UK: Paying Up, Smartish

Last Updated: 1 October 2015
Article by Will Matthews

Most Read Contributor in UK, August 2017

Deloitte's latest mobile consumer survey shows that we are increasingly using our smartphones to pay for things – so what impact does that have on the store?

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Over 1.2 million smartphones are sold in the UK every fortnight.  More than 50% of smartphone users look at their device within 15 minutes of waking up.  Around two thirds use their smartphone at work, while a brave few admitting to frequent use in business meetings. As usual, the latest Mobile Consumer survey is crammed full of interesting statistics.  But for an industry used to seeing exhilarating growth in the use of new technologies, the adoption of smartphones as a way of paying for items in stores has been comparatively slow. That appears to be changing however, aided partly by consumers' growing familiarity with contactless cards, a similar concept that is also rapidly gaining acceptance.

Paying as you go

At the extreme, widespread adoption of mobile payment technology could theoretically allow stores to do away with some, or even all of their traditional checkouts and accompanying staff, and for customers to undertake a shopping trip without actually talking to anyone (indeed, supermarkets have already helped facilitate this through the introduction of self-service checkouts).

Whether this is desirable may depend on whether you're the retailer or the customer.  For retailers, the transaction process may be the only point at which they have the opportunity to engage with customers: if that opportunity disappears, they might need to think about other ways to connect with them.  Customers sometimes value the luxury of browsing uninterrupted by assistants, but even the most well-informed may occasionally value the ability to speak directly to a member of staff. These behaviours are explored in a recent report, Digital influence in UK retail.  In the short term at least, mobile payments might not change the physical appearance of the store dramatically, if at all.

In store, but online

That being said, the underlying implication is that mobile payments could be yet another new technology that helps to make shopping trips feel less overtly transactional and more focused on the experience - of trying new clothes or technology, for example.  It is also another step towards blurring the boundaries between in-store retailing and online retailing, and as we have noted before in our thoughts on the rise of mass personalisation, ponding to these types of challenges can sometimes affect retailers' supply chain property much more profoundly than the stores that customers see.

On a more practical level, the provision of quick and easy ways to make mobile payments might also go some way to addressing some of customers' biggest gripes when shopping in store.  Research from colleagues in the US shows that long queues is the single largest reason for people to avoid shopping in store, closely followed by slow checkouts.

From brawn to brains?

Perhaps a different way to look at the impact of mobile payments is as part of the age-old march of technology that gradually makes obsolete the more routine – and mundane – aspects of work, thereby freeing up employees to concentrate on higher value aspects of work as explored in our recent insight, From brawn to brains.

Applied to retail, that could mean that former checkout staff can spend more time helping customers understand new products, to use a simplistic example.  If this type of shift starts to be seen in stores, then for some retailers there could be merit in reconsidering store layouts and fit-outs to encourage customers to spend more time browsing, almost a smaller version of the way leading shopping centre operators have successfully promoted the leisure element of their schemes as a way to increase shoppers' dwell times.

This might be passive, in the sense of providing a more relaxing setting with more seating, for example, or it may be active, by hosting demonstrations or classes on the use of products.  Yet whatever the impact on the intricacies of store layouts, ultimately, the bigger picture is that smartphones will continue to play a growing role in any retail experience, not least due to their ubiquity - in the two or three minutes it has taken to read this post almost 200 smartphones will have been sold in the UK. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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