April 27, 2006
 

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Posted: 07.01.05

Fly and Buy Wireless Retail

Intuitive smart kiosks, in-store tracking and secure cell phone transactions will change the way consumers deal with retailers—and how retailers plan product marketing strategies.
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By Tim Scannell




Several years ago, while standing on the expansive stage of the Las Vegas Convention Center, Sun Microsystems’ CEO, Scott McNealy, demonstrated the flexibility of the company’s Java development environment by flashing a large ring that was impregnated with the software.

The prototype ring, he said, could now be used to authenticate employees and allow entry into secure areas. It might also someday be used to automatically pay for purchases and order merchandise on the fly, by linking the ring’s authentication software with the wearer’s bank account and the merchant’s supply chain network.
While we may be years away from the day when most people pay for their Sunday bagels with software-enabled bling, wireless systems and evolving technologies such as radio frequency ID (RFID) tagging are revolutionizing the retail industry and setting the stage for a significant shift in approaches to customer service. In fact, the industry is rapidly moving toward an era where virtual storefronts and virtual employees are an expected option, rather than an exception to the norm.

In order to gauge just how fast the evolution in retail will come about, you only have to look at how quickly the industry has changed in the past few years. In October 2002, at a popular East Coast shopping mall, mobile marketing company m-Qube conducted a small pilot program in which people could use their mobile phones to get instant coupons that could be redeemed at a number of stores within the mall area. By dialing an 800 number on their phones and choosing various menu options, users of the SmartMobile Shopper system could be sent a four-digit SMS code that could
be used to get a paper coupon at a mall kiosk. The coupon could then be brought to the retailer and applied to a purchase.

The innovative trial, reported extensively by the local press, not only demonstrated how mobile devices could effectively be used to build a virtual relationship bridge between retailers and consumers but illustrated just what does not work in mobile retail. While the concept of mobile couponing showed much promise back then, the burden that it placed on the consumer at the time, to exchange that digital
message into a paper coupon, just wouldn’t fly.

Finger Food.

Since that time, however, the retail world has evolved to the point where debit cards and paying for gasoline and other services with RFID tags are everyday activities. The technology has also evolved to the point where transactions are quite literally at the tips of your fingers. In May, for example, Cub Foods, a small Midwestern grocery chain, became one of the first general retailers in the country to deploy a biometric payment system that lets shoppers pay for their groceries with the scanning of their fingerprint.

Wireless systems are not only bringing shoppers closer to the point-of-purchase but are giving them unprecedented influence over a store’s order inventory and supply infrastructures. For more than a year, shoppers at an expanding number of Stop & Shop supermarkets in New England have been using an intelligent and wireless system called the Shopping Buddy. The system consists of a series of bright red mobile computers equipped with touchscreens and laser scanners that are snapped into special shopping carts and can be used for on-the-spot tallies and checkout when linked to shopper loyalty cards. The system is based on IBM hardware and software developed by systems integrator Cuesol, and it will even remind you that you are low on peanut butter as you enter an aisle stocked with that product. Users can also go to the Cuesol Web site to build a shopping list that will be waiting for them when they log on to the system at the store.

“The emerging trends demonstrate to us a growing willingness for wireless both within a store environment as well as back into the corporate environment,” says Mark Ferguson, marketing director for Padcom USA, a wireless solutions provider that specializes in multi-network systems. Of course, “there has to be a level of comfort that it is going to work, that it is secure and that it will improve productivity.”

Real-Time Retailing

Up until very recently, Padcom saw the bulk of its business coming from the public safety sector, especially involving police departments that wanted to make use of multi-network wireless systems to improve cost efficiencies, while at the same time guaranteeing the security of sensitive information. Increasingly, however, a lot of small-to-medium size retail businesses are looking at the company’s 6100 and 8100 remote access routers and TotalRoam software to provide wireless backhaul services between remote store locations and centralized corporate resource in an almost real-time approach. The system not only manages wireless connections between multiple types of networks and devices within a store location and provides a single point of communications, but it also offers a fail-safe capability by presenting more than one wireless access route to and from the store location.

So, if a store’s broadband-based connection goes down, the Padcom system will automatically route data through an available cellular wireless con-
nection without missing a beat. Deploying such a
system is also a lot faster and less expensive than a traditional broadband-based frame relay network, explains Ferguson. “Stores cannot waste time or risk losing customers when a single network goes down. With our approach, everything is routed through a secondary system.”
Wireless reliability is not only important for credit authorization and payment transactions, it’s also a critical factor in maintaining customer satisfaction, adds Chris Bogdon, Padcom’s chief technical strategist. As an example, Bogdon points to a customer that was introduced to Padcom through a wireless carrier and wants to work with the company to develop a real-time charge card authorization system. Eventually, however, that effort expanded into gift and customer loyalty cards, and other customer-facing services that were dependent on real-time wireless access and reliability.

“Previously, this store’s back-end infrastructure pretty much consisted of a fax machine,” he explains. “And what they wanted to do was too complicated for a frame-relay solution.”

Wireless systems can not only improve the flow of data between what is happening in the aisles, the back-haul location and a central headquarters but can be used to collect some very useful real-time information on shoppers, their shopping habits and supply and demand trends.
At Stop & Shop, for example, Cuesol’s ShopWatch software, which is included as part of the Shopping Buddy system, relies on infrared beacons in the ceiling and transmitters embedded in the mobile terminal to track the location of every wireless-enabled shopping cart throughout a store and map consumer purchases and shopping patterns. The terminals provide a constant flow of data back to a number of different applications, including one that monitors front-end workloads and can alert staff to impending changes in customer flow and another that analyzes shopping and purchase behavior patterns, which can then be used to improve the store layout and even schedule product orders and cancellations.

Tell-All Tagging

Short-range wireless technologies, such as the low-power ZigBee and even some forms of 802.11 Wi-Fi, are also being used for RFID tagging and product tracking applications. Wal-Mart, for example, is a pioneer in the use of RFID tracking on the pallet and container level. In fact, the company requires many of its suppliers to adopt RFID tracking technology so that it can extend its monitoring reach deeper into the supply chain. The next obvious step, which is being taken in a number of pilot projects right now, involves tagging individual products with wireless systems that can exchange small bits of information with backend and front-end systems.

While placing RFID tags on candy bars and packs of gum may not be the best or most cost-effective use of the technology, it can be applied to higher-end products—especially those that target a specific type of consumer or buyer demographic. One company now involved in per-product wireless tracking and the development of smart kiosks is Concursion Technologies based in Vancouver, B.C. The company has developed a vendor-managed inventory system for retail point-of-purchase racks and displays that rely on high-frequency RFID technology to perform item-level tracking.

What this basically means is that a retailer can use the system to track the items a consumer picks up, how long they held the item, if they put the item back and which other item they selected instead. “This provides valuable data not only to retailers but to the manufacturer of goods—especially
information related to consumer behavior and analysis,” explains Andrew Jones, founder and CEO
of Concursion.

Real-time item tracking has the potential to revolutionize such tried-and-true retail techniques as consumer browse time and sell-through, says Jones, adding that such information can also be incorporated into just-in-time manufacturing applications and strategies.

Although smart kiosk technologies can be applied to most any product, the concept really works best when dealing with high-end consumer goods in stores where there is limited shelf space and with retailers that cannot necessarily invest huge capital in products. For example, Concursion has worked with a number of leading golf equipment manufacturers in California to develop smart sensing and inventory control systems that can even be tied directly to consumers who decide to opt in with customer loyalty cards. “Inventory control is a constant pain in this industry, because there is a wide range of expensive products, a diversity of clubs and equipment and a strong relationship between the buyer and the seller,” says Jones.

Although still primarily a voice device, the cell phone is quickly shaping up to become a wireless front-line system that can be used to make purchases remotely or at an actual storefront, while also shifting to become a personal authentication system that has the potential to reduce credit card fraud and prevent identity theft. Black Lab Mobile, for example, has developed secure systems that use text messaging, device-customized graphics, location-relative information and mobile couponing applications to authenticate buyers during a purchase.
The BillMyCell technology, already being used in a handful of pilot programs at stores in San Diego, takes a messaging approach to transactions by acting as an intermediary between the user’s bank account and the retail merchant. To initiate a payment, the cell phone enters a retailer’s code and the amount to be transferred. The retailer’s cell phone, or even a wired phone, accepts that code and the transaction amount. A user’s credit card data is stored at a protected location and is never exchanged.

“It doesn’t eliminate the use of credit cards, nor does it entirely replace credit cards or cash,” says James Linlor, Black Lab Mobile CEO. “The idea is to use a wireless device to make a purchase without giving out any credit card information.”•
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