Many consumers are familiar with a “tap and go” payment system to pay for all types of goods and services. From groceries, plane fares, and hotel rooms, to tapping a kiosk in a metro station to gather train schedules and purchase tickets, smartphones are at the center of this universe. And the technology that enables it, Near Field Communication (NFC), is already imbedded and uses proximity to create simplified transactions, data exchange, and brief connections.
NFC technology is not new to your smartphone. In fact, it has been there for awhile and certainly has changed how we run our daily lives. Android first introduced it in 20101, while Apple took the plunge in 20142, but restricted it to Apple Pay. Until now.
Apple’s Fall 2017 launch of iOS 11 included the ability to read NFC tags, enabling retailers and smartphone owners to broaden their relationship. NFC will now become a more important part of how consumers use their devices to interact with businesses and how they spend their money. Forrester Research predicts U.S. mobile payments will account for nearly $100 billion in transactions in 2017 and rise beyond $140 billion by 20193.
Now that two major smartphone manufacturers are making NFC technology available to the masses, retailers are embracing technology to bolster their businesses and combat the rising trend of online shopping. In fact, indicators show that the NFC market is poised to grow at a CAGR of around 15.8% over the next decade, reaching approximately $32.6 billion by 20254. Which makes sense as 2017 is predicting fewer than 25% of all in-store purchases to be cash-based transactions – a trend expected to continue downward.5 And it’s not just brick and mortar retailers seeing this explosion of growth, NFCs are finding a variety of ways to be used in the “tap and go” environment.
For pennies on the dollar, retailers can acquire these hi-fidelity, off-the-shelf, customizable tags and place them strategically throughout their store. In just a few simple steps with application software, retailers can program NFC tags to their liking and connect them to the store’s backend system.
But, with which information should NFC tags be programed? Most U.S. shoppers walk into stores carrying their phone and roughly 90% of consumers said they use their smartphones when retail shopping — 48% of them search for product information and 42% of them check online reviews6.
This insight on shopper behavior lets the smart retailer recognize that, depending on where the NFC tags are placed, programming should at least include additional product information (e.g. how to assemble, warranty, ingredients, origin of manufacturing, etc.) and links to online reviews, all available with a simple tap of the screen. Taking it a step further, “retailers have begun to arm sales associates with a variety of technologies to serve and support today’s demanding customers, including everything from handheld devices, inventory management technology, in-store operational analytics, clienteling functionality and mobile POS tools,” says Sharon Goldman, guest columnist for CIO magazine.
By connecting well-placed NFC tags to the store’s backend system and arming sales associates with the right technology, retailers are setting the stage for a seamless, frictionless, and positive shopping experience. NFC tags connect customers to their inquiries, that information pings the retailers backend system, and if in place, an orchestration layer analyzes in-motion data and then triggers the right information back to the customer. Simultaneously, that information is relayed to the in-store associate who now has insight on the customer’s inquiry, preferences, behaviors, and quite possibly, their purchase history. For a visual, think of the Apple Store experience – the customer engages with products on display, finds what they are looking for, maybe asks a sales associate a question or two (who is armed with a mobile POS tool), and then makes the purchase with any associate anywhere in the store.
The Apple Store just might be the gold standard for the in-store experience, but that doesn’t mean retailers need to emulate every ingredient to successfully combat the “Amazon Effect” (I’ll save that for a future blog). Rather, brick and mortars should combine what they like most of the Apple Store, what works best from their own business model, and then create an engaging customer experience.
With a scan in the blink of an eye, promotional and other useful information embedded in the NFC tag can be downloaded into customers’ smartphones potentially creating an engaging customer experience. Here are a few suggestions:
Major smartphone manufacturers understand the power NFCs yield and recognize how they are transforming the way they are used in everyday life settings, most notably, in the consumer’s daily buying motion. And with this ever increase trend, it’s imperative for retailers to adopt the right technologies, enable their in-store environment to embrace this movement, and arm sales floor employees with the right tools.
Brick and mortar retailers offer an experience that is hard to replicate online – the personal touch, product demos, a guided selling process – and contactless selling through NFCs can help make that a profitable reality.