How Retailers Can Achieve Mobile Shop-And-Pay Success
Retailers including Macy’s, Kroger’s, Walmart, Target, B.J’s Wholesale, Meijer, and Shoprite are racing to allow theircustomers to use mobile phones in stores to: shop, research products,check stock,and pay. Why the recent rush to install mobile shopping applications? Today’s customers demand convenience. Clearly convenience is an important factor that consumers are willing to pay for; no waiting in checkout lines, no having to find a store associate to learn product information and no uncertainty about the price of the item. To satisfy the consumer demand for convenience, retailers are offering mobile applications featuring“click and collect” order and pickup at a designated area close to the store entrance as well assame day or even 2 hour or less home delivery of on line purchases. However, these convenient methods increase the retailer’s cost of doing business, reducing an already very thin profit margin.
Customers’ mobile phones can create savings and increase sales, through payroll reductions, converting unneeded checkout space to selling space, and reducing the number of bulky and expensive self-checkout devices. These savings will make it possible for retailers to provideincreased customer service by re-assigning some of the cashier payroll savings to the sales-floor.Cornerstone Capital Group concluded that the jobs of as many as 47% of the millions of Americans currently working in retail could be made redundant by automated commerce including mobile shopping.
Thus retailers in all segments, grocery, convenience, specialty, etc. have rushed to implement some form of mobile shop-and-pay. However, the key to success, providing consumer convenience is not being met, as evidenced by; Walmart’s recent announcement that they are discontinuing their roll-out of mobile “scan and go” and Kroger’s eliminating their “scan, bag and go” (saying they are working on a mobile replacement application for roll-out in 2018). Sited as the cause for these failures is the low percentage of consumers using these applications, coupled with an increase in shrink that offsets any gains created by mobile shop-and-pay. I believe this indicates that retailers have missed the consumer convenience target(s).
Some retailers are contemplating delayingmobile shopping until they can install an “Amazon Go” like solution that offers the convenience of no scanning required, where customers simply pick up items and walk out, with payment charged to an on-line account. But, in my judgment this technology will be too expensive and complex for many if not most retailers and is only applicable to purchasing a very limited number of items. So those who don’t implement mobile shop-and-pay now may soon find it is too late.
What to do?
- Retailers must work with customers to define “convenience” and acquire a mobile shop-and-pay application covering the entire sales process that conforms to their definition.
- Retailers must be willing to change their existing processes to successfully implement mobile shop-and-pay. For example, if payroll can be reduced by 4% and sales increased by 5%, retailers must be willing to trade these for a 1% increase in shrink, by reducing security procedures to increasecheckout convenience.
- Employees must be encouraged and incentivized to embrace the “new” shopping process. They must be assured they will not lose their jobs but be reassigned to other tasks such as: helping acustomer on the sales floor to purchase items sold by weight and creating ticketed pre-packs so consumers have a morepleasant shopping experience.
What changes in business model and processes should retailers consider to maximize convenience and efficiency?
A critical change is to modify Loss Prevention (LP) practices. Perhaps many retailers should consider an exit review process. Scan and Go works well in Sam’s Club because they have a limited number of exits and each is staffed to review purchases in the cart to a customer’s receipt. After 40 years in retail, I understand the emphasis retailers place on LP. But this is a new world and stringent purchase screenings are NOT convenient. LP must be viewed as just one cost factor, and if profits can improve with less of an LP presence in the store, retailers can redirect those labor costs towards more customer service activities. A compromise between LP and convenience can be reached by creating an automated purchase review system based on shopper history, basket size, high theft items, time of day, store LP history, etc. to alert employees what levels of exit or other location screening to employ, none to very thorough.
Create new bagging features to eliminate customer need to handle items multiple times. Redesign shopping carts to include bag holders similar to those at traditional front end checkout and place clear bags at convenient location throughout the store.
Increase customer convenience by creating ticketed pre-packs of items usually sold in bulk; peanuts, candy, grapes, breads and donuts for example. Reassigning cashier labor makes this convenience affordable.
Interviews with customers will produce many additional ideas to increase convenience, and thus a higher adoption rate of the mobile app.
With an open mind to business changes and documented measurable success goals, retailers can select and install a mobile shop-and-pay application that can succeed if it that supports the “entire sales process”? My friend and retail expert Brian Kilcourse of RSR Research recent published a “consumer sales path” trigger/ explore/ select/ purchase / advocate that I believe is a perfect yardstick to evaluate and select a mobile shopping application.
Trigger – does the app support receipt of advertisements, or promotional flyers that stimulates consumer interest for adding items to their shopping list?
Explore – does the app allow access to item descriptive information with customer reviews to permit the consumer to determine if the product(s) meet their expectation?
Select – does the app provide guidance for making the optimal purchase, including volume pricing, delivery options, etc?
Purchase – does the app; record purchases by a quick and accurate phone camera scan of the bar coded tag or if on-line shopping with one click; easily permit canceling or changing quantity; and provide rapid payment processing via multiple options; debit, credit, ApplePay, PayPal etc. and all with coupon redemption? There are many features to consider in “purchase” that will vary based on retail segment and on-line versus in store. For example; customer deli orders with ready for pick-up alerts, interfacing with scales for “sell by weight”, referencing a shopping list or promotional flyer while shopping, displaying full product description and customer assistance monitoring (The ability for associates to an monitor consumers throughout their time in store to provide personal recommendations, answer product queries and quickly resolve application issues to avoid customer frustration).
Advocate – does the app generate purchase follow-up requests for reviews/comments and provide links to Facebook and other social media for customers to share experience with friends?
The above are only a few examples of features within each step of the path. Mobile Shopping apps should offer a full set of features and permit retailers to select those that fit their business model and mission.
The next decision is for retailers to decide whether to acquire or develop the application.
Acquiring the application has the advantages of having being tested and proven in multiple business types ensuring a more polished start up for customers and provides experienced advice from the supplier on process changes, consumer marketing, employee training and initial customer assistance. Further, since it can take a year or longer to develop and implement a proprietary solution, during which time the mobile expense saving and competitive advantage are lost. Perhaps the most compelling reason to acquire is that retailers can implement a universal application, meaning other retailers may deploy the same application, so the customer only needs one shopping icon on their phone.
Statistics indicate that consumers are constantly changing applications on their mobile phones. On average consumers have more than 60 apps but most are deleted and/or replaced within 90 days. By allowing the consumer to have one app/icon that can be used in multiple retailers they are likely to keep it on their phone. The disadvantage to acquisition may be the on-going costs associated with service fees. When making the build vs. buy decision, retailers must weigh service fees against the cost to build a proprietary solution and the long term staffing support requirements.
Developing the application in house has the advantages of providing the precise the features the retailers wants, easier integration with company owned applications and data, total control of the of the operation and perhaps less total cost of operation (TCO) if the retailer already has a mobile development staff. The disadvantages are the pro’s stated above for acquiring.
Retailers should consider this compromise: license an application, install and operate it, using it to refine the consumer convenience and business requirements through actual experience - and then build the “perfect” system in-house.
Whichever choice a retailer makes, it is critical to establish metrics to measure success.
Clearly, the percentage of consumers that adopt and use mobile shopping is THE measurement of success. In my judgment this can best be achieved by following the Bill Marriott principals:
I’m a frequent user of Sam’s Club “Scan and Go”, and many employees tell me that the mobile app was installed to replace them. I watched as exit door checkout screening for “Scan and Go” digital receipts became casual, not the diligent review afforded to paper receipts. Employees will not embrace automation that threatens their jobs. Employee training must begin with a commitment to employee job security and incentives for them if the percentage adoption goals for mobile shopping are achieved. Once employees embrace the new application and are empowered by management, they will learn how to assist customers, resolve any questions or problems and indeed encourage consumers to adopt mobile shopping. Employee training must be a two way process: listen carefully to their questions and suggestions, and be prepared to make a few pre-implementation changes based on their feedback.
With employees trained to willingly support and encourage consumers’ next step is to operate pilots, to learn more from customers. Prelaunch steps should include:
- Promote mobile shopping as an exciting event to the public, and offer customer incentives to sign up and use. It is critical that sign-up is quick with minimal personal information required.
- Double check that item descriptions and pricing is absolutely accurate and most importantly that all barcodes are quickly and easily scanned. Technology exists that makes the mobile camera a great barcode reader.
- Create and execute a staffing plan that places employee throughout the store, not just at the checkout location, to assist customers quickly solve any problem before they become frustrated. Mobile shopping apps that can monitor customer purchasing activity on the sales-floorhave the great advantage of being proactive in providing assistance and solving problems.
- Treat the mobile pilot as a new store opening. Albert Boscov, former CEO of Boscov’s, who built the business from a single 1,000 square-footstore to 46 locations with over a billion dollars in sales, always emphasized to employees at new store openings “we have one chance to win a customer” make sure their first visit is delightful.
Wishing you happy customers and great success with mobile shopping.
About the Author:
Richard Mader has 50 year retail career, including 15 as a CIO and 20 years managing the ARTS retail standards association a division of the NRF that published the Mobile Blueprint for Retail in 2010. He has consulted with many retailers and vendors on effective use of technology the past 4 years focusing on mobile POS. He is a member of the RIS Retail Technology Hall of Fame.