Mobile payments prompt retailers, card networks to innovate
Anyone focused on driving a seamless, rewarding retail customer experience knows one big part of the equation is the purchase experience. And, a big part in ensuring a satisfying purchase experience is providing whatever payment channel today’s consumer prefers.
That was a simple achievement way, way back in the day, as payment options were pretty much cash, check or credit card. But as retailers and payment providers know full well, options have fast expanded and the consumer’s love for mobile commerce is driving a contactless, cardless, cashless channel available via the smartphone.
It’s mobile payments and it’s prompting Neiman Marcus and Visa to innovate, advance and embrace emerging technology and strategies.
One reason mobile pay is gaining traction, according to Alfred Kelly, CEO of Visa, is because cash is a costly option and businesses, especially those in the tight margin retail industry, are striving to save costs.
“Banks and businesses are realizing the cost of cash. Digital can make for a more convenient consumer experience given nearly every consumer uses a smartphone,” explained Kelly during a panel session at the recent NRF Big Show held in early January at the Javits Conference Center in New York City.
Yet, Kelly acknowledged that cash, and even the paper check, aren’t going the way of the dinosaur any time soon, noting $17 trillion in spend transactions remains cash or check based.
But change is coming due to consumer expectations and retailers, including Neiman Marcus, are busy planning and deploying strategies to drive a mobile commerce experience that is as seamless and satisfying as earlier payment channels.
“It’s always coming back to how do we connect with the customer, develop a relationship with the customer. It’s always been about creating experiences with the customer,” said Karen Katz, who joined Kelly on the panel.
At the time of the talk, Katz was president and CEO of Neiman Marcus Group. She announced her retirement the week prior to the NRF event, and Neiman Marcus announced it was hiring former Ralph Lauren executive Geoffroy van Raemdonck to take the helm as of Feb. 12.
“Today people want options on how to pay,” said Katz, who served as CEO for 17 years. Consumers are seeking the same personalized experience in-store when online, she added, and Neiman is focused on driving “the next level of personalization online.”
That’s because retailers know today’s tech savvy shopper is using a smartphone and other mobile devices to do homework on products before purchase, and are increasingly being influenced by social media channels.
“Eighty one percent [of shoppers] go online first before shopping. So the customer, before she steps into the store, is doing a lot of work upfront,” said Katz, who remains on the Neiman Marcus board.
“That changes how we approach providing her that store experience,” she added. “Is she able to find the kinds of things she wants, are her expectations met? We have to make sure we’re doing omnichannel at a premium, and we have to take it five years out and take her experience online and make sure it’s always seamless.”
Kelly noted that in terms of mobile and contactless payments on a global scale, the U.S. has long been a laggard. For instance, in Australia, 90 percent of purchases are contactless, he noted. But the U.S. is making progress.
“[In the U.S.] About 50 percent [of businesses] are taking contactless pay,” he said, yet “few cards are enabled for contactless.”
For Neiman, the mobile commerce/pay wave is driving a “channel agnostic” payment approach. About one third of the retailer’s sales are happening on its e-commerce platform, said Katz.
“The customer is choosing where and when to shop online, and in the store, and choosing the experience she wants. So, we want online to be as personal as in-store,” she said.
Such consumer wants are also driving new associate training and “digital literacy” when it comes to serving shoppers in Neiman stores. For example, associates now help shoppers find what they need if it’s not in the store via iPhones and an app. The app “lets associates work outside of the four walls and push information to the customer,” explained Katz.
“We’re encouraging associates to have social media in play and have customers follow them. Associates are finding the more they post [on social media] the more followers they get, and they’re then getting a better sense of what customers are interested in.”
At Visa, the mobile commerce/pay wave is driving the strategy to “just be in the middle of any payment regardless the form factor,” said Kelly. While the plastic credit card may one day disappear, Visa sees a big opportunity ahead with mobile payments. Kelly expects a 10-fold increase within the next decade in terms of demand for digital payment credentials.
“We’re creating a ramp for all of those IoT devices as well, as they present new channels where payment can happen,” said Kelly, noting the list includes cars, the family home and even the refrigerator, thanks to embedded IoT technology.
At Neiman, the focus is ensuring emerging mobile commerce and mobile pay are at the forefront of its “digital first strategy,” Katz said.
“It’s very very important to try to have a human touch online and have consumers feel like they have that connection [provided in the store],” said Katz. The past year or so has been all about personalization, she added. “It’s about getting it right and doing it right and not just for the sake of it [technology].”