UK retailers need to catch-up with demand for mobile payments if they are to avoid missing out as consumers begin to start spending via mobile. This is the stark warning of a special report Mobile Payments: Catching up with the Consumer, published today for Retail Week.
In partnership with Mobile Money Network, Retail Week conducted in-depth interviews with 15 major high street retailers to understand their views of mobile payments as a means of increasing conversion rates across all channels, and what their roadmaps look like.
The study found that UK retailers were slow to respond to customer demand with retailers at various stages of evaluating different mobile solutions.
According to Industry association IMRG m-retail has recorded huge growth, up a staggering 254% on March 2011 and averaging 300% year-on-year growth for Q1 2012. But while retailers recognise that mobile payments are an inevitable evolution to their operational models, 46% said that there was little understanding of mobile payments within their wider organisation, and 33% said that there was no understanding.
The message from the Retail Week report for UK retailers could not be clearer: if you are not investing in a multichannel strategy that embraces mobile you will lose out to competitors or disruptive new entrants and a share of predicted £670bn by 2015, according to Juniper Research.
According to Ofcom, smartphone ownership in the UK nearly doubled between February 2010 and August 2011 from 24% to 46%. Meanwhile market data from IMRG reports that 51% of adults now have access to a smartphone and that 38% of smartphone users have completed a purchase using their device.
The in-depth interviews were anonymous, but include comments from grocers, convenience retailers, a department store retailer, several fashion chains, retailers selling big-ticket items, homeware and electricals, and a selection of specialist retailers.
“History is repeating itself. The retailers that waited for the online market to mature before investing in ecommerce lost out; customers didn’t wait for them. Some are long gone while businesses that didn’t exist 15 years ago are now multi-billion pound organisations,” said John Milliken, Managing Director, Mobile Money Network.
“Every piece of consumer insight available points to the fact that retailers are missing out by not fully embracing a multichannel environment. This Retail Week report spotlights the opportunity and brings clarity to the steps that retailers should be taking,” he added.
The most striking result from the Retail Week research is that retailers believe that once the adoption hurdles for mobile payments are overcome, the convenience benefits will prove compelling for consumers. This is key with 66% citing it as one of the top two priorities, along with improving sales conversion in all channels – online, offline, and traditional media.
By embracing mobile commerce and reducing inefficiencies, customer data specialist QuBit believes the UK retail economy could gain as much as £2.4bn in incremental digital revenues for UK retailers. Visa Europe has put a stake in the ground and predicted that 50% of all its payments will be mobile by 2020.
The mobile commerce developments of most interest to retailers are around creation of mobile sales channels, where consumers reserve products or complete an online purchase through either their mobile’s browser or an app. Several retailers commented that integrating channels to provide a proper cross-channel or omni-channel shopping experience is their biggest priority, with payments the next stage.