The message to retailers from IBM is simple: Embrace new technologies or suffer the consequences.
The company's recently released 2012 Smarter Consumer Study found 60 per cent of Australian consumers want to use technology as some part of their retail process. Of this 60 per cent, 17 per cent of consumers want to use three or more technologies, such as websites, social networking, televisions, in that process.
That number might not sound like much, but it was the highest rated amongst all the mature markets surveyed on a global level.
“It is higher than the US and the UK. Australians want to be adopters of technology, that’s what it indicates to us,” IBM Global Business Services A/NZ retail industry leader, Ian Wong, said.
Highest on the list of technologies consumers preferred was social networking which 90 per cent of Australian consumers were happy to use as part of the shopping process.
A similar survey by eBay on its Online Business Index for March stated that one in six respondents (17 per cent) are unsure of ways to capitalise in mobile commerce.
“Innovations in mobile technology, changing consumer behaviour, and the willingness of retailers to incorporate a multi-channel sales strategy are providing significant growth opportunities for the retail sector, and the findings of the 2012 index reflect these shifts,” eBay vice-president Deborah Sharkey said in a report by the Herald Sun.
The study also showed that the sellers were willing to embrace mobile technologies in evolving business, with 61 per cent planning to advance into mobile technologies for the first time this year, 24 per cent cultivating a mobile website, 46 per cent promoting online content for mobile, and 21 per cent publishing a mobile app.
Australian National Retailers Association CEO, Margy Osmond, said the reports show that consumers are at the core of what drives the how, when and what of the Australian retail sector.
She said that the increased use of mobile technology highlights a message for government as well as retailers.
Osmond stated that particularly at a state level, the uptake of mobile technology in retail should motivate changes in public policy, such as the removal of nutritional information labels, deregulation of store trading hours and planning laws.
“When we talk about retail, we don’t talk about bricks and mortar or online, because successful retailers are going to have to encompass everything in between,” she said.
Looking ahead, Near Field Communications (NFC) is another technology that can help position retailers as a differentiator in their industry.
So what is NFC technology and how can it be applied to retailing?
NFC allows consumers to use their mobile devices to tap-and-go when making purchases instead of having to physically hand over their credit cards. It is a contactless payment method.
Products such as the Visa Digital Wallet and Google Wallet currently use the NFC technology for payment services.
In the near future, consumers will be able store tickets, boarding passes, ID cards and key information, as well as other functionalities available in cards and smartphones – accessible via NFC. Payments have to be made through pre-paid cards, with top-ups using a savings account or a credit card.
Wong said that the proliferation of mobile devices not only enables retailers to make payments contactless for consumers, but also serves as a method to get across advertising messages and promotions to the public via their smartphones.
However, he stated that using the NFC technology now is far from being at hand’s reach.
“There is quite a bit of experimentation in that space. It is one of the payment technologies that retailers are certainly looking at, certainly on the repertoire, but in Australia, its still in its infancy stage and uptake can be expected in about five years or so,” he stated.
Retail Directions managing director, Andrew Gorecki, said retailers can adopt other more general mobile technologies that use Bluetooth or Wi-Fi with VEP 2 encryption.
“NFC is a new technology. In terms of infrastructure, there is a question of cost and security in using NFC. As long as the transmission is secure and inexpensive, it’s not a problem. But, there are other cheaper and secure alternatives that retailers can use now,” he said.
However, the word from the US is that NFC is already seeing early adopters. “We foresee 2012 as the year when deployments are going to start to happen, mostly because of the availability of the handsets themselves,” spokesperson for HID Global, Jeremy Hyatt, said.
In fact, the number of handsets with NFC is expected to rise from a global total of 35 million at the end of 2011 to about 100 million by the end of 2012, according to David Holmes, vice-president of the Identive Group, a US NFC solutions vendor.
IBM’s Wong recommended that for now, retailers should try to meet the demands of consumers by embracing technologies in retail.
He suggested that they use mobile apps for one-on-one personalised shopping and incorporate location-based services within the mobile space. At the same time, he said they should adapt two-way communication between retailers and consumers, through social networking.
One example of a retailer adopting mobility in its strategies is David Jones. In its David Jones Future Strategic Direction Presentation, available on the ASX, the company stated it will implement a new strategic direction for its future.
Current challenges According to the company, it intends to address its current challenges and grow through a three-point strategy that encompasses transforming it into an omni channel retailer, growing its store network and strengthening its core business.
It plans to do so by primarily launching four new sales channels – a new webstore, a transactional mobile webstore, native mobile apps and a social commerce store by end 2012, amongst other plans.
“It should come as no surprise to retailers that digital technologies and the Web are impacting the industry in a major way. However in Australia, the physical presence of a retailer is still very important, so it’s not about eradicating bricks and mortar in favour of online,” Wong said.
WHAT TECHNOLOGY IS NEXT?Near Field Communications (NFC): Allows consumers to use their mobile devices to tap-and-go when making purchases instead of having to physically hand over their credit cards. it is a contactless payment method.
Additional reporting by Maria Korolov, Network World