The Future Of Retail Is Now

There’s no doubt that the face of retail is changing. And this week in New York, retailers and the marketers and technologists that work with them are together trying to figure out how to get ahead of that change and turn it into an advantage.

PYMNTS was there on the ground, catching up on the ideas that are catching fire this year and talking to the innovators on the floor about “what’s next” for retail in the U.S. and around the world.

Innovation Drives The Train

“What this is really about is big ideas and cool stuff,” retail brand consultants Graj and Gustavsen founding partner Eric Gustavsen told those assembled at the NRF’s iLab exhibit. The iLab was a showcase for a variety of products,  including health, food and beauty, e-commerce, home decor, wearables and the sharing economy.

“We’re going to be looking at a mix of game changing ideas in the market that will change the ways people live, play and shop.”

The ideas on display were varied.  There was a demo of a new “Facetime” for shopping application that offered consumers the chance to connect – in real time – with an expert who can make sure that those jeans really do look good on the consumer.

“Uber is magical because it feels like magic and because things arrive for you.  And why can’t this happen in a retail context–and you know what–it can. An expert should be available [to consumers] on demand,” said cloud technologist Appiro’s Director, Clinton Bonner.

Opportunity Amidst Options

What holds all that is on display together, Gustavsen noted, is the role of innovation in helping retail move to the next level. Innovation is valuable for what it provides, but also, because it’s now an important part of a brand’s identity.  Consumers, when they shop, want to be wired into what’s new and next, which means the pressure is on for merchants online, offline and all stops in between to be innovative – and to try to anticipate how to get there.

“Innovation is driving brand value, so we’re finding ourselves at a sort of crossroads of looking at brand value and brand positioning and what that means in the market and the degree to which innovation has a huge effect on that.”

However, as NRF is making clear, there is no shortage of innovations available to merchants who wish to accommodate those consumer preferences and new brand positions. In fact, the array of options from beacons to mobile payments, NFC, HCE, EMV, cross-channel, cross-border, and social marketing can be overwhelming. After all, the merchant’s humble goal is to sell products. Period.

Gimme Me An “O”

The one word that has been spoken more than all others this first day is “Omnichannel.” However, it’s been used in a much different context than perhaps it is spoken about in other settings. Omnichannel is being embraced as a strategy that includes the resurgence of brick-and-mortar stores, since the overall consensus of the NRF crowd is that the physical store still has a lot to contribute to the wonderful world of commerce.

But only if merchants understand how to use it to their advantage.

“The value of brick-and-mortar can be to offer the consumer a chance to buy online and then not to send back the goods, but to go to the store with the goods and exchange them onsite.  From that perspective, the payment is very key, because it shapes the experience for the consumer.”

That was the perspective of Ingenico EVP Europe Pierre-Antoine Vacheron, who caught up with MPD’s Karen Webster on the show floor.

The cross-channel merchant has a unique chance, he noted, because they offer a new layer of ease of use for the customer: the ability to buy online, pick-up in store and then return and exchange in store seamlessly, easily, and without additional work like having to repackage an item and send it back. In that sense, Vacheron noted, payment plays a critical role and can be the difference between a good and bad customer experience with the retailer. He offered that helping merchants select a platform that enables that entire seamless merchant interaction has to be both pragmatic and collaborative. The minute it becomes “choppy,” Vacheron noted, omnichannel immediately loses its charm.

Vacheron also emphasized the additional challenge that payment faces – it must be secure. And while much promising has happened on this front, Ingenico is particularly well suited to guide U.S. retailers to the shift to EMV that is underway, a shift that will present challenges for retailers. When asked for words of advice for U.S. retailers now in the thick of the migration, Vacheron offered, “It takes more time then you think.”

However, it’s time well spent, he noted, since that transition will not only help merchants move to the more secure payment type, but will help retailers attempting to traverse the digital divide by expanding their capabilities across the board and giving them a platform for innovation.

“It’s not that big an issue for the retailer, since in terms of consumer experience it doesn’t change a lot. But it brings a lot of potential with it for the retailer, and all the Apple Pay innovations and such wouldn’t exist without EMV,” Vacheron added. “So I would say go for it, and then leverage this transformation to change the payments experience at the point of sale.”

Vacheron further explained that while the changing retail environment is challenging, it isn’t something merchants should experience with fear.

“Don’t experience this as a constraint,” he offered, “but instead view it as a new way to interact with the consumer.”

Vacheron wasn’t the only person Webster spoke with at NRF yesterday who had EMV on the brain. Echoing his French counterpart’s concerns about the difficulties U.S. merchants may face during the migration, Creditcall’s CTO Jeremy Gumbley noted, “It’s very clear when you are walking around a show like this – a lot of people don’t understand what it takes to become EMV compliant.”

Gumbley noted that while it may seem as easy as plugging in a key pad, merchants have a lot more work to do.

But more than implementation concerns about EMV implementation, Gumbley spoke to Webster about what he thinks the next challenge for the retail payments space is: card not present transactions.

“We’re beginning to see an increasing numbers of transactions going there (the cloud). So what we need to work on as an industry is securing those card not present transactions.”

This, he notes, won’t be easy, because where there are customers transacting, there are criminals transacting.

“It doesn’t matter what kind of transactional security we build in, if there’s money to be made from defrauding it or bypassing it, criminals will find a way to profit from that,” Gumbley remarked.

However, bigger than these concerns are what Gumbley sees as the potential as retail increasingly moves online and expands across borders, as it is doing now. Those transactions aren’t easy or consistent or seamless for consumers. But that, Gumbley says, will change over the next decade.

“Another significant issue the industry faces is whether that card holder from Finland can use his or her card in Canada as easily as in Australia.  Right now, with these mobile schemes, the coverage is very, very fragmented.  We need to acknowledge the things Visa and MasterCard do very, very well – global acceptance of their product.  Maybe in ten year’s time we’ll see the same thing from Apple Pay and Google.”

Webster chuckled lightly at that assertion, noting, “Ten years? Not happening.”

While Karen Webster might be right in her dubiousness about the globalization of Apple Pay or Google Wallet in the next decade, she did agree with Gumbley that the rate at which technology is advancing means that innovations that used to be spaced decades apart are now iterating much more quickly.

So can we know today what retail will look like in ten years? Perhaps not.  But the retailers at the Big Show this week clearly aren’t waiting ten years for the future to start, when now is as good a time as any to get the wheels in motion.



Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The September 2019 AML/KYC Tracker Report provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

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