Post Categories: Market Watch

Surviving Extinction: Taking Checkout Into the Digital Age

If you have ever headed up to the front of a store, ready to purchase your carefully selected items—only to abandon them as soon as you see the checkout line is backed up into the aisles, you are not alone. Nearly 40 percent of shoppers say they leave the store when lines are too long, according to a study by mobile payment company AisleBuyer. And 73 percent of shoppers cite waiting in line to check out as their least favorite part of the in-store experience, reports technology firm Synqera.

Understandably, retailers have experimented for years with different approaches—from self checkout to faster scanners—none of which have resulted in a reduced wait at checkout. However, as populations continue to grow and retailers are forced to accommodate more people within their current store layouts, the need to evolve past the archaic checkout process and into the future of digital checkout is imminent.

There are a number of new technologies now available that will revolutionize the checkout experience, cutting down on wait times, boosting customer satisfaction and loyalty, reducing costs and increasing sales. In order to provide more efficient checkout options and to avoid damaging relationships with loyal shoppers, retailers must first understand what customers want in a checkout experience and what technologies can help deliver that experience.

The ideal wait time is three minutes or less, says consumer research firm Envirosell—with each minute above that increasing the likelihood shoppers will get frustrated and abandon their baskets. But the preferred checkout experience is more than just a short wait. Shoppers also want convenient options that simplify their in-store routine and offer personalized experiences—for example, walking up to the register and having all of their loyalty and coupon data instantly recognized, without having to swipe a card or say a word.

“Mobile is definitely going to play a big role in making checkout easier for customers,” says Abhi Beniwal, Senior Vice President of Global IT for Interactions. “But the most powerful digital checkout solutions are those that combine multiple technologies to deliver a better overall experience.”

Heeding this call, progressive retailers around the world have begun to experiment with a variety of solutions that combine mobile and other technologies to deliver consumers the enhanced checkout experience they want.

One technology that’s reinventing checkout—and the brick-and-mortar concept as a whole—is QR (quick-response) codes tied to at-home delivery services. International grocery giant Tesco recently launched a service based on this model in South Korea. Using Tesco’s app, shoppers can snap photos of QR codes posted on subway walls for the grocery items they need as they wait for their trains, then choose when to have those items delivered from a nearby store to their home. Beniwal expects this type of store- or even subway-as-showroom model to expand even further as near field communication (NFC) technology is integrated into more smartphones.

“The most powerful digital checkout solutions are those that combine multiple technologies to deliver a better overall experience.” –Abhi Beniwal, Interactions’ Senior Vice President of Global IT

The mainstreaming of NFC is also expected to expand the adoption of another promising digital checkout technology which has thus far stayed in the background: the mobile wallet. With a mobile wallet, shoppers can pay through their personal financial accounts with the simple scan or tap of their phone against the retailer’s QR- or NFC-enabled POS system. Starbucks has been leading the way in this arena with its Square Wallet, which not only allows customers to pay for their purchases, but also helps them discover nearby businesses and deals. While some consumers may express concerns about storing their financial information on their phone, this can be overcome with careful consumer education. According to Beniwal, “Mobile wallets are safer than regular wallets. Your phone is tied to a unique PIN, so if you lose it, you can just wipe all the mobile wallet information that was stored on it with a single call to your mobile service provider.”

Some of the latest innovations in digital checkout center around combining several existing technologies into a single solution that allows shoppers to complete the entire checkout process on their own via their mobile device. Already, mobile apps like grocery retailer Stop & Shop’s “Scan It!” allow shoppers to scan items, get discounts and head straight to the self-checkout line to finalize their purchases without unloading their carts or handing over physical coupons. Developers envision taking this type of solution one step further with the new Google® Glass (computerized eyewear that acts as a smartphone, GPS, camera and more all in one) by creating an app that would allow shoppers to scan items, comparison shop, view a running total and checkout using a mobile wallet—all simply by looking through the lens and speaking a few commands.

sept13-calendarWhile solutions like these require significant investments in technology and human resources to build, they offer sizeable tangible benefits for retailers. For example, the Stop & Shop “Scan It” app not only saves shoppers time, it also increases basket spend by 10 to 17 percent and lowers front-end costs by 10 to 15 percent, according to Modiv, creator of the app. Adding in mobile wallet capabilities like those envisioned for Google Glass only stands to increase savings for retailers—and satisfy the 73 percent of smartphone shoppers who Modiv says would prefer to handle checkout on their own.

“Up-front costs are a major obstacle, but retailers have to remember that every interaction with a customer is a chance to build loyalty… And adopting mobile technology opens the avenue of communication for the type of continuous relevant and meaningful engagement that does just that,” says Chris Doherty, Vice President of Loyalty Strategy for Daymon Worldwide, which recently launched Be Heard, a digital loyalty and payment solution for retailers.

The message is clear: it’s time for checkout to evolve. Progressive retailers who embrace digital checkout technologies and take them to the next level can not only improve customer satisfaction and loyalty, but also pave the way for a new vision of retail—one that makes shopping more easy, convenient and enjoyable, and leverages technology for the greatest benefit of consumers and retailers alike.