon Prime’s highly touted one-hour delivery service is not a meaningful part of its business.

In terms of the rapidly growing ranks of third-party same-day delivery providers, Mulpuru said most of these companies face significant challenges due to scale and demand limitations. However, she cited one exception.

“Uber is in an interesting position,” Mulpuru commented. They can add package delivery for a relatively small incremental cost. They don’t need infrastructure.”

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