Retail chief information officers are weighing technology developments that would streamline the in-store payment process, refocusing on an area they say has lagged behind.
Retailers during the pandemic poured investments into e-commerce, as many questioned whether shoppers would ever return in full force to physical stores.
Two years on, shoppers are returning. E-commerce is now 16.4% of all retail shopping, down from 18.8% at the height of the pandemic, according to the National Retail Federation.
CIOs say they could risk losing their customer base to antiquated in-store technology, although cost could be a barrier to making some of these investments.
“Physical locations have lagged behind,” said Neil Holden, CIO of British retailer Halfords Group PLC, adding that the risk of failing to modernize is that “it just doesn’t appeal to customers.”
Tech leaders at companies like Kroger Co.
Nordstrom Inc.
and Halfords are considering what new technologies could improve the payment process for customers, offering the type of seamless experience in stores that customers are used to when shopping online.
At Halfords, a provider of automotive and bicycle products and services, Mr. Holden says he is investigating a technology that would allow payments to be sent over sound waves. The cutting-edge technology, which has been used by militaries, involves encoding data into sound waves and then sending it to another device via speaker. Customers would be able to initiate the payment via an app, he said.
Kroger is testing a shopping cart equipped with cameras and sensors that track what a customer is buying so that individual items no longer have to be scanned at checkout, said senior vice president and CIO Yael Cosset.
mr. Cosset also said he is looking at the possibility of installing checkouts in individual aisles so that if customers want to quickly grab an item they can check out right there.
Kroger CIO Yael Cosset.
Photos:
The Kroger Company
“There is an opportunity to remove the friction,” said Mr. Cosset. “If customers are saying, I would love to be able to pick up a sandwich and walk out with it, then we would create that experience.”
Dennis Bauer, Nordstrom’s president of credit, loyalty and payment services, said he has his eye on a nascent technology that would allow payment to be received via a mobile phone rather than a traditional payment terminal.
Near-field communication chips in smartphones are what enable users to tap to pay at the register, but with new technology, they can also be used to accept payments from cards or smartphones, said Nikki Baird, vice president of strategy at retail technology provider Aptos .
Eliminating separate payment hardware could lend greater flexibility and convenience, allowing associates to check customers out wherever they are in the store and busting up long lines, said Mr. Bauer. If retailers have equipped associates with smartphones for tasks like inventory, it would also cut down on the amount of necessary hardware purchases by allowing them to use one device for both duties, he said.
But according to CIOs, a major barrier for any of these investments is cost.
“If you have multiple hundreds or thousands of stores, if you think about the fact that those devices could break,” said Mr. Bauer about potential smartphone-to-smartphone payment, “it’s a large expense.”
“Margins can be quite tight, therefore investment capital budgets can also be quite tight,” said Halfords’ Mr. Holden. “It’s never enough.”
In addition to cost barriers, Mr. Cosset of Kroger said it is also wise to hold back on some investments based on what the consumer actually wants.
Technology exists to provide fully friction-free shopping, where cameras track shoppers around stores and automatically charge them, a phenomenon known as cashierless stores. But privacy concerns coupled with the cost of large-scale camera installation make it impractical, Mr. Cosset said.
Write to Isabelle Bousquette at [email protected]
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