Changing the face of retail – again
When Tesco opened a store in a South Korea subway filled just with pictures, it signalled a massive leap forward both for retail loyalty, and for the use of mobile technology
Already copied in China, the concept was straightforward enough. Busy commuters could go into the store, hold their phone up to the QR codes – squares filled with a black and white pattern, unique to the product in question that are a successor to the bar code – which could be scanned by the traveller’s mobile phone. In this way, they would build up a virtual shopping basket in the few minutes. If short of time, they could jump on a train and continue the transaction as they completed their journey. Shortly after they arrived home from work, their shopping would be delivered in a box.
The idea has been hugely successful with highly techno-crazed Koreans, and has boosted Tesco’s market share in South Korea. The concept has now been amended too. The pictures and the QR codes are still in evidence, but there are also real goods, so shoppers can take away items if they want to. The concept of choosing now, for delivery very soon, remains popular
Fighting to be number one
Tesco’s South Korean network of shops , called Home Plus, had grown to become the country’s second-largest supermarket after E-Mart since launching in 1999, but reaching number one was proving a difficult hurdle to climb.
As South Korea has more than 10 million smartphone users in a population of less than 50 million, and with QR technology now proven, it made sense to explore a way to make mobile shopping more user friendly.
In most countries, retailers are exploring initiatives to put their internet shopping ventures onto phones, and many have designed apps, but Tesco’s South Korean venture was different, because it was quicker, less exhausting to use and offered a massive bonus in its superfast delivery.
Often technology solutions, at least in the early days of adoption, can prove far more complicated and time consuming than using traditional methods. Internet ordering of groceries can fall into this category, especially when the predictive software keeps insisting you want things you are not interested in.
Tesco’s logic was straightforward enough. People waiting for trains clearly had jobs and so had money, yet they probably had little time for shopping. Carrying heavy bags home on a packed commuter train was difficult.
The compromise was to use the mobile smart phone, so that these exhausted, time poor commuters could walk up and down the aisles of the traditionally laid out store and quickly add goods to their shopping list, rather than struggling with tiny text and incomplete descriptions.
The application was developed with Cheil Worldwide, an advertising and online development group and has now been copied in Shanghai, where the posters, at 12 of the Chinese commercial capital’s busiest underground stations, depict several rows of a supermarket shelf stacked with 80 or so daily groceries, with everything from raw meat to juice and nappies.
Commuters use the same system to that of Tesco in South Korea The phone ‘reads’ the QR code, giving the shoppers the chance to check the item, price and quantity in an online store. Orders are delivered to their door “within hours”.
Delivery is charged by weight and is as low as 10 yuan (95p) for orders under 11lbs. The charge is waived altogether for orders over £9.50.
“This is for young customers who do not have the time to go to normal supermarkets,” said Zou Ping, a spokesman for Yihaodian, the Chinese store behind the scheme. “This allows them to do something useful on the way to and from work,” she added.
Building the support system
To work in other markets, two vital pieces of infrastructure are required: mobile connectivity in the subway stations, and possibly in the trains too, so that people can complete their shopping once they are on the trains. The other vital component is a network of delivery vans set up for fast reactions.
Currently it can take several days before a supermarket has a delivery slot available in some areas, and with some retailers. For the mobile system to be competitive, it has to be within a couple of hours of ordering at the very most.
Mobile shopping using QR images is a fantastic concept that can increase customer interaction, and it is ready to use. Start looking for the codes, and you will find them everywhere. They are on books, enabling you to find out more about the author, on posters in the street, and on a huge number of supermarket products.
This has huge potential for organisations that can complete the infrastructure required to deliver on the promise. But there is little point for the consumer, in going to the trouble of ordering by mobile if there is no benefit.
There are also dangers. Tesco in South Korea has hit on an idea that differentiates its brand, and offers definite advantages to time poor commuters, but the risks are also developing swiftly for those companies worried about negative consumer comments, comparison of price or product, and those not prepared to engage in a dialogue with their customers.
Today’s smart mobile user has the ability, using QR codes, to not only find out everything they want to know about a product, while in a store, they can also compare it with other products, compare the price and even compare the price of a whole shop, in the UK, using www.mysupermarket.co.uk. They are able to read customer comments and reviews, and to make criticisms themselves – whether you want them to or not.
Robert van der Wallen, CEO of BrandLoyalty which develops concepts in food loyalty, said last week at the company’s conference in Bonn: “Satisfactory is not good enough any more. Consumers are more knowledgeable, more connected, more plugged in, all over the world. They are more demanding. They are saying ‘I want to be happy, I want to be in a partnership, I want you to be talking to me one to one.’ But how many companies are responding?”
Once again, the world of retail will be following Tesco. More than a decade ago, they showed us how to use a loyalty card to learn about customer behaviour. Now they are being innovative in the use of the mobile. The technology is available today, even before NFC is fully available, and research points to very high consumer demand. It is just the creaking bits that will hold us up – the infrastructure, the systems, the logistics. And of course the retailer attitude to it all.