Peter’s been talking Tesco and mobile payments in Marketing Week. They’re reporting on the supermarket giant’s rollout of their PayQwiq app, assessing both the advantages and the challenges ahead.
According to Marketing Week, Tesco is expanding its pilot to 500 stores and offering 600,000 customers a trial of the service. However with only 18% of consumers interested in using their smartphone to pay for their purchases, they may find the market overcrowded and trust still a big issue.
Peter discusses the positive and negative possibilities of Tesco’s move. He sees the move into mobile as intrinsically necessary, saying “Grocery stores need to ensure they offer their customers seamless experiences and digitally enhanced solutions in order to compete with the retail giant. Digitising their loyalty schemes and trying to jump on the mobile payment bandwagon is definitely a part of this.” However he also notes the problems of many varying payment systems for consumers: “If every supermarket does this, customers will need to download a number of apps and I’m not convinced that people would want to use different apps for payment… An alternative would be to integrate their loyalty schemes and offers into the existing payment solutions.”
More supermarkets making inroads into mobile payments include Waitrose and Asda, as well as telecoms giant Sky. In the article, the advantages of Tesco's app – reducing queues, speeding up shopping, enabling retailers to learn more about consumer behaviour, and so on – are balanced against the disadvantages, with the main stumbling block being take-up by consumers, with concerns over trust topping the list.
Most successful out of any of the mobile payment apps is Starbucks. As long ago as 2013 the company was seeing 11% of its sales volume coming through its own mobile wallet. Starbucks Chairman and CEO Howard Schultz commented “No single competency is enabling us to elevate the Starbucks brand more than our global leadership in mobile, digital and loyalty. Starbucks is a clear leader in mobile payments and we are encouraged by how consumers have embraced mobile apps as a way to pay.” Starbucks' success in this arena is no fluke; the company spent years studying loyalty schemes before rolling out simple but trail-blazing technology that made the payment process easy for customers.
But with research from Mintel revealing that less than one in eight (12%) of British smartphone users have signed up to a digital wallet service – and only 7% of those actively using the service – the success of mobile-based contactless transactions has come under scrutiny.
And as Amazon readies its own online groceries service, the supermarkets must be part of the mobile conversation to ensure their brands are thought of as forward-thinking when it comes to digital technology. The problem for retailers such as Tesco, according to Thomas Slide, UK Retail Analyst at Mintel, is that they "lack trust when it comes to building payment apps compared to other payment providers such as banks or even technology companies.” With contactless cards continuing to grow – as of January 2016, there were a total of 81.5 million contactless cards issued in the UK according to the UK Card Association – and the high-profile launches of the likes of Apple Pay, there could be also be an issue of overcrowding.
The article concludes by acknowledging that for supermarket mobile payment solutions to be successful, retailers likely need to integrate them with existing loyalty schemes. For us consumers, really all we want is an easy life: not a million apps that do a million amazing things, but rather a handful of apps that actually make life simpler.
For further reading, see our white papers The return of the high street: how technology has created a new future for retailers and The future retail bank: evolving at speed in a new digital world.