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Using NFC Tags in Brick and Mortar Stores

Posted on: November 17, 2017 | Posted by: Leo Merle

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.

An Extension of Sales

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.

Expanding NFC Uses

Enabling the exchange of information

  • storing phone or web address information
  • tracking personal items like car keys and laptops
  • viewing public transit schedules and fees
  • sharing files and photos between devices
  • paying for goods and services
  • distributing information from posters
  • gaining enterance to parking structures
  • purchasing snacks in vending machines
  • tracking care and medication in hospitals

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.

The In-Store Experience

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:

Cross-selling a related or complementary product

  • seasonal – suggest purchasing an umbrella when customers are reviewing a raincoat
  • promotional – mention a product located in another part of the store is 25% off today only
  • historical – if reviewing information on toothpaste, ping the customer’s smartphone that customers also purchased mouthwash
  • impulsive – if it’s close to lunchtime, propose they stop by the in-store café for a light refreshment

Coordinated in-store experience

  • inquiry and stop by – use tags to answer typical product questions or request an associate to stop by and provide assistance
  • guided selling – help on-the-floor employees be more knowledgeable of real time in-store customer activity so they can blend algorithmic recommendations
  • no line checkout – scan a tag for “checkout with a sales associate” to help alleviate abandoned carts when customers face long lines
  • in-store demo – customers raise their virtual hand to request a sales associate provide an in-store demo of the product being considered

Building Loyalty

  • NFC tags can provide up to the minute information to In-store specialists who can engage with customers immediately, thereby building trust through informative expertise
  • NFC tags help create a simplified shopping experience, resulting in customer satisfaction, and translating into increased customer loyalty
  • Customers appreciate when you remember who they are, last time they visited your store (or other locations of your store), and if they are a loyalty program member. Armed with this data creates an engagement that can be quite a bit different than a first-time visitor

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.

Loyalty Programs

Customers are only 12-15% loyal to a single retailer but they represent 55-70% of total sales. This means that half of your sales are coming from a small percentage of your customers, so nurturing these relationships are important. Loyalty programs can help do this!7

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.