Can mobile commerce save the high street?

4th Jan 2013

Mark Prior-Egerton examines how mobile loyalty propositions can merge the worlds of online and offline shopping to save Britain's failing high street. 

It's been a grim couple of years for the high street with an estimated 30 chain stores closing daily. A recent PriceWaterhouseCoopers report suggested that, over the last 12 months, major retailers in the UK have closed close to 1,000 stores due to a combination of the recession and the growth of the internet shopping (compared to 174 in 2011). With many big names such as Comet, Game and Clinton Cards feeling the strain, the government recently pulled together a think tank to come up with a solution to the demise of the high street. But, perhaps the rebirth of the high street is possible with the reinvention of retailing through an old foe (the internet), as we see a blurring of the real world and virtual worlds with mobile commerce.

Mobile usage

The latest results on smartphone penetration show that over half (56%) of UK consumers now own a smartphone, whilst around one in five (21%) have access to a tablet device. Recent stats have revealed that 59% of us use our mobile to access the internet daily - whether it’s to check our emails, shop, bank, socialise or play games. All of these examples highlight how dependent we have become on mobile devices, with a staggering 78% of consumers saying that we wouldn't leave home without it. Although 35% of us are already buying stuff using our mobiles, we're not quite there yet when it comes to fully loaded mobile payments. It seems that we have some trust issues in terms of mobile security, but ultimately we just don’t see the added value it will provide over and above traditional payment methods.

Mobile payments have become much more widely adopted in developing countries; with the lack of electronic payments and less access to money, mobile has filled the void in person to person payments (P2P). In developed countries however, the case for mobile payments has been a harder sell. The ease of access to cash and businesses facing the cost of deploying a mobile payments infrastructure means we are presented with a convincing barrier to entry.     

So if it’s not through mobile payments, how will mobile save the high street? The answer in short is it won’t… on its own. Mobile is only part of the solution as merchants need to join forces and work SMARRT (specific, measurable, attainable, relevant, rewarding and time-bound) to survive. It has long been a misconception that the internet is a cheaper and quicker way to purchase, when in reality it can cost more. When you add up the delivery costs, wait time and frustration of having to send back stuff that either doesn’t fit or looks nothing like the image online, you start to wonder if there is a silver lining to shopping on the high street.

I picked up the acronym SMARRT when setting project targets, but it is just as relevant to saving the high street as it is for effective project management. For those of you who are reading this and know a little about project management I admit that there is no ‘R for rewarding’ in SMARRT projects, but for this to work for the high street it’s a must. 

Loyalty rewards

When we apply SMARRT to the high street we are talking about instant rewards at the point of sale, using big data. It might sound a bit scary, but it isn’t. It just means that we’ll get specific promotions (rewards) on stuff that is relevant to us, based on our purchasing habits i.e. what we’ve bought, where we bought it and how often. The attainable piece of this is just as important as the other parts, as we’ll only get rewarded on the stuff we actually agree to receiving. 

Unlike current loyalty programmes, mobile delivers more value with big data and location based services. It has the potential to operate in a similar way to the virtual market place we get online with etailers such as Amazon. Where an item is out of stock in one store, merchants from a different shop (either another branch or a different retailer collaborating with the merchant) could check their stock and present an alternative item, which is price matched to the original store’s item. They can then provide a voucher for collection and this service can even extend to ‘out-of-towners’ being directed to the store’s street address through a navigation portal.      

The main value of this system is in the delivery of real-time redemption, which enriches the shopping experience.  Conceptually it could be like having your very own pocket-personal shopper with you. For example, a customer purchasing a dress in Marks and Spencer could then receive a recommendation for jewellery in Monsoon that compliments the dress and the shoes they have reserved in Dune, with each item bought delivering money off the total cost of the outfit. Plus, when synced with a mobile calendar, the solution delivers timely and relevant rewards using personal data such as birthdays, weddings or even to celebrate a shopping anniversary with a specific merchant rewarding the customer with an extra discount or complementary item with their next purchase.

How much of this is fact or fantasy is to a degree down to the merchants on the high street. Some payment service providers have already developed the services to implement multiple payments, remote estate management, secure tokenised rewards at the point of interaction and are currently working with their clients to make the above become a reality.  

In conclusion, mobile loyalty will be the driving force behind mobile payment adoption in 2014. Although 2012 has seen a slower than anticipated take up of NFC enabled handsets, SMARRT mobile loyalty propositions such as instant rewards will deliver the value added benefits to the high street and go some way to driving revenue and growth whilst rewarding customers at the point of interaction.

Mark Prior-Egerton is solutions marketing manager at The Logic Group.


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