Predictions
For children on a long journey, the typical refrain is, “Are we there yet?” However, for retail IT practitioners and executives, the challenge is not in waiting to get “there,” but figuring out what “there” even is. The question for the IT journey on which retailers are now traveling can be more appropriately phrased as, “Where are we going?”
To get an answer, Chain Store Age asked experts in the fields of mobile, social, payment, security, omnichannel and beacon technology to provide some predictions on where exactly the industry is heading in each of these crucial IT areas in the next 12 months or so. While each area obviously has its own unique direction, one common denominator in all the predictions is that the destination looks a lot different than the starting point.
The New World Order: Mobile
No surprises here: Expect mobile devices to keep strongly impacting how consumers engage retailers.
Bill Davis, director of MB&G Consulting, noted that 90% of U.S. adults now possess a mobile phone, with 58% of them owning a smartphone. With strong global mobile and smartphone growth expected at least through 2017, Davis sees mobile devices as strongly impacting how consumers engage retailers.
“Given its recent history, mobile has become and will continue to be the fastest-growing medium for accessing the Internet,” Davis said. “In 2014 and preceding years, mobile devices have primarily been a research channel, with people using their mobile phone and tablets to access the Internet to gather information.”
The trend going forward will be for mobile phones and tablets to continue to grow their share of both product research and purchasing activity, primarily at the expense of PC-based consumer engagement, which Davis predicts will erode more than in-store engagement in 2015.
“And in-store, multiple ways to leverage your smartphone exist, whether simply by price-checking products elsewhere, using payment mechanisms like Apple Pay or CurrentC, or being messaged in-store,” Davis added. “Mobile is not only here to stay — it’s soon to become the primary way by which we browse and buy from the Internet and in store. As a result, it’s time to start preparing for this new world order.”
Social Comes of Age
According to Miya Knights, senior EMEA research analyst for IDC Retail Insights, social figures prominently as part of the “third platform” of digital development, which also includes mobility, analytics and cloud. She predicts it will only expand its influence on retail strategies and experiences in the coming year. The most successful retailers will adopt social systems and tools for marketing and competitive insight to improve omnichannel operational integration and execution.
“They will also further their use of social media as part of more unified customer engagement for hyper-personalized loyalty initiatives, schemes and campaigns,” Knights added. “These trends will complement the existing social retailing use cases we’ve seen emerge in the last few years, which include targeted social promotion, social contests and the direct purchase of goods through social media using hashtags, as well as social shopping among groups of friends.”
Knights said a longer-term developing trend is how on-demand, socially networked delivery services like eBay Now, Uber, Amazon and Alibaba will mature to meet growing customer need for immediacy.
“Retailers should consider the reasons why consumers are likely to embrace these services, both in-store and online, and prepare to respond proactively to them,” she added. “They allow consumers to rate the service providers and select one that meets their delivery objectives and cost constraints.”
Most importantly, she stated, these services allow consumers to select a provider they trust from previous personal experience and that of their peers.
Payment: We’ve Only Just Begun
Payment technology development these days is mostly focused on how to replace a physical wallet with a mobile device. Truth is, said Brian Kilcourse, managing director of RSR Research LLC, the retail industry has only just begun to examine the core issues of mobile payment.
“ ‘Market and adoption’ is center stage right now with the debate about ApplePay versus CurrentC, the soon-to-be-released mobile pay solution from MCX (the retailer digital payment consortium led by WalMart),” said Kilcourse.
But beyond the fact that both CVS and Rite Aid are members of the MCX retailer consortium, there are more fundamental issues related to standards and technology at work.
“For starters, the Apple iPhone 6 uses NFC (near field communications) to communicate with NFC-enabled payments terminals. MCX’s CurrentC mobile app will use QR codes that are scannable at the POS, but will not use NFC, at least for now,” Kilcourse explained.
There is also a security angle to the development of mobile payment technology. ApplePay uses a token-based payment authorization process where banks managing the security of authorization requests assume any fraud risk. With MCX, it’s not clear yet who will be liable for the risk, Kilcourse said.
But even ignoring the Apple versus MCX debate, there are differences in the various options — which also include Google Wallet and PayPal.
The fact is payment adoption is dependent on a lot of things beyond retailers’ control. As to what retailers should do to encourage consumer adoption, Marianne Crowe, VP payment strategies at the Federal Reserve Bank of Boston, advises retailers to get something in their stores now to make consumers comfortable, and use it as a baseline for future improvement.
Securing the Enterprise
Obviously, security is on every retailer’s mind these days, with the bulk of the responsibility falling squarely in the lap of the IT department. Technology security can be broadly divided into the areas of network breaches and loss prevention.
Joseph G. Hadzima Jr., senior lecturer at the MIT Sloan School of Management, said retailers should focus on the growing threat of network breaches resulting from the expansion of the Internet of Things (IoT) as consumer devices become connected to the Internet.
“Various research organizations are predicting that there will be 25 billion to 35 billion-plus devices on the Internet of Things by 2020,” Hadzima said. “The emergence of ‘D-to-D’ (device-to-device) and ‘M-to-M’ (machine-to-machine) involves more and more devices communicating with each other via multiple communication modes, such as USB, Bluetooth, NFC and 4G LTE.”
There is no effective security to protect against attacks or data loss for D-to-D, Hadzima cautioned.
“All current and prior products focus only on the application layer, not below — device drivers, protocol layer, physical layer, etc. — where the next-generation attacks come in,” he said.
However, some governmental applications have started to implement a solution against this type of attack, and the Department of Defense has also pioneered some standards for IoT security. Moving forward, Hadzima said, retailers must devote much