Apple Pay, wearable technology and the 'new normal' for retailby
The arrival of Apple Pay in the UK market will stimulate a major shift in the way consumers shop, not least because the company has millions of devoted customers who idolise its products.
Having invested in an iPhone and an Apple Watch, many of them will want to use this new system that allows them to pay for their coffee or snacks with a swipe of the shiny device on their wrist.
In just a handful of years, wearable technology has moved right into the mainstream. Who would have thought a few years ago that pensioners, for instance, would routinely wear fitness monitoring devices on their wrists or that the range of smartwatches on offer would require many minutes to search through.
Now we can see that devices such as Fitbit and Vivosmart have become the kind of items commonly bought as family presents. The evidence is before us: one of the country’s biggest chains – Lloyds Pharmacy – found such devices flew off the shelves in the run-up to Christmas.
In retail, however, wearable technology is not just about payments and consumer devices, it promises a series of innovations that could give store operations a real makeover.
Of course, the arrival of Apple Pay is the most attention-grabbing of the current developments. It will pull many consumers away from their chip-and-pin payment cards for smaller purchases and is part of the general trend towards the everyday acceptance of wearable technology.
Soon the technology giant Samsung is going to add its weight to this bandwagon with the launch of its wristband, using flexible LED technology to produce a physically resilient product that is both smartphone and payment device.
From a retailer’s perspective, allowing customers to pay through wearable technology is always going to be about return on investment. For some, the £30 payment limit that comes into force in the autumn will be too low to make it worthwhile, although with Apple Pay, there is the option of increasing the amount if updated software is installed on payment terminals.
Nonetheless, if retailers are in an urban location with plenty of iPhone users and smartwatch wearers, they should certainly consider Apple Pay. The speed and convenience of paying with a quick swipe of a device will attract more customers and bring a quick return on investment.
And stepping into the arena is not as daunting as may appear. If a retailer already has pin entry devices (PEDs) that are able to take contactless payments, then they can take payment from Apple Watch and some of the other smartwatch payment systems that are in the pipeline.
It is not all about speed, either. Enabling payments via wearables also gives a retailer a loyalty advantage. Customers can be enticed to sign up to loyalty programmes and build up credits that can easily be monitored and redeemed through a wristband, or smartwatch.
Retailers have a great opportunity here to take the initiative and engage with queueing customers so they feel more at ease using their wearables to make payments. If customers also sign up to loyalty programmes, the retailer has access to profile data, which they can use for marketing purposes.
A further driver towards wearables is likely to come from the banks’ increasing use of biometric technology for customer identification – especially blood vessel recognition. Indeed, given Apple’s acquisition of biometric businesses, it is expected they will add new payment authentication methods to their devices, besides the current fingerprint recognition technology.
Biometric recognition of this kind, allied to a wearable such as a wristband, is very practical in locations such as sports and fitness clubs where membership or identity is an issue. By swiping a wristband over a reader using a secure NFC connection, entry to facilities is immediately available with the minimum of fuss.
In a very different environment – cash-and-carry warehouses – where customers pay on account and determining identity is crucial, wearable technology could eradicate the need for record-checking and production of ID cards at the checkout.
Yet for store operators, wearable technology is about far more than just wristbands and smartwatches. Retailers should be thinking about how it can bring efficiency to their operations. In particular, through the use of augmented reality via Google Glass-type devices.
These can, for instance, be used as tools to give guidance on how stores should be laid out and products presented. As staff with headsets move around the store, head office managers can check remotely via cameras in the devices to see if their instructions are being fulfilled. It allows them to offer real-time advice without the need for training courses or days out of the office.
The same technology can be adapted to bring a big boost to customer service. Staff equipped with a headset can see down aisles and pull up real-time product availability information in front of their eyes. Without having to leave customers, they can let them know precisely where products are, whether they are in the stock room or will shortly be delivered.
And as more retailers operate click-and-collect, this visual display technology will enable in-store staff to complete an order much more quickly, picking up the location of products through tiny radio tags. Not only will it save staff time, it will also alert them when the stock of individual items is running low and shelves need replenishing. As a result of such increased efficiency, the click-and-collect experience for the customer should be smoother than ever, free of embarrassing delays or incomplete orders.
Seen in three dimensions, then, wearable technology is likely to become an everyday part of retail, both on the shelves, on the shop floor, in the stock room, back office and even at headquarters.
For many store operators, adopting wearable technology is likely to make them far more attractive to consumers.
James Pepper is technical services director at Vista Retail Support.