September 17, 2008
Transforming Retail with Portable Shopping Devices
Research from Frost & Sullivan concludes that portable shopping devices, including those mounted on carts, may be on the verge of transforming retailing on a global scale.
According to the report, World Customer Shopping Device Markets, the portable shopping device market reached $59.2 million worldwide in 2007 and the technology is being adopted on a widespread basis in Europe and North America. The Pacific Asia and Latin American markets are also seeing the pace of adoption picking up.
“The primary driver behind the implementation of portable shopping devices or mobile self-scanners is the significant improvement in the customer’s shopping efficiency and labor productivity,” said Prasanna Prakash, a research analyst with Frost & Sullivan Research, in a press release. “Using these systems, customers can eliminate waiting time in queues, leading to faster checkouts while retailers can streamline operations and redeploy staff to other functions within the retail environment.”
The use of portable shopping devices enables stores to move workers from the checkout to other areas of the store to “augment customer relationship management activities,” according to the report.
Frost & Sullivan suggests that digital signage solutions can be incorporated into store environments to help improve interaction with consumers using portable shopping devices at the point of purchase.
Discussion Questions: What is the potential of portable shopping devices at retail? Where do you see the greater upside for the technology: reducing labor costs or growing sales? Are there particular types of devices that you think hold the greatest potential to “transform” retail?
BrainTrust
Recent Discussions
Discussion Questions
Poll
The benefits touted by the manufacturers of digital devices and other time-saving gizmos at retail will only be realized if the devices are simple and work as advertised. Otherwise, they become a hassle for the consumer and require extensive intervention by retail staff to complete the transaction. I have rarely seen a consumer complete self checkout without some snafu that requires staff participation to correct. Is that a time saving progress?
Personal self-checkout devices will be one additional component transforming merchandising within the brick and mortar retailer.
If we examine the Motorola MC17 device, which can scan barcodes rendered on the latest generation of electronic shelf edge labels, it has display and interactive capabilities that extend way beyond self-checkout.
To be truly effective, the challenge is in the retailer’s ability to connect the devices with intelligence on the customer’s profile, preferences and buying history. With this exposed, it is then possible to trigger relevant, personalized, interactions between the retailer and the customer while the purchase decisions are being made.
Providing the customer opts in by registering his/her ID when initiating the use of the device, the interaction can be “Amazon.com like,” as retailers retain more intelligence on customers than all other industries combined.
The issue is how to use it when the retailer doesn’t usually know the customer is in the store until he/she leaves. When the retailer has the ability to apply this information the device interactions can range from guided selling, special (personalized) pricing, health and wellness advice, (such as allergen alerts), all combined to make the shopping experience conform to true “customer-centric” merchandising.
Initiatives along these lines are already occurring in Europe, but the success factor is more related to the software being able to connect the devices to customer intelligence during the shopping visit, rather than the devices themselves.
PSS, combined with ESEL deployments, has the potential to revolutionize retailing by delivering the most significant impact on customer satisfaction and retailer financial performance seen in the past decade.
Unless this magical device can make the products leap out of the aisle and into the consumer’s shopping cart, it won’t be that much of a time saver. They will still have to WALK DOWN THE AISLE to get what they want. So I don’t see much navigation time being cut. As far as the check-out, my colleagues have pretty well indicated the failure of self-serve checkouts as another reason this device has little merit.
Another important thing to keep in mind, any technology that has been attempted in-store will ultimately be doomed to failure if you don’t keep it out of the reach of children. They have an innate ability to mess with a gadget, coupon display, interactive kiosk (whatever) until it breaks down and needs to be repaired.
I have said this before and I’ll say it again–paint me a skeptic….
If we get to the point where there is an information delivery system and the content available to give each shopper a custom experience, they’re not going to want to drive to the store to use it. Customers will prefer sitting at their home theater screen and having selected products delivered the next day. And if they don’t have a home theater, the retail location will become their neighbor’s recreation room on a Saturday afternoon.
Yes, there will be some people who continue to “go shopping” but even they are not going to want to be saddled with cashing out their own baskets. If the store cannot afford to have enough checkout lanes, they simply won’t go to that store.
And I don’t see any discussion of the whole aspect of shrink. At the front end you have check stands, where for a few seconds either on the belt or in the bag there is a chance for the system and cameras to record the physical characteristics of what is being taken from the store. This opportunity does not exist in the aisles as shoppers load items, remove them, then decide to buy them after all. The constant adjustment of what is in the cart makes it difficult for electronic systems to accurately record the information. Serialization (RFID) will help greatly, but now we’re back to the size of the capital investment necessary to implement RFID in order to save some labor dollars.
I think portable devices will make an impact on the shopper experience by offering the manufacturer a way to reach the consumer at the shelf edge. This will allow special coupons and the ability to promote why widget A is far superior to widget B. But as far as checkout and reducing labor required to capture sales data, I don’t think automation is quite there yet.
Consumers will embrace portable devices in the store because it enhances their experience. The adoption rate, however, comes down to business models. If device makers and software providers want to share promotional and advertising revenue on these devices, retailers will pony up their commitment to them. If retailers are left to buying them on a per unit basis and frozen out of the revenue picture, portable devices will languish until the economy turns around.
It’s too early to know which business model is going to win, and it’s too soon to know whether devices will belong to the store or to the consumer. But one thing that’s certain is the ubiquity of mobile phones–there are 3.3 billion cell subscriptions worldwide in 2008–and the changing nature of mobile applications. Near Field Computing may well revolutionize payments, rewards, even couponing. Whatever the device ultimately does, we’ll be holding it in our hands.
Technology will make it quicker and easier to get through the checkout line. In the foreseeable future, we will have automatic checkout lines in some of the big club stores and it will spread to others.
Technology is already simplifying the purchasing process with check pricing units throughout the stores. The applications and benefits are limitless.
Costs aside, I think this evolution is wonderful for the consumer and will lead to increased sales.
The ability to confirm the price before the item is in the basket is a huge benefit for me and my family. It will speed up our checkout because I won’t be watching every sale item to make sure it scans properly–I’ll already have done that.
These systems have the potential to dramatically cut down stoppages in the checkout lines. Remember that a 30 second stop needs to be multiplied by the six people in line. You’ve wasted three minutes of consumer time.
Happy consumers spend more and come back to your store.
To me, a core question here is whether we lead the portable shopping device charge with check-out capabilities or shopper media capabilities. I think it depends on how shoppers perceive them.
Portable checkout devices will be inevitably viewed as a convenience for the retailer, not the shopper. There will be a learning curve to master and they may ultimately prove to be a distraction from the complex act of locating and selecting desired products. They might function but also fail to serve the shopper’s interests. Only fundamental in-store experience research will reveal how shoppers feel about using these devices and what behaviors they evoke.
Portable shopper media–whether mounted on carts or embedded in hand-held devices or piped to people’s cell phones–may be viewed as a shopping aid (“help me find what I want” and “tell me about deals”) or as an unwelcome intrusion. I suspect both perceptions may at times coexist within the same shoppers, depending on the momentary specifics of the shopping mission or need state. In general, shoppers will want it when they want it, and want it out of their faces when they don’t.
These technologies certainly cool. But just because we can build them and make them work doesn’t mean shoppers will embrace them. A rule of thumb may apply here: A shopping technology that makes shoppers feel more in control will tend to succeed, whereas a shopping technology that makes shoppers feel burdened, manipulated, or assaulted with unwanted noise will tend to fail.
We can try to “buy” shopper acceptance of shopping technology by providing promotional offers and services. But universal acceptance may be a long reach and retailers will need to calculate how much is enough to justify the changes in shopping experience and added operational complexity.
The effective use of portable shopping devices will have a significant impact on shopping behavior and retailing operation. The greatest impact will be on increasing sales rather reducing costs. Customers will be able to scan UPC tags and get as much information about products as they need to make a purchase decision–information which will probably be superior to that provided by sales associates and certainly more readily available.
In addition, retailers will be able to target special messaging and promotions to mobile devices–promotions and messages that are tailored to specific customer needs and buying potential. The effectiveness of mobile devices will be greatest for self-service retailers–supermarkets, discounters, and category killers.
Other than being male, I think I’m a target lead user for this type of thing (I have 6 people in my household and use self-checkout today). So, here’s what I want it to do:
1) Replace checkout seamlessly
2) Help me find stuff in the store (easily!)
3) Tell me when there are promotions on stuff I or my wife have bought in the past (ordered by purchase frequency)
4) Link to my loyalty card to give me special deals targeted to me
I’m thinking I should get some extra discounts too, given that I’m saving them checkout labor. 😉
Telexion units go for about a grand a piece. Do we want customers using these expensive wireless hand-helds at their leisure? While the neatness factor is there, I don’t think it is cost effective for anyone chain to utilize this type of technology for the customer.
I’ve seen some club chains use it to pre-scan customer’s orders while they are waiting in line which is convenient. And with RFID growing, soon we will be able to just push the shopping cart through a scanner and have the order rung up. These systems work well but I do not think we should be letting customers use expensive hardware like that.
This is another interesting and potentially impactful tactic…albeit (like some of the others we’ve discussed here) in search of a customer-relevance strategy.
First, there must be a clear value proposition to the customer as this could well be a cumbersome element in terms of the retail experience. It is potentially disruptive from a customer habit standpoint as well.
Second, technology in a store begs the question of customer data, addressability and actionable intelligence. This is fundamental to adding value to the customer and making this more than just (another) cost-efficiency move for retailers.
Last, in our every technology-driven world, one aspect of brick-and-mortar retail that is irreplaceable is the human element. It is still the most fundamental differentiator aside from location and merchandising.
So many questions: Will the cost of the device be cheaper than checkout labor? Are shoppers willing to use it (consider the small proportion that use the self checkout lanes in stores)? Are retailers giving up an opportunity to display great customer service at checkout? (Publix always asks if I’ve found everything I was looking for, as one example.)
This sort of technology will continue to grow in use over time. As the younger generations move into more heavy purchasing, coupled with their already pervasive use of technology, more and more of these types of devices will be expected–not optional–in the retail environment. Retailers that do not offer these types of tools will not be seen as relevant and “with it.”
The transformation will happen, but it will be slow.
I was recently in a supermarket in Carson City, Nevada. They had many checkouts, but only two were open. The store was not very busy at that time. One of the checkouts was “express.” There were about 4 people in that line.
This store had 4 self checkout aisles. None were being used. It occurs to me that if people were reluctant to use the self checkout for a mere couple of items, then we are a long way from getting shoppers to use more sophisticated technology.
A Home Depot in New York City has 8 self checkouts. They have one associate for each 4 to help people to use them. Right there is a significant labor (or time) saving. But, they also have associates walking the checkout lines encouraging people to use the self checkout. Despite the ease of use, there continues to be reticence. What I don’t know is how many times people have to use them to become comfortable.
When the shoppers become comfortable, they will realize the benefit and the revolution will accelerate.
It seems to me that this is a first step in replacing human labor with technology for check-out. The early steps here aren’t terribly convenient for shoppers. Consumer thoughts might run like this, “Now I have to learn another system for check-out–forget it. I’m in a hurry.”
However, in the future, these kinds of systems may become easier than waiting in line. What might this look like? Every time a consumer puts an item in the trolley, the item is automatically scanned and added to the total shopping list, which is displayed on a screen on the trolley. If the consumer takes it out, it is subtracted. That could work. There is no learning curve.
Payments could happen in a traditional line, where the cashier simply accepts payment. Or, perhaps consumers who have registered a credit/debit card with the store could cash-out simply by running through a separate aisle (ala SpeedPass at toll booths).
The key I believe is no learning curve. No extra widgets. The trade-off for consumers will always be, is the technology simpler than standing in line?
I did a study with Motorola and ModivMedia on the value of mobile to consumers. We found–mostly from Modiv’s experience–that while time saving benefits are valued by customers, that is really only half the equation. Modiv was seeing that uptake was “good” but not “great” when they emphasized the time-saving features of using their mobile devices. It was when they combined the time-saving features with opportunities to get targeted promotions through the handhelds–ways to save money–that they got the higher double-digit uptake they were looking for per store.
I think in grocery there may very well be a place for store-provided handhelds, because the level of interactivity that is needed to provide both sides of the value is high enough to justify investing in the technology to control the quality of the customer experience. In other verticals, I can see all of this coming through the consumer’s mobile phone instead.
The checkout is an obvious beneficial application for these devices. (It seems that to many, this is all about self checkout.) But “to help improve interaction with consumers” is the primary focus of the devices I have seen deployed. The reality is that something like 80% of the shopper’s time is wasted in the typical store. The reality is that the primary value of these devices is to reduce that wastage by either selling something during that time or to reduce the overall trip length, without decreasing sales.
Selling more is an obvious goal, but simply reducing wasted shopper time is likely to result in better store performance. Achieving these goals will require a greater understanding of the shopping process than most retailers and their suppliers have. It means moving from a passive retailing model, where the shopper is responsible for the “shopping,” to an active retailing model, where the retailer actually participates in the shopping process.
There is real “gold in them thar hills!”
The worldwide market for portable shopping devices was $59 million in 2007? Since the technology was largely available for years, that sales volume sounds like total failure. No adoption. If retailers thought the devices would save money or improve sales, volume would be $59 million per month.
Let’s start with some data: Front-end labor typically costs 4% of sales. So if a store is doing $500K per week and can save 10% on front-end labor by using self-serve technology that represents a $104K per year. Check and see how much profit a typical store makes in a year.
Every year for the last 20 or so years consumer identify the checkout process as the major problem with the shopping experience (FMI Speaks). Shoppers will use mobile devices if they “think” it saves them time and money. Finally, a shopper spends a dollar for every minute they spend in the store. These devices give the shopper the “impression” they are getting through the store faster because they are engaged. They actually spend more. Every study conducted since VideOcart in the early 90s by IRI and Nielsen have supported the value proposition of this technology.
More Discussions
As Boomers ‘Age Out of Peak Purchasing,’ How Can National Brands Retain Interest With Gen Z?
According to a recent First Insight study titled “Is Gen Z Still Choosing Your Brand,” while…Is Supply Chain Volatility Here To Stay?
Can we expect an ongoing volatility to remain in terms of retail supply chain?Has Same-Day Delivery Become an Expectation Across Retail?
Are expectations around retail delivery speed in flux?
The benefits touted by the manufacturers of digital devices and other time-saving gizmos at retail will only be realized if the devices are simple and work as advertised. Otherwise, they become a hassle for the consumer and require extensive intervention by retail staff to complete the transaction. I have rarely seen a consumer complete self checkout without some snafu that requires staff participation to correct. Is that a time saving progress?
Personal self-checkout devices will be one additional component transforming merchandising within the brick and mortar retailer.
If we examine the Motorola MC17 device, which can scan barcodes rendered on the latest generation of electronic shelf edge labels, it has display and interactive capabilities that extend way beyond self-checkout.
To be truly effective, the challenge is in the retailer’s ability to connect the devices with intelligence on the customer’s profile, preferences and buying history. With this exposed, it is then possible to trigger relevant, personalized, interactions between the retailer and the customer while the purchase decisions are being made.
Providing the customer opts in by registering his/her ID when initiating the use of the device, the interaction can be “Amazon.com like,” as retailers retain more intelligence on customers than all other industries combined.
The issue is how to use it when the retailer doesn’t usually know the customer is in the store until he/she leaves. When the retailer has the ability to apply this information the device interactions can range from guided selling, special (personalized) pricing, health and wellness advice, (such as allergen alerts), all combined to make the shopping experience conform to true “customer-centric” merchandising.
Initiatives along these lines are already occurring in Europe, but the success factor is more related to the software being able to connect the devices to customer intelligence during the shopping visit, rather than the devices themselves.
PSS, combined with ESEL deployments, has the potential to revolutionize retailing by delivering the most significant impact on customer satisfaction and retailer financial performance seen in the past decade.
Unless this magical device can make the products leap out of the aisle and into the consumer’s shopping cart, it won’t be that much of a time saver. They will still have to WALK DOWN THE AISLE to get what they want. So I don’t see much navigation time being cut. As far as the check-out, my colleagues have pretty well indicated the failure of self-serve checkouts as another reason this device has little merit.
Another important thing to keep in mind, any technology that has been attempted in-store will ultimately be doomed to failure if you don’t keep it out of the reach of children. They have an innate ability to mess with a gadget, coupon display, interactive kiosk (whatever) until it breaks down and needs to be repaired.
I have said this before and I’ll say it again–paint me a skeptic….
If we get to the point where there is an information delivery system and the content available to give each shopper a custom experience, they’re not going to want to drive to the store to use it. Customers will prefer sitting at their home theater screen and having selected products delivered the next day. And if they don’t have a home theater, the retail location will become their neighbor’s recreation room on a Saturday afternoon.
Yes, there will be some people who continue to “go shopping” but even they are not going to want to be saddled with cashing out their own baskets. If the store cannot afford to have enough checkout lanes, they simply won’t go to that store.
And I don’t see any discussion of the whole aspect of shrink. At the front end you have check stands, where for a few seconds either on the belt or in the bag there is a chance for the system and cameras to record the physical characteristics of what is being taken from the store. This opportunity does not exist in the aisles as shoppers load items, remove them, then decide to buy them after all. The constant adjustment of what is in the cart makes it difficult for electronic systems to accurately record the information. Serialization (RFID) will help greatly, but now we’re back to the size of the capital investment necessary to implement RFID in order to save some labor dollars.
I think portable devices will make an impact on the shopper experience by offering the manufacturer a way to reach the consumer at the shelf edge. This will allow special coupons and the ability to promote why widget A is far superior to widget B. But as far as checkout and reducing labor required to capture sales data, I don’t think automation is quite there yet.
Consumers will embrace portable devices in the store because it enhances their experience. The adoption rate, however, comes down to business models. If device makers and software providers want to share promotional and advertising revenue on these devices, retailers will pony up their commitment to them. If retailers are left to buying them on a per unit basis and frozen out of the revenue picture, portable devices will languish until the economy turns around.
It’s too early to know which business model is going to win, and it’s too soon to know whether devices will belong to the store or to the consumer. But one thing that’s certain is the ubiquity of mobile phones–there are 3.3 billion cell subscriptions worldwide in 2008–and the changing nature of mobile applications. Near Field Computing may well revolutionize payments, rewards, even couponing. Whatever the device ultimately does, we’ll be holding it in our hands.
Technology will make it quicker and easier to get through the checkout line. In the foreseeable future, we will have automatic checkout lines in some of the big club stores and it will spread to others.
Technology is already simplifying the purchasing process with check pricing units throughout the stores. The applications and benefits are limitless.
Costs aside, I think this evolution is wonderful for the consumer and will lead to increased sales.
The ability to confirm the price before the item is in the basket is a huge benefit for me and my family. It will speed up our checkout because I won’t be watching every sale item to make sure it scans properly–I’ll already have done that.
These systems have the potential to dramatically cut down stoppages in the checkout lines. Remember that a 30 second stop needs to be multiplied by the six people in line. You’ve wasted three minutes of consumer time.
Happy consumers spend more and come back to your store.
To me, a core question here is whether we lead the portable shopping device charge with check-out capabilities or shopper media capabilities. I think it depends on how shoppers perceive them.
Portable checkout devices will be inevitably viewed as a convenience for the retailer, not the shopper. There will be a learning curve to master and they may ultimately prove to be a distraction from the complex act of locating and selecting desired products. They might function but also fail to serve the shopper’s interests. Only fundamental in-store experience research will reveal how shoppers feel about using these devices and what behaviors they evoke.
Portable shopper media–whether mounted on carts or embedded in hand-held devices or piped to people’s cell phones–may be viewed as a shopping aid (“help me find what I want” and “tell me about deals”) or as an unwelcome intrusion. I suspect both perceptions may at times coexist within the same shoppers, depending on the momentary specifics of the shopping mission or need state. In general, shoppers will want it when they want it, and want it out of their faces when they don’t.
These technologies certainly cool. But just because we can build them and make them work doesn’t mean shoppers will embrace them. A rule of thumb may apply here: A shopping technology that makes shoppers feel more in control will tend to succeed, whereas a shopping technology that makes shoppers feel burdened, manipulated, or assaulted with unwanted noise will tend to fail.
We can try to “buy” shopper acceptance of shopping technology by providing promotional offers and services. But universal acceptance may be a long reach and retailers will need to calculate how much is enough to justify the changes in shopping experience and added operational complexity.
The effective use of portable shopping devices will have a significant impact on shopping behavior and retailing operation. The greatest impact will be on increasing sales rather reducing costs. Customers will be able to scan UPC tags and get as much information about products as they need to make a purchase decision–information which will probably be superior to that provided by sales associates and certainly more readily available.
In addition, retailers will be able to target special messaging and promotions to mobile devices–promotions and messages that are tailored to specific customer needs and buying potential. The effectiveness of mobile devices will be greatest for self-service retailers–supermarkets, discounters, and category killers.
Other than being male, I think I’m a target lead user for this type of thing (I have 6 people in my household and use self-checkout today). So, here’s what I want it to do:
1) Replace checkout seamlessly
2) Help me find stuff in the store (easily!)
3) Tell me when there are promotions on stuff I or my wife have bought in the past (ordered by purchase frequency)
4) Link to my loyalty card to give me special deals targeted to me
I’m thinking I should get some extra discounts too, given that I’m saving them checkout labor. 😉
Telexion units go for about a grand a piece. Do we want customers using these expensive wireless hand-helds at their leisure? While the neatness factor is there, I don’t think it is cost effective for anyone chain to utilize this type of technology for the customer.
I’ve seen some club chains use it to pre-scan customer’s orders while they are waiting in line which is convenient. And with RFID growing, soon we will be able to just push the shopping cart through a scanner and have the order rung up. These systems work well but I do not think we should be letting customers use expensive hardware like that.
This is another interesting and potentially impactful tactic…albeit (like some of the others we’ve discussed here) in search of a customer-relevance strategy.
First, there must be a clear value proposition to the customer as this could well be a cumbersome element in terms of the retail experience. It is potentially disruptive from a customer habit standpoint as well.
Second, technology in a store begs the question of customer data, addressability and actionable intelligence. This is fundamental to adding value to the customer and making this more than just (another) cost-efficiency move for retailers.
Last, in our every technology-driven world, one aspect of brick-and-mortar retail that is irreplaceable is the human element. It is still the most fundamental differentiator aside from location and merchandising.
So many questions: Will the cost of the device be cheaper than checkout labor? Are shoppers willing to use it (consider the small proportion that use the self checkout lanes in stores)? Are retailers giving up an opportunity to display great customer service at checkout? (Publix always asks if I’ve found everything I was looking for, as one example.)
This sort of technology will continue to grow in use over time. As the younger generations move into more heavy purchasing, coupled with their already pervasive use of technology, more and more of these types of devices will be expected–not optional–in the retail environment. Retailers that do not offer these types of tools will not be seen as relevant and “with it.”
The transformation will happen, but it will be slow.
I was recently in a supermarket in Carson City, Nevada. They had many checkouts, but only two were open. The store was not very busy at that time. One of the checkouts was “express.” There were about 4 people in that line.
This store had 4 self checkout aisles. None were being used. It occurs to me that if people were reluctant to use the self checkout for a mere couple of items, then we are a long way from getting shoppers to use more sophisticated technology.
A Home Depot in New York City has 8 self checkouts. They have one associate for each 4 to help people to use them. Right there is a significant labor (or time) saving. But, they also have associates walking the checkout lines encouraging people to use the self checkout. Despite the ease of use, there continues to be reticence. What I don’t know is how many times people have to use them to become comfortable.
When the shoppers become comfortable, they will realize the benefit and the revolution will accelerate.
It seems to me that this is a first step in replacing human labor with technology for check-out. The early steps here aren’t terribly convenient for shoppers. Consumer thoughts might run like this, “Now I have to learn another system for check-out–forget it. I’m in a hurry.”
However, in the future, these kinds of systems may become easier than waiting in line. What might this look like? Every time a consumer puts an item in the trolley, the item is automatically scanned and added to the total shopping list, which is displayed on a screen on the trolley. If the consumer takes it out, it is subtracted. That could work. There is no learning curve.
Payments could happen in a traditional line, where the cashier simply accepts payment. Or, perhaps consumers who have registered a credit/debit card with the store could cash-out simply by running through a separate aisle (ala SpeedPass at toll booths).
The key I believe is no learning curve. No extra widgets. The trade-off for consumers will always be, is the technology simpler than standing in line?
I did a study with Motorola and ModivMedia on the value of mobile to consumers. We found–mostly from Modiv’s experience–that while time saving benefits are valued by customers, that is really only half the equation. Modiv was seeing that uptake was “good” but not “great” when they emphasized the time-saving features of using their mobile devices. It was when they combined the time-saving features with opportunities to get targeted promotions through the handhelds–ways to save money–that they got the higher double-digit uptake they were looking for per store.
I think in grocery there may very well be a place for store-provided handhelds, because the level of interactivity that is needed to provide both sides of the value is high enough to justify investing in the technology to control the quality of the customer experience. In other verticals, I can see all of this coming through the consumer’s mobile phone instead.
The checkout is an obvious beneficial application for these devices. (It seems that to many, this is all about self checkout.) But “to help improve interaction with consumers” is the primary focus of the devices I have seen deployed. The reality is that something like 80% of the shopper’s time is wasted in the typical store. The reality is that the primary value of these devices is to reduce that wastage by either selling something during that time or to reduce the overall trip length, without decreasing sales.
Selling more is an obvious goal, but simply reducing wasted shopper time is likely to result in better store performance. Achieving these goals will require a greater understanding of the shopping process than most retailers and their suppliers have. It means moving from a passive retailing model, where the shopper is responsible for the “shopping,” to an active retailing model, where the retailer actually participates in the shopping process.
There is real “gold in them thar hills!”
The worldwide market for portable shopping devices was $59 million in 2007? Since the technology was largely available for years, that sales volume sounds like total failure. No adoption. If retailers thought the devices would save money or improve sales, volume would be $59 million per month.
Let’s start with some data: Front-end labor typically costs 4% of sales. So if a store is doing $500K per week and can save 10% on front-end labor by using self-serve technology that represents a $104K per year. Check and see how much profit a typical store makes in a year.
Every year for the last 20 or so years consumer identify the checkout process as the major problem with the shopping experience (FMI Speaks). Shoppers will use mobile devices if they “think” it saves them time and money. Finally, a shopper spends a dollar for every minute they spend in the store. These devices give the shopper the “impression” they are getting through the store faster because they are engaged. They actually spend more. Every study conducted since VideOcart in the early 90s by IRI and Nielsen have supported the value proposition of this technology.