What Happens When Smart

By Evan Schuman  |  Posted 2006-08-02 Print this article Print

Carts Meet Smart Phones?"> A few years down the road, the potential of smart-phone integration could be even greater when other not-yet-ready-for-aisletime technologies are deployed, such as item-level RFID (radio-frequency identification) tagging, smart shelves and smart carts. When that happens, the smart phone could become the representative of both the consumer and the retailer, storing shopping lists from the consumer (both typed and scanned in) and databases of recipes and inventory from the retailer. The phone would be the intelligent intermediary. This could play itself out in two ways. Using historical CRM data about that customer, the system could recommend products the consumer has typically wanted, but try and encourage brand-switching through coupons.
It could also use situational data. An example of that might be if the smart cart, using item-level RFID, sees that the customer has purchased lettuce, tomato, cheese, anchovies and garlic and—using its recipe database—concludes that a Caesar salad is intended. It could then flag traditional ingredients that appear to be missing or it could flash an instant coupon for a particular salad dressing that might work well (and have a huge margin).
MobileLime CEO Bob Wesley said the direction technology is taking today will lead to morphing the smart phone—itself the merging of a cell phone and a PDA—into something more like a portable computer. "The mobile phone will become the logical extension of the PC," Wesley said, in Boston. "It is a really rich way of accessing information." Mobile marketing is something that should be of particular interest to global retailers, as the availability—and acceptance—of sophisticated smart phones is much greater in parts of Europe and Asia than in the United States. Consider SMS (Short Message Service) communications. Of the 200 million American cell phone subscribers, barely 24 percent use SMS, compared with 76 percent of European cell phone subscribers, according to Forrester Research, in Cambridge, Mass. But the U.S. consumer is quickly trying to catch up, with Forrester citing industry sources as reporting a 154 percent increase between 2004 and 2005. But increased ability to handle SMS communications does not necessarily translate to increased willingness among consumers to do so. Forresters Tamara Mendelsohn argues that those consumers may indeed be open to SMS, but only if retailers make it worth their while, most likely by subsidizing their monthly cell phone costs. "As SMS usage increases, some consumers will show a willingness to allow approved retailers to communicate with them via cell phones, if they are given strong enough incentives," Mendelsohn said in a recent report. "Consumers tolerance for ads also increases as service fees decrease. While only 4 percent of U.S. consumers wouldnt mind ads when watching video on their cell phones, 25 percent would accept ads if it reduced the fees they pay." Another Forrester analyst, Sucharita Mulpuru, agreed that the marketing potential of cell phones is attractive, but she strongly cautions retailers against moving too quickly lest they drown this channel before it can swim. Mulpuru said the mobile marketing trials "are great experiments. I think coupons and relevant one-to-one marketing will probably be the most likely to take off, especially if advertisers help defray consumer costs of phone calls and text messaging in exchange…" However, she stressed the problems: "Unsolicited spam will be most unwelcome, so both the telcos and advertisers will have to agree to set up a premium in place from the get-go so we dont have the same problems we now have with e-mail. If advertisers and retailers get greedy about this channel and think they can market to people for free, theyll eventually kill the goose that laid the golden egg." How bad could it get if marketers push mobile too far and too fast? Pretty bad, Mulpuru said. "There are two big segments of shoppers that are relevant to this topic. People who absolutely love hearing from marketers—yes, they do exist, although theyre hardly a vocal community—and people who hate it. It is so, so, so important to avoid ever getting near the latter," Mulpuru said. "If a retailer doesnt [show restraint], those consumers will launch litigation and ultimately be the drivers of legislation that prevent one from ever cost-effectively marketing to those consumers who actually like it. It is important for anyone marketing in the SMS arena to be aware of this segment and figure out how to allay the concerns of those consumers." Smart phones already are being integrated into promotional displays, connecting with both visible bar codes and virtually invisible codes meshed in with digital images, the so-called digital watermarks. The digital watermark efforts are a great first step, as are trials such as the one being watched by Subway. When those cell phones are integrated with the rest of the network, vendors will be able to enter the age of the Sell Phone. The question will be whether consumers will by then be ready to answer the call. Evan Schuman is retail editor for Ziff Davis Internets Enterprise Edit group. He has tracked high-tech issues since 1987, has been opinionated since long before that and doesnt plan to stop anytime soon. He can be reached at Evan_Schuman@ziffdavis.com. Check out eWEEK.coms for the latest news, views and analysis on technologys impact on retail.

Evan Schuman is the editor of CIOInsight.com's Retail industry center. He has covered retail technology issues since 1988 for Ziff-Davis, CMP Media, IDG, Penton, Lebhar-Friedman, VNU, BusinessWeek, Business 2.0 and United Press International, among others. He can be reached by e-mail at Evan.Schuman@ziffdavisenterprise.com.

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