Self-service Embraces Mobile

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The time is now ripe for mobile interactivity and payment by mobile phone. This year, Planet Retail published a report providing detailed insights into the current initiatives of the world’s largest retail groups aiming to deploy the customer’s mobile phones as assistants.
 
By Björn Weber, Research Director Retail Technology, Planet Retail
 
Powerful initiatives in France and the Netherlands, initiated by the likes of Carrefour, Ahold and Auchan, may be strong enough to set European, perhaps even global, standards for payment by mobile phone. Retailers all over the world are also testing the customer’s mobile phone as personal shopping assistant, product information terminal, shop finder tool, shopping list editor, couponing terminal and even self-scanning device.
 
An estimated 2.8 billion mobile phones are in use around the world, more than PCs, and even more than TVs. More people in the world use mobile phones than use the internet. Moreover, the mobile is the one and only device that people carry with them all day, every day; it is the only technology that is worthy of being described as personal and yet ubiquitous. Hence, it now opens up a myriad of different ways for retailers to interact with their customers.
 
A new revolution seems to be starting in France, this time bearing the name of ‘Ergosum’, an acronym for ‘Ergonomie des Service Sur Mobile’ (Ergonomics of Mobile Services). In December 2008, the French grocery giants Carrefour, Auchan and Intermarché, as well as non-food retailers Fnac, Castorama, Decathlon and Leroy Merlin, joined forces. Together with their in-house banks and the mobile network providers the retailers want to make payment, the use of loyalty cards and couponing easier, by bringing everything onto one single platform: the mobile phone. Carrefour is carrying out larger field tests in late 2009, followed by roll-outs in 2010.
 
One of the most promising trials in the area of standardisation, Payez Mobile, is also located in France. The seven largest French banks and the three French mobile phone network operators have joined forces as Payez Mobile to turn the customer’s mobile phone into the wallet or purse of the future.
 
During 2008, Payez Mobile conducted a successful trial in the two cities of Caen and Strasbourg in France, with almost 1,000 customers and a large number of specialised retailers, restaurants, pubs, public transport and entertainment providers taking part. An important success factor for the project is the fact that the partners managed to involve MasterCard Worldwide and Visa Europe as co-operation partners. Both credit card companies are presently putting significant investments into the roll-out of contactless payment with swipe cards, aiming to sideline the debit card-based payment processes as well as cash – including transactions worth less than €20.
In the Netherlands, grocery market leader Albert Heijn is participating in a promising payment-via-mobile-phone project called Payter. Since August 2007, Payter has been trying mobile payments in Rotterdam with Albert Heijn and about 60 smaller businesses such as restaurants, fashion retailers, beauty centres, cinemas and parking space providers. Since August 2008, Payter and its partner CCV, a major Dutch electronic payment system provider, has been rolling this project out to Amsterdam, The Hague, Utrecht, Eindhoven and Arnhem. In total, 9,000 points-of-sale are participating in this trial. Payter intends to include a further 100,000 customers this year, who will use a specialised phone from Nokia.
 
In London and Frankfurt, the public transport associations are testing mobile phones with NFC as tickets. Transport for London is testing a mobile phone version of its pre-paid swipe card, the Oyster card. The public transport operator in the Frankfurt region, RMV, is collaborating with Visa Europe and Citibank Germany with virtual tickets on the mobile phone, combined with timetable information as an additional service for passengers.
 
As means of payment, the mobile phone has clear advantages over cards. Because of the high usage rates, the loss of a mobile – forgotten, lost or stolen – is, according to several studies, more quickly noticed and reported than the loss of credit or debit cards. For the first time the market power of companies pushing the new means of payment forward is strong enough to lead to success: not only nationally but, if the specifications prove to suffice, also internationally.
 
In both projects, Payter in the Netherlands and Payez Mobile in France, the mobile phones need to be equipped with RFID-technology known as Near Field Communication (NFC). Although at present only a minority of devices are NFC-ready, this technology seems to be the leading horse in the race for mobile payment.
 
NFC is based on the same kind of radio technology – RFID – used in logistics. In the supply chain, items are identified as soon as their label, a passive microchip with antenna (transponder), passes into the magnetic field induction of a transmitter device. But differently to RFID deployed in logistics, NFC -enabled mobile phones are equipped with both a passive chip (transponder) and a transmitter device.
 
With both devices enabled, they can be used either in a passive or in an active communication mode. In the passive mode, the mobile phone simply replaces a swipe card, as already in use as travel cards, access cards to buildings and ski lifts or to clock-in at work. But in the active communication mode, NFC phones provide an electromagnetic field that enables them to read passive RFID labels, or to communicate in both directions with other NFC devices.
 
The promising Payez Mobile approach in France combines both ways of communication with NFC. If the amount is less than €20, the customer simply places the phone in front of the terminal, the payment is made and the receipt is printed out. The process is similar to that of the contactless cards such as MasterCard’s PayPass, Visa’s PayWave or, in the US, AmEx’s Expresspay.
 
Another interesting application for mobiles is carrying paperless promotion coupons. In the US, Kroger, the second largest North American grocery retailer, started a paperless couponing promotion together with Procter & Gamble back in December 2007 – at that time, without mobile phones but with internet coupons and the ‘Kroger Plus Card’.
 
For Kroger, 2009 is the year of the mobile phone as marketing assistant. In January, Kroger partnered with specialist Cellfire to make coupons from Procter & Gamble, Del Monte, General Mills, Kimberly-Clark and others downloadable onto and redeemable from cell phones. According to Cellfire, over half of shoppers who joined the programme redeemed more than one coupon.

Metro Group equipped 100 customers with mobiles from Nokia that featured NFC and cameras with auto-focus.

Pick Up on Aisle Three
 
In May 2008, Metro Group opened its second generation Future Store, a Real hypermarket in Tönisvorst, Germany. One of the most innovative features in this test store is the option for customers to use software which can adapt mobile phones as self-scanning equipment.
 
By scanning products’ barcodes in the store with their phones, customers can access additional information on the product via the mobile’s display. They can use also the phone as a self-scanning device that makes the further scanning of the chosen products at the checkout superfluous.
 
Additionally, the same phones are also tested as means of payment via NFC. In a first step, Metro Group equipped around 100 customers with mobiles from Nokia that feature not only NFC technology, but also cameras with auto-focus. Only with auto-focus are the phone’s cameras able to replace laser technology for barcode scanning.
 
At the end of the shopping trip through the store, the software, called Mobile Shopping Assistant (MSA), shows a barcode on the mobile phone’s display. This barcode is read by the self-service machine Pecuron, a jointly developed standalone payment solution from IBM and cash specialist Gisecke & Devrient. The MSA software, jointly developed by Metro Group’s in-house IT subsidiary MGI and Deutsche Telekom, connects the customer’s device via T-Mobile’s 3G network (UMTS) with the hypermarket’s IT system.
 
The discipline of scanning graphic codes with mobile phone cameras to receive additional content is already established in Japan, Taiwan, China and some other Asian countries. All kinds of consumer-facing businesses, among them brand manufacturers of fast moving consumer goods as well as retailers, are showing Data Matrix graphic codes on products, leaflets, posters and even on their websites. Once scanned with the camera, the phone connects to special content via the internet that brings additional information to the screen.
 
With this technology, food manufacturers can not only provide additional information on ingredients, they can also make every single item traceable and, for instance, show a picture of the farm where the product originated. In the Americas and Europe, the deployment of these so-called Consumer Response Tags (CRTs) has only just started.
 
In autumn 2008, the UK’s Tesco started to test a feedback service called ‘Every Comment Helps’ in about 100 stores. The service from CRM specialist Fizzback allows a variety of methods to contact the retailer, either while the customers are still instore, or after their visit, mainly via mobile phone. Customers can send an SMS text, an e-mail, dial the freephone number or use the traditional comment cards to give feedback. The system allows comments received from customers to be automatically analysed for their meaning in real time and dealt with accordingly.