NRFtech 2009: Mobile Payments

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Sahir Anand, retail practices research director for the Aberdeen Group, led a panel discussion on the emerging role of the mobile phone in retailing. Joining him in the conversation were Delaney Bellinger, CIO of YUM! Brands; Richard Crone, principal of Crone Consulting; Jorge Fernandes, CEO of service provider Mobibucks; and Richard Mader, executive director of ARTS.

Two things became clear in the course of this conversation: That the cell phone and its cousins are going to play fairly sizeable roles in retailing in the relatively near future – and that just how big and how soon remain anybody’s guess.

Anand characterized the mobile phone as an emerging customer touch-point — a new opportunity to drive customer-centricity in the multi-channel retail environment. “It’s a way of developing something completely new to touch the customer with value at the storefront and to take the e-commerce experience through the mobile channel and really develop something more personalized,” he said.

As mobile retailing grows and develops, mobile-related standards, business processes and IT equipment requirements will become more clearly defined and become part and parcel of overall retail strategy. In a recent Aberdeen survey of 250 retailers, the two areas consistently identified as being the functions that mobile retailing will fulfill were loyalty and payment — or the two in combination.

I’ll have pepperoni on that
According to Bellinger, YUM! is still quite early in the process of adopting mobile strategies. “We piloted a couple of things, starting with text ordering at Pizza Hut,” which is working fairly well in some regions and locations, but there are challenges. The greatest obstacle is integrating mobile retailing into a rather varied technology base (in addition to Pizza Hut, the company’s major brands include KFC, Taco Bell, A&W and Long John Silver’s), a situation further complicated by the involvement of franchisees. As a result, integrating mobile into the POS system is “something we’ll have to solve for,” she said.

For the industry as a whole, Bellinger said the biggest obstacle to mobile payments is customer acceptance and adoption. Still, she and her colleagues are certain it’s coming. “I don’t see it being more than three years,” she said. “For our business, it’s going to be like credit cards: If you don’t take them, the customer will go somewhere else.” This will be particularly true among younger customers, she said. “Older people will have a cell phone and use it, but for the young, the phone is practically an appendage.”

Kid stuff
Mobibucks has been working for several years to determine when customers will opt for the mobile payment/loyalty approach, and what types of retailers will/should go forward with it. The timing “will be market-segment dependent,” Fernandes said. “If you cater to the young, it will be sooner.”

Can mobile retailing become “everything to everyone” on the consumer side? “Absolutely not,” he said. “This is an issue about the younger generation, and you have to look at the effect on your POS. As an IT professional, you don’t want anyone touching your POS. On the other hand, if you don’t link your POS to online, it will mean you’re not getting the business, and somebody else will. I tell my clients, ‘Look, it’s simple. Grandpa is writing checks. You and I are using plastic. Our kids are going to be using mobile.’”