STORES Magazine - October 2008 - (Page S10)

MOBILE COMMERCE Less Cash, More Money Brian Kilcourse, managing partner of Retail Systems Research, led a panel discussion entitled “Mobility and Near Field Communications — The New Era of Ubiquitous Retailing” that explored the overall topic of emerging electronic transaction technologies. These include NFC (a chip in or near a cell phone makes contact with a nearby communications node in order to obtain information or make a transaction), contactless technology (a chip embedded in a credit card does more or less the same thing), 802.11 wireless networks and RFID. The panelists — Mohammad Khan, president and founder, VIVOtech; Barry McCarthy, president, First Data Mobile Solutions; Thomas Parker, group manager, transit system development, Bay Area Rapid Transit System (BART); and Jim Scott, CTO, Kroger — did an admirable job of avoiding the technical details of Thomas these various developments and focusParker ing on the business issues surrounding them. Parker opened the discussion by showing a short TV news clip explaining a recent BART test of NFC technology. From January to May of this year, a small group of riders (230 hand-picked volunteers, all regular users of the system with Sprint or Boost mobile plans) were able to pay their fares by waving their cell phones at ticket machines. They were also able to make purchases from Jack in the Box and obtain information (such as the location of the nearest Jack in the Box restaurant) from “smart posters” in the stations. BART is still studying whether to expand this pilot program to the public at large, but whatever technological hurdles might have to be overcome, the business case for the technology is simple and clear-cut, Parker said. “Every time we have to handle a dollar it costs us about six cents, so anything that reduces our need to handle cash is an advantage to us.” It isn’t usually a free advantage, however. “The exchange medium — paper tickets, tokens, coins, whatever it might be — is a huge item in our operating costs,” he said. “We pay five dollars for a smart card. We pay three cents each for a paper ticket, and we buy a lot of tickets. “With a smart phone using NFC we don’t have to buy an instrument,” Parker said. “We can sell a dollar and get a dollar, not sell a dollar and get 90 cents.” S10 STORES / OCTOBER 2008 New revenue sources The participation of Jack in the Box was an outgrowth of research trips Parker and his associates made to Japan and Hong Kong, where the use of NFC and other transaction technologies is much more advanced. “When you can partner with a third-party vendor, you set up a win/win situation for everybody,” he said. “It enables the consumer to carry less plastic and less cash around, it builds business for the third-party vendor — this was very successful for Jack in the Box — and it’s a new incremental revenue stream for us.” Kroger is piloting some wireless systems using NFC combined with high-frequency RFID technology. “It’s on our just-past-middle-term to-do list,” Scott said, “something we’ll look to implement in the next three to five years.” One of the challenges Kroger – and, by extension, the industry — faces is motivating large numbers of shoppers to use a given technology. In addition to simple, speedy transaction clearance, Kroger expects to offer loyalty programs and/or multi-channel functionality options. “The core challenge is realizing ROI and business benefits,” Scott said. “We’ll have to convert 2,500 stores by 15 or 20 devices per store, so you’re looking at a substantial investment.” Rather than place a futures bet on that investment, Kroger is taking a wait-andsee approach. “The consumers and the payment industry are going to drive it,” Scott said. “We see a convergence: The need to bring NFC, contactless and Jim Scott RFID all together on one store network WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - October 2008

STORES Magazine - October 2008 Contents Executive Editor's Page President's Page Force of a Different Collar What Shoppers Think Bagging the Competition 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Favorite 50 Sticky Strategies for Retention Concept2Watch Kiosks Online Business Intelligence RFID NRFtech Wrap-up E-Commerce Credit Warehouse Systems Logistics Selling Tools Supply Chain LOEB Retail Letter Arts Update Point of View NRF News Retail Crossword Retail Industry Calendar Last Laugh

STORES Magazine - October 2008

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