More Smartphones means shops won’t be shops anymore

Major changes in shopping have on the cards for a while, but it now seems that we’re close to tipping point where shops, as we know them, will no longer be shops. The internet started the trend, for sure. Consumers became better informed, comparing prices and product reviews. And it had an impact in many sectors. The music industry was decimated (with a bit of help from the iPod) to the point that CD shops became an anachronism. Although we still buy books (but maybe not for much longer), Amazon pretty much nailed the coffin shut on the book reseller. Electronics shops have become little more than show rooms to browse with most purchases being made online – something that Curry’s tried to cash in on in their advertising a few years ago.

These trends have shifted to mobile with the rise of the smartphone and mobile retail. Marks and Spencer are seeing close to £1 million of sales each month from their mobile site. 12% of Ocado’s orders come from mobile devices (mostly iPhones). It’s not just the UK, in France Monoprix’s excellent app has created a similar shift in purchasing habits. But mobile is different to PC. Very different. And it has the potential to shift the role of retail way beyond anything that the internet could manage. The reason is the very nature of mobile, it’s mobile-ness. As soon as you go away from a desk-bound, or lap-bound online experience, everything changes.

The Perfectly Informed Consumer

The internet saw a better informed consumer. No more hours spent flicking through camera magazines, reading reviews and looking for the cheapest price. Just search for it online and you can find it. With mobile that is happening in the store. It isn’t a case of a customer turning up with a few print outs, they can check prices or stock there and then. If they don’t like it in that store they will simply leave and go to the shop down the road that has the cheaper/better offer. Data from Google/IPSOS is that 72% of smartphone owners are using their handsets in-store and 28% are buying from them. It means that not only can they check your prices, but if it’s cheaper online they can (and do) buy there and then in the store. The same Google/IPSOS study found that 21% of smartphone users have changed their mind about a product in-store as a result of information gleaned on their phone.

Witness the trailer for a new Channel 4 documentary. A man’s in the shop, he scans the product’s barcode on his phone and it gives a price comparison for the item ‘It’s the cheapest, yup, I’ll buy it’ he says to the camera. He’s doing that for every product. What that means for retailers goes way beyond ‘the customer is always right’. As one blogger aptly put it on ‘the consumer owns the retailer’.

Shops as Showrooms

In short, the shop will become little more than a showroom, or place to collect goods. Most of the sales journey will be happening on their mobile device. How shops respond to this will be interesting. The right way will of course be to embrace this empowerment and support it. One of Monoprix’s competitors in France is Casino. They also have a great app with all the usual store finders and online ordering. As with any shopping app you can add your list. But what they have done is to allow you to go to the store and the app will create the perfect route around that store for you to find everything you need. Brilliant. For many, grocery shopping is a chore, so they just made the thing so much easier. Marks and Spencer also know that retail is changing. They are implementing a whole range of in-store media that taps into smartphones – from giant screens to point of sale displays.

Who needs a shop anymore?

John Lewis does a Tesco Homeplus in Brighton

The thing that retailers are beginning to realise is that there may be no need for a shop at all. With so many consumers armed with smartphones, you can give them a retail experience almost anywhere. Tesco Homeplus Korean shop is every media guy’s favourite case study at the moment. And so it should be. (Just in case you’ve been in a cave for the last few months, you can read about it here). Whilst many see it as a clever use of QR codes, that’s not the interesting bit. What Tesco Korea did is to show how brands don’t even need a shop to any more. But that’s Koreans who are very well connected and their subways have super-fast WiFi connections. What about the UK? Well time will only tell, but John Lewis have just launched something similar to Tesco’s Korean offering in Brighton. What they’ve done is take John Lewis into Waitrose without any need for more retail space. Simply scan the code in the window and it adds it to your shopping basket on the John Lewis mobile site. Then you pop by your local Waitrose to pick up your item the next day.

Other retailers are experimenting with extending their retail brand into mobile. Net-A-Porter, very much an online brand, took things in the real world (sort of) with two pop-up shops in New York and London called The Window Shop. Except they weren’t shops. The windows had posters, and when scanned using with an image recognition app, ‘shoppers’ were taken to more content, videos and the buying page. Other fashion retailers are quickly following, with virtual shops being created by the likes of Diesel and Debenhams.

Are these new applications simply just a fad that appeals to media and ad types? It’s hard to know exactly what will catch on at this stage. Net-A-Porter got a decent number of scans and site hits from their Window Shop campaign, but most of all it gave the brand some great PR coverage. Fad or not, one thing is clear. Consumers are already redefining retail through their smartphones. The rise of the smartphone will continue to transform that. Nearly 50% of UK handsets are now smart and it will be 75% by 2014. The question is how will retail brands choose to engage with them?

Square gathers momentum: $3m per day and rising

Jack Dorsey founder of mobile payments company, Square (and a Twitter founder to boot), tweeted that they are now seeing $3 million per day in payment transactions. Square is chip and pin type device that attaches to a smartphone and allows merchants to turn it into a pdq machine. It took the first 10 months to get to $1m per day, but just three months later, they have tripled that. Spured on by investment from Visa, it certainly looks like Square’s mobile payments are gaining momentum. Many industry observers believe that 2011 will be THE year of mobile payments, and both mobile PDQ and contactless are showing the possibilities.

Visa puts yet more cash into mobile payments

Yet more evidence that mobile transactions will be big. Visa had previously committed to spending 100 million Euros per year rolling out mobile payments. They have now made a significant investment in Square’s credit card reading technology. Founded by Jack Dorsey, previously of Twitter’s fame, Square aims to bring mobile payments to the masses. The concept is simple enough – Square is a device that will allow anyone with a smartphone to take payments through it. Imagine that you have a plumber in to fix your boiler. You obviously won’t have enough cash to pay him, so he whips out his smartphone, clips on Square and it instantly becomes a chip and pin machine. In the US there are 27 million businesses that don’t take credit cards. Square’s aim is to give them that facility. As Keith Rabois from the company explained, ‘we’re empowering people to accept credit cards that historically have not’.

The service is proving popular already, with over 100,000 merchants signing up to it.  The investment from Visa gives added weight to the concept of mobile transactions. The significance of this is not simply in helping small merchants to take payments, but in the overall consumer perception of phones as the place to make payments.

Square: it’s mobile payments, but not quite as we thought

It came to light this week that Twitter founder, Jack Dorsey, is working on a new project for mobile payments called ‘Square‘. The project has been around for a few months, but the press finally put together the various pieces and worked out what they were up to!

Square is a great concept: install some software on your smartphone, then plugin a small plastic square. You swipe a user’s credit card and take a payment.

As with all great ideas, the concept is extremely simple. It is aimed at small businesses who don’t aren’t able to invest in PDQ systems. The revenue model comes from taking a small fee per transaction. It’s great to see a mobile application that will help small businesses – afterall many of the online brands that we know and love (or hate) started as small businesses.

Most people think of mobile payments in terms of taking the money from the phone bill, however Square takes a more left-field approach to it. There is no question that people are reluctant to enter credit card details on a mobile site. Even though the connection is almost the same as PC web, the trust element with mobile is missing. So if Square takes off (and I hope it will), as well as providing a useful and much needed service for SMEs, it may also change perceptions about payments through the phone.

With the introduction of NFC (Near Field Communication) systems on mobile, in app payments and now Square, the next year will see mobile commerce becoming massive.