26 October 2014

The Bold War

Michael Nuciforo - Keatan

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Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Location, Location, Location

11 November 2012  |  7480 views  |  0

Mobile is the most disruptive consumer product of all time.  We went from aspiring to have a computer in every home to having a computer in every pocket. Soon it will be a computer in every object.  The adoption of mobile devices has driven the more social, more informed and more location aware lives we now live.  There has been a lot of debate about the future of retail payments and the role mobile will play in it.  It has become increasingly apparent that most in-store interactions will revolve around our little pocket friends and the fact we can share where we have been, where we are, and where we are going…

 

1. Personalised Pricing

Augmented Reality (AR) has been touted for a number of years as the next big thing.  Google has invested heavily in Project Glass and it’s rare to see founder Sergei Brin without his famed superhero spectacles.  The first stage of AR implementations has focused on presenting static information over a real world view.  In the second wave I expect the use of AR to change rapidly and retail is an area where I believe it will excel. 

Let's start with price tags.   They are socialist by nature, take time to maintain and are static.  By socialist I mean one price is displayed to everyone who views that product.  It doesn’t matter who you are, or what your income is, the price presented is the same.  This limits the bargaining position of the retailer and it means all customers are treated as equal.  I foresee a world of no price tags and let me tell you why…

AR has advanced rapidly over the last few years.  Increasingly sophisticated algorithms and 360 degree product scanning tools mean that even the slightest variations in objects and shapes can be calculated.  This means that an AR app will be able to determine precisely what product is in front of it.  This changes the game.  Customers will have access to either retail specific or multi-brand AR apps that they use to augment their in-store experience.

At a basic level an AR app will tell you what the product is, who the manufacturer is, and even how sustainable it is, but here comes the really cool part - it will also tell you the price.  As you hold your phone over the product it will tell you the price.  A personalised price calculated for you.  The price won’t be based on supply and demand only.  It will be based on who you are.  And because the price will be dynamic the retail store will be back in command. 

Through AR a merchant could present different prices for different people. It could be based on how much stock is left, how many people are in the store or even what time of day it is.  Prices could also be presented based on what type of customer you are.  If you a regular shopper at the store or if you have come from a rival outlet.  What about if you were very influential and likely to share the products with your friends?  These slight variations in price will drive huge increases in sales for retailers. 

 

2.  No More Queues

Retailers are obsessive about store space.  Income generated is always quantified against the square footage of the property.  In most retail outlets, the point of sale area and the accompanying hardware takes up a significant amount of space - space that could ideally be used to show off more products. Paying for goods also creates queues.  Queues that frustrate customers and take up even more space.  It’s a vicious cycle.  In the future these areas will be gone and it will all be because of mobile.

To take payments, retail staff will use their mobile device.  This will allow them to interact with customers at any location within the store.  This could be as the customer is leaving the store, outside the changing room, or more importantly right at the point of impact, when a customer picks up an item that they have shown an interest in.  Customers will also be able to self-checkout if they want.  To support this, retail space will be significantly altered.  There will be no point of sale areas and no queues. 

This evolution in retail will lead to three significant benefits.  It will increase the available space in the store, reduce the cost spent on point of sale areas and it will also allow all staff to get out from behind the counter.  By encouraging staff to use their own devices, retailers can even save on hardware costs.  Retailers will only have to focus on the app that sits on staff devices.  Retailers will subsequently launch apps for staff that will be much richer than any POS interface today (refer to point 3 below).

 

3. Warm Conversations

Does it frustrate you that no matter how many times you go to your favourite shoe store that they never remember your name, shoe size or favourite colour.  Do you long for the days of great service, by a shop assistance who knew you by first name, and a customer experience where you were treated you like an individual and not a nuisance?  The power of mobile, location and social data will create a revolution to the in-store experience and facilitate the recreation of ‘warm conversations’.

Over the next few years we are going to see the proliferation of dual apps.  Retailers will offer one app for customers and one app for staff.  These apps will be able to communicate to each other.  Retailers will use the customer’s app to generate meaningful insight about the customer’s preferences, purchase behaviours and favourite items.  In return the customer will receive offers and discounts.  This insight will then be presented to staff in the store.  Using the customer’s location, as soon as they walk into the store, salespeople will be notified of whom they are and what they would like to purchase.

The opportunities are endless.  Salespeople will receive bespoke information about the customer they are speaking to.  What they have liked on Facebook, what location they have come from, what they have recently purchased.  They will be able to use this information to help sell.  Whilst this might seem scary at first, it will become the norm.  Customers will love the fact that they can receive personalised treatment and you can request assistance whenever you need it.  Most importantly retailers can keep the conversation going after the transaction.  Unlike traditional POS systems today that add no value other than taking the payment, these new apps will allow retailers to keep talking with customer’s after the purchase.

This is the type of conversation you can expect to have in the future with someone you have never met before, ‘Hi Michael, how was your trip from Notting Hill today? We have this fantastic new pair of brown leather shoes in a size 9, would you like to try them on?’ They would know all this just from my app.  Once I tried on the shoes they could take the payment right there and then.  As I go to make the payment, I get an offer for a discount leather protectant. 

Watch this space…

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Michael Nuciforo

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Mobile and Digital Consultant

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Keatan

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