From Black Friday to Christmas - How digital mobile stole the holiday shopping season
Like it or not, holiday shopping has become the one major obsession that everybody suffers from, running, approximately, from after Thanksgiving to Christmas Day and beyond, if we count the January sales. Like it or loath it - it’s become a ‘thing’. However, according to some sources and articles last week, it’s a ‘thing’ that the digital and mobile world are muscling in on in a big way.
Business advisory firm Deloitte has released research that says 40% of physical shop sales will be "digitally influenced" this Christmas in the UK. The term "digitally influenced" means consumers will use some form of digital technology to inform or facilitate their purchase, and Deloitte says it will represent £15 billion of festive sales in 2014, almost three times the size of estimated online sales for December. Overall sales in December are forecasted to rise 4% year-on-year to £42.4 billion – over £1.5 billion more than Christmas 2013 – while online sales are expected to account for 13% of total sales. Ian Geddes, head of retail at Deloitte, commented: "Growth in the influence of digital on physical retail has been driven by consumers' desire to access information on products and services, compare prices and increasingly pay and transact via digital devices. As investment in in-store digital technologies increases, such as mobile payments to facilitate faster, more convenient transactions and beacon technology to track shoppers in-store and deliver personalised messages and promotions, so will the digital influence on the physical environment. Just as physical retailers have benefited from the growth of click & collect, technology investment in-store will increase the number of shop visitors who buy and how much they spend, as well as help join the online and offline worlds."
This last long weekend period (Friday - Monday) has become the unofficial start to the annual Christmas spending rush, with a Centre of Retail Research survey, commissioned by Vouchercodes.co.uk owner RetailMeNot, predicting that Britons will spend £6,435 per second on Monday 1 December. Called 'Cyber Monday' and marking the first Monday after what will typically be consumers' final pay cheque before Christmas, the research said the UK will spend £556 million online over the course of the day as shoppers try and complete their digital orders well ahead of retailers' Christmas delivery cut-off dates.
Interesting figures but I have to believe that they are age-skewed towards younger people. A survey conducted by digital payments company Skrill reveals that more than one in ten 18-24 year old consumers (14%) now use digital wallets for every purchase they make online. However, a generational gap is forming with over a third (37%) of those aged 55 and above admitting to never having used a digital wallet to pay for goods and services online. Findings also indicate just 4% of people saying they have never bought a product or service online. Yet the influence of technology is not confined to shopping online. When 18-24 year old consumers shop on the high street, one in five (17%) now pay for goods or services in-store with a mobile device, contactless reader, text service or a sensor that determines their location via their phone. This compared to only 2% of people aged 55 and over.
Over in the US, there are similar findings. Stratos, Inc., creator of the Bluetooth Connected Card™ Platform, last week also announced results from its 2014 Holiday Mobile Payments Survey. The consumer survey found that nearly one out of three (30 percent) US smartphone owners plan to use mobile payment offerings such as Apple Pay or Google Wallet for shopping in stores this holiday shopping season. In fact, 17 percent of the smartphone users said they would spend more because of these new payment options. The report said smartphone users wanted to use mobile payments applications like Apple Pay and Google Wallet in the following locations for the holidays:
- 66% Department stores
- 48% Discount retailers/super stores
- 43% Coffee shops
- 42% Fast food
- 41% Toy stores
- 35% Drug stores
- 28% Hotel
- 28% Upscale restaurant
- 26% Bars
- 23% Boutiques
However, when it came to American smartphone users’ comfort level with the new technology, Stratos found less than 5 percent were “more comfortable” paying with their devices than using traditional payment cards such as credit or debit cards. A clear majority of smartphone users were uncertain which stores would actually accept this type of phone payment. When asked what appeals most about mobile payments for in-store shopping, the number one reason was “I don’t have to worry about getting my credit or debit cards stolen” at 37 percent. The second most important reason was “I can track my spending more easily electronically” at 32 percent, followed by 31 percent of smartphone users saying, “Phone pay is not appealing – I would rather pay by payment card.”
Ah, but would mobile phone payments be more appealing if the maximum transaction value was raised beyond the paltry £20 limit? The Logic Group announced last week that they have a new service available to those with NFC-enable phones that lets users enter their PIN on their mobile device to confirm a high value transaction - above the £20 limit. The new high value contactless service requires a software update to merchants’ contactless POS terminals and is currently live in the stores of a UK carrier, a client of payments and loyalty specialist The Logic Group, which has gained accreditation from Visa for the service. Two other merchants are also in the process of rolling out the service ahead of wider availability in 2015.
Explaining that the solution used two-stage authentication to NFC World+. was Mark Prior-Egerton, solutions marketing manager at The Logic Group, “From the consumer perspective, there are two user experiences. The first user experience is where the customer goes up to the terminal and instead of presenting your card, you’re going to be presenting your mobile. So, you’ll say you want to do a contactless transaction, you’ll take the phone and go near to the reader and it’s almost like a two-tap interaction, and then you bring the phone back and it will identify that it’s over £20 and will request your PIN. So you’ll put your PIN into the phone and, of course, it will do something similar to how it works with the terminal at the moment; it will actually come up so you will be able to see it on the phone display. Once that comes up, you tap again and that’s when it confirms that it is your PIN with the issuer and goes off and the transaction’s complete. The other use story is the interaction in the queue. You’ve already identified that you’re going to be making a transaction of over £20 and you’ll input your PIN whilst you’re stood in the queue so it will speed up the process.”
And the British certainly have a lot of time on their hands while waiting in those queues. The average Brit spends over 18 hours a year queuing, with local shops, post offices and supermarkets the worst contributors to the UK ‘queuing culture’, according to stats released last week by Visa Contactless. The survey revealed that Londoners are worst off, with those in the capital averaging 9.11 minutes per week in queues – more than two minutes longer than those in the West Midlands who suffer the second longest queues.
Over 89% of the 2,000 consumers surveyed have recently left a store as a result of the length of the queue, with two thirds (65%) admitting they’ve visited a rival store straight after in order to get what they need. Almost half felt that the length of queues was down to slow payment options and people having to find the right cash rather than using quicker payment methods such as contactless. True to form, 78% of Brits smile sweetly or tell the cashier it’s not a problem when they get to a front of the long queue, despite feeling aggrieved at the time wasted.
“These stats clearly show that consumers are incredibly frustrated by long queues,” comments Kevin Jenkins, managing director UK & Ireland at Visa Europe. “I’d encourage those who have a contactless card (or perhaps a mobile wallet?) to use it for small purchases whenever they can to help reduce tedious queuing in store, particularly over the busy Christmas shopping period.”
If things go well, with so many people doing their shopping digitally at home, perhaps even the Christmas queue will become a thing of the past. Considering the scenes we saw on the news of customers going nuts at these events, that has to be a good thing, right?
Until next week.
Steve Atkins
Contactless Intelligence
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