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4 frictionless shopping tools to boost your bottom line

In January 2018, the retail industry was abuzz over the opening of the first Amazon Go store in Seattle. This store was the first to use groundbreaking shop-and-walk-out technology.

That store opening, according to Convenience Store News U.S. editorial director Don Longo, prompted a growing roster of convenience store chains to implement similar cashierless payment solutions.

“Frictionless engagement is now a competitive imperative for convenience store retailers,” Longo said during a recent Convenience Store News/Paytronix Systems Inc. webinar exploring frictionless checkout.

To date, several store chains including convenience giant 7-Eleven Inc., are testing some type of frictionless checkout in their stores.

Advancements in mobile devices have paved the way for the current innovation around the way consumers shop and pay.

Kimberly Otocki, convenience store marketing specialist for Paytronix Systems, noted that mobile is a huge component of a consumers’ day-to-day lives.

“They are spending a lot of time on their mobile devices and we see it day to day because we know when we walk down the street or our customers come into our stores, they most likely have their mobile phones out and are using them,” she said.

Mobile has become so big that the average person checks their phone 157 times a day. In addition, 90% of consumers use their phones inside stores while shopping.

Smartphones have changed the way we interact, the way we experience life and, because mobile devices enable consumers to get what they want in an instant, convenience views have shifted as well, Otocki said, calling it “the now factor.”

The numbers speak to that. For example:

  • 86% of shoppers avoid going into stores with long lines;
  • 74%t of shoppers will shop at a competitor rather than a store with a long checkout line; and
  • 41% of shoppers will change their minds about a purchase if there is a long checkout line.

“That’s a lot of customers who will gladly avoid going to your store if they know they are going to be greeted with a long line or if they go in and see a long line, they will purposely avoid it,” she said. “We want to make sure our line speeds are down to make sure they continue shopping with us.”

This ongoing shift in consumer expectations and their definition of convenience is driving frictionless engagement.

“Ultimately, if we are able to meet that frictionless experience — that great experience for our customers, so they don’t have to wait in line and they can get all of their goods and head on the road — then that means we are going to get higher profits,” Otocki said. “Our top line will increase because we are bringing more people into our stores and, hopefully, getting them to spend more money.”

Amazon is the “true pioneer” of the frictionless shopping experience, according to Otocki. “[Amazon has] shaped industries, destroyed industries and changed customers’ expectations to the point that we don’t really have any other option beside meeting that frictionless need that has been set by Amazon.”

Amazon knows exactly who its customers are. The company has been collecting data, honing it and trying to figure out exactly what makes each of its customers tick. And it uses that intel to keep customers coming back.

GET AHEAD BEFORE BEING LEFT BEHIND

Convenience stores need to be frictionless in order to compete, Otocki advised.

While some c-stores have already begun to adopt frictionless solutions, such as implementing mobile checkout or scan-and-go technology, more must be done in the convenience channel.

“We need to get ahead of it now before we get swamped out of the game,” Otocki said.

Types of frictionless options currently in the convenience channel include:

1. Mobile ordering. According to Otocki, this is a great opportunity to bridge the gap between the physical store and the world beyond its four walls. Mobile ordering is also “super rich” with customer data, she said.

2. Scan-and-go technology. Calling this “the ultimate level of convenience,” Otocki foresees this taking off a bit further down the road. It is still expensive at this point, she noted.

3. Connected cars. This service provides a greater level of frictionless checkout right where most c-store customers are — at the fuel pump.  A mix of online ordering and grab-and-go options with connected cars can bring those fuel-only customers inside the store, she explained.

4. Delivery. Service via delivery allows the c-store to connect with more customers. “How do we get to that last mile?” Otocki posed.

She did acknowledge that frictionless shopping options can be daunting and challenging from an operations standpoint and a capital standpoint, and will require convenience stores to change how they do business.

“While there are a lot of different technologies out there and a lot of different things we can implement, all of these things are going to take a lot of time to really go through and make sure they are done right,” she said.

Once c-store operators choose the right option for their business, they can use frictionless methods to gather customer data and more effectively market to customers. Such methods include:

  • Credit card token and matching;
  • Mobile payments with NFC;
  • Text to join;
  • Mobile apps;
  • In-store kiosks;
  • Physical loyalty cards; and
  • Reverse enrolment.

Originally published at Convenience Store News.


Modern times call for modern payment systems

Screen Shot 2019-05-16 at 12.22.33 AMCash was once considered king, but times have changed as payment options like mobile wallets, Apple Pay and Venmo have grown in popularity. The problem is that today’s payment system has not kept up with the times.

“We have a lot of work to do, especially when it comes to modernization,” said Guy Berg, vice president of the Payments, Standards and Outreach Group at the Federal Reserve Bank of Minneapolis.

Speaking about the opportunities, challenges and limitations of payment modernization at the 2019 Conexxus Annual Conference in Nashville earlier this month, Berg noted that today’s payment system worked well for its time, but was built before innovations in technology.

Compared to the horse and buggy, today’s payment system was faster, more convenient and more efficient when built. However, now it is slow, vulnerable to attack and inefficient, according to Berg.

“What we need,” he said, “is a jet. It’s fast, efficient and safe. We need a payment system that can deal with a high volume of transactions and is safe.”

Built back in the 1970s and 1980s, today’s payment system was designed for in-person transactions. While “wowed” by the system at the time, it came before the Internet and social media apps, Berg noted.

TWO DIFFERENT CONVERSATIONS

Today, when it comes to payment modernization, there are two different conversations happening: consumer payments vs. business-to-business (B2B) payments.

“They are two very different stories. One is moving very rapidly, but the other one is dragging its feet,” he said.

The consumer side is defined by mass connectivity and mobile convenience. Think mobile phones, online banking, mobile coupons, loyalty programs, mobile wallets and social media. This mass connectivity, though, is creating more vulnerability, Berg explained.

“In the 1960s and 1970s, we did not have a cybersecurity issue. But we do today,” he acknowledged.

The demand for mobile remote payment systems is exposing these vulnerabilities, which include:

  • Cyberattacks;
  • Main-in-the-browser;
  • Man-in-the-middle;
  • Malware;
  • Robotic attacks;
  • Phishing/social engineering; and
  • Large-scale data breaches.

“Back when the system was designed, data was stolen — but to create counterfeit card and checks. There was no scalability,” Berg recalled. “There is a whole scalability of attacks issue enabled by connectivity that the current payment system can’t really protect us from.”

According to Berg, the root cause of fraud today is mass connectivity.

What can be done? He outlined five steps:

  1. Add dynamic authentication security.
  2. Remove sensitive account information.
  3. Combine multiple layered security functions.
  4. Leverage existing infrastructure while adding new technology.
  5. Converge identity verification, payment device authentication and location.

While the consumer payments side of the conversation is evolving, B2B payments are “a different animal,” Berg said, explaining that B2B needs more connectivity.

“Even though businesses are more connected than ever — and it opens them up to vulnerability — we don’t have connectivity in the right way,” he pointed out.

In addition to the lack of mass connectivity, the B2B payment system lacks the necessary interoperability; experiences increasing costs and inefficiency; and has insufficient corporate leadership to drive innovation in the right way, according to Berg.

So, what needs to happen to achieve B2B payment modernization?

According to Berg, these four steps will combine for straight-through processing of electronic payment:

  1. Greater connectivity and interoperability between businesses;
  2. Structured electronic invoices;
  3. A B2B directory; and
  4. Structured electronic remittance information.

Originally published by Convenience Store News


Choice and added-value keys to adoption of alternative payment methods

Apple_Pay_and_contactless_payment_logoWhen it comes to checkout and payment, new technologies are abounding and retailers across all industries are trying to keep up. Whether it’s payment via a mobile wallet, mobile app or emerging in-vehicle payment technologies for fuel, the options continue to increase.

Convenience store operators and fuel retailers are responding to the changes with upgraded mobile apps, wider adoption of the various mobile wallets available, and both Shell and Chevron in the United States are now offering in-vehicle payments, with Shell partnering with General Motors and Chevron with Honda. Others are following Amazon’s lead and offering cashierless checkout for a frictionless experience.

But how can c-stores here in Canada gain greater consumer adoption of their new, alternative checkout offerings?

The key is to offer added value and a reason to use the technology besides just payment, according to Kevin Grieve, North American payments lead at Accenture, a consulting firm based in Dublin.

“Mobile payment is the end game, but it’s taken longer to adopt… because there has not been enough value provided by the solutions,” Grieve told Convenience Store News. “There are multiple payment methods — whether it’s a retailer’s own mobile app, Apple Pay, Google Pay or Samsung Pay — and people will align with what provides the most value to them.”

For c-store chains with their own branded mobile app, adding more than just payment ability will be key to converting customers and driving usage, he said, pointing to Starbucks as a best-case example. The coffeehouse chain connected its loyalty program to its mobile payment, which helped drive usage. Starbucks also added mobile ordering to allow people to pay before even entering the store.

“Consumers will drive demand, but this is where the future is headed and c-stores should get into it now. Do the pilots and tests, and get the customer feedback to know what works and what doesn’t,” Grieve advised. “At one point, Starbucks had no drive-thru and now, they don’t open a Starbucks without them because it’s what consumers wanted.”

Many c-store chains are adding loyalty programs into their branded apps, along with mobile payment. For example, Shell worked with General Motors (GM) to integrate its Shell Pay & Save program into GM’s in-vehicle payment system, and also offers this integration though its own branded app.

Even those offering mobile self-checkout for a frictionless experience are including loyalty in the mix. 7-Eleven Inc. announced a pilot of mobile self-checkout that work through the 7-Eleven app, and the retailer integrates its 7Rewards loyalty program into the process.

Those c-store operators using Skip, a third-party app that enables frictionless mobile self-checkout, also have the ability to link to a loyalty program.

Going forward, offering value will be even more important as more payment methods surface and competition heats up between apps and payment technologies.

If an app doesn’t offer a relevant experience — not just payment — it isn’t likely to last, according to Patrick T. Raycroft, a consultant at W. Capra Consulting Group in Chicago, who specializes in c-store, petroleum, QSR and specialty retail, as well as digital commerce technologies. “Just being able to pay on the phone doesn’t do it the way people anticipated.”

And it’s important to offer multiple checkout and payment options to customers so that they can choose which works best for them. Allowing for Apple Pay, Chase Pay, Google Pay and more provides convenience and ease, which is what today’s consumers are looking for when shopping.