Mobile payments, geolocation and heat mapping could soon take the industry by storm
What technologies will the convenience store retailer of the future use to increase sales and boost profit margins? Mobile wallets, geolocation and heat mapping are just three budding technologies that could soon enter the lexicon of every c-store operator.
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| Cumberland Farms offers a mobile payment option to its customers via an app. |
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Mobile wallet and related mobile payment technologies are definitely the closest to full retail implementation. According to Doug Kilgour, senior director of business development for mobile wallet provider Isis, the mobile wallet market will reach $200 billion by 2015 and 86 percent of all point-of-sale (POS) terminals in the United States will be contactless by 2017.
"We are finally starting to deliver on some promises regarding mobile payments," Kilgour said during a recent webcast presented by technology partner Gilbarco Veeder-Root.
The future of mobile payments looks "very promising," agreed Danilo Portal of National Payment Card Association (NPCA), a supplier of merchant-branded debit cards and mobile payment solutions. "Most retailers we are talking to have mobile payments on their agenda for 2014," the chief operating officer and chief information officer told Convenience Store News. "I see a very high adoption rate within the next two years by most retailers."
Exxon Mobil Corp. is one industry retailer taking part in the rapid shift toward mobile technology. The company recently launched a mobile payment app called SpeedPass+ at 27 locations in Nashville. The app is designed to make paying at the pump quick and convenient for a new segment of technology-savvy consumers and serves as a complement to ExxonMobil's existing Speedpass program.
"We know how important mobile phones have become to our consumers' lives," said Ted Walko, ExxonMobil's retail fuels strategy and program manager. "We see this trend continuing and accelerating. If our pilot is successful, we would hope to expand to other markets."
Mobile payment technology has also made its way into Salt Lake City-based c-store chain Maverik Inc., which is testing Isis' mobile wallet platform. Isis, a joint venture of AT&T Mobility, T-Mobile US Inc. and Verizon Wireless, is so happy with the results in its test markets of Salt Lake and Austin, Texas, that the company will launch nationally later this year.
To use the Isis Mobile Wallet, consumers need a near-field communication-enabled smartphone and a SIM-based secure element. "Over the past nine months, we have proven the power of an open platform, creating an ecosystem of literally hundreds of partners dedicated to making mobile commerce a reality," said Michael Abbott, CEO of Isis. "As part of our commitment to consumers, we are incorporating feedback from our [pilot programs] into the next generation of the Isis Mobile Wallet as we prepare for national availability later this year."
Many more c-store retailers are about to follow Maverik's lead by backing an Isis competitor as charter members. A large group of chains, including 7-Eleven Inc., Phillips 66, Alon USA, QuikTrip Corp., Sheetz Inc., Wawa Inc., Hy-Vee Inc., Royal Dutch Shell plc, Sunoco Inc., RaceTrac Petroleum Inc. and Pacific Convenience & Fuels LLC, have joined mobile payment provider Merchant Customer Exchange (MCX). Although Dallas-based MCX has not yet revealed an official launch date, experts believe this payment method will begin to gain plenty of traction in 2014, meaning c-stores will be promoting mobile payments to their customers shortly.
Currently, mobile payments still only make up a small percentage of all payments in the United States. In fact, using a baseball analogy, mobile payments are only in the top of the first inning, said Henry Helgeson, CEO of Boston-based Merchant Warehouse, a payment technology company that serves as a liaison between merchants and consumers.
"I would have said players were just stretching and warming up before the game. But we've seen a couple of companies that have gotten out in front right now, and we are seeing some great use cases starting to evolve around these companies," he said, continuing the analogy. "Starbucks, LevelUp, Isis and Tabbedout are companies that are in the field today and are processing good transaction volume."
Why Go Mobile?The benefit for c-store chains to offer mobile payments is simple: providers such as Isis and MCX are purported to charge lower interchange fees than the credit and debit card companies. With mobile payment technology, retailers can achieve higher profit margins and believe they can control POS transactions in a way they have never done so before.
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| The Spinx Xtras app combines a loyalty program with mobile payment. |
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Consumers, however, must still be convinced that there is a benefit to use their smartphone to make POS purchases before the technology can really take off.
"Mobile [payments] have to make someone's life better or they will not use it," said Dodd Roberts, president of MCX. "But it is so important to do so because mobile payment allows a retailer to engage with customers when they are at home or on the road."
Therefore, rewarding customers is perhaps the best way to get them to choose mobile wallets vs. traditional debit and credit card swiping. "Membership and loyalty programs, targeted offers and gift cards are great ways to get customers interested in mobile wallets," added Isis' Kilgour.
Retailers can easily transfer the lower interchange fees they will pay via mobile payment platforms to fund loyalty programs, noted NPCA's Portal. "The retailer can promote cents off, percentage discounts and special offers to this selected and loyal group of customers," he said. "The net result for the retailer is increased sales and a better return on investment."
Last month, The Spinx Co. went this route. The operator of 69 Southeast c-stores now offers the Spinx Xtras app, which combines a loyalty program with a payment option. Customers who download the free app on their iPhone and Android devices can not only earn gas discount awards, but also pay for the transaction via mobile payment, which is processed by NPCA.
"This app eliminates the necessity of carrying another physical card," said Steve Spinks, president and CEO of The Spinx Co. "It also provides customers with a secure and simple way to make purchases at Spinx, as well as easy access to their Xtras rewards balance."
The New Face of Technology If there is anything of equal or paramount importance to retailers than increasing profit margins, it is selling more items to customers who enter or are about to enter their c-stores. That's where GPS, geolocation and heat mapping – perhaps the three hottest (pun intended) new retail technologies – come into play.
GPS and related geolocation technologies incorporate many facets under their umbrella, including the ability to have a customer place an order online, pay for it in advance and have the order ready for quick pickup when they enter the store. This technology, often through the use of apps, also helps retailers determine where a customer is located in real-time and can direct this customer to its nearest store or offer a targeted regional offer to consumers.
Geolocation expands even further to identifying customers, such as VIPs, right as they walk in the store. This idea follows a basic tenet that consumers will repeatedly visit stores if a location already knows his or her likes and presents product offerings around that knowledge.
NEC IT Solutions is one technology provider innovating in this area with its recently released NeoFace Watch facial recognition technology. When the software recognizes a celebrity, VIP or simply any other customer who seeks the service, it sends a message to the sales staff with information about that customer's preferences and past purchases.
NEC is not just selling facial recognition, but an enhanced customer experience, Senior Account Development Manager Allen Ganz told CSNews. Facial recognition technology is especially valuable on busy days at a retail location, he added.
"I've often seen it when a customer walks into a store, sees the long line and buys the product somewhere else," he said. "Imagine a scenario where you can walk up to a kiosk where you already preregistered yourself along with, for example, your favorite drink and the store recognizes and knows I want my standard order."
NEC's newest technology requires customers to opt in to the service. Therefore, retailers need not worry about intrusion claims, according to Ganz.
NeoFace Watch works in tandem with Field Analyst, NEC's facial detection software. Field Analyst can anonymously detect the age and gender of individuals at a c-store.
"A retailer can have a better appreciation of the makeup of the customers walking into the store," Ganz said. "It can also be used at the POS, tying the product that's purchased to the demographic of the individual."
The Heat Is On Heat mapping has similar qualities to geolocation, but it uses color maps to determine consumer tendencies. For example, if a section of a store is crowded, it will come up as red on the map. If foot traffic is sparse, the area will be highlighted in blue.
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| Heat maps reveal a red color where foot traffic is the strongest in a c-store. A blue color depicts less-traveled areas. |
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Today's heat maps can provide so many more details, though. "Video cameras have always been in stores for security and loss-prevention purposes," said Rajeev Sharma, founder and CEO of State College, Pa.-based VideoMining, a supplier of heat mapping software. "But now, we can use those videos and convert it into useful information about shopper behavior in stores."
Heat mapping can determine what products a customer looks at in-store and what they touch. The software measures data from the moment a customer walks in, up until the second they walk out. Heat mapping products can even be used with a retailer's current security cameras if they are positioned properly within the store, noted Sharma.
"You can find out how many people saw a display and how many people bought from that display," he said. "You can also learn the demographics of that customer. We can determine the gender and age range."
In fact, heat mapping offers one additional component many facial recognition programs cannot: the ability to determine a shopper's ethnicity. "You can, for example, determine what Hispanic shoppers look for and differences in how young people and old people shop," the executive stated.
Heat mapping not only helps c-store retailers determine what products sell best in their stores, but it also provides them with vital information regarding where to place particular items in the store. "Most people who come into a convenience store have a purpose," said Sharma. "We analyze the first place they go when they enter the store. Perhaps, that place is where the retailer should place impulse items."
Heat mapping technology can also be expanded to outside the store at the pump, added Sharma. But he acknowledged that the software cannot yet reveal quite as many details about customer tendencies at the pump as it can inside the store.
VideoMining analyzes retail data on a national basis. Hence, the company's heat mapping technology provides an added benefit whereby it allows retailers to benchmark data gathered vs. national averages in several different categories, Sharma concluded.
http://www.csnews.com/article-the_future_of_technology_-6344.html
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