Shopper Marketing Trends Report 2015

In October 2014, Shopper Marketing magazine and the Path to Purchase Institute surveyed hundreds of CPG marketing executives for our annual Trends report. The questions were developed by the Institute’s editors, and among the topics we cover are survey mainstays such as budgets and collaboration, while we also take our deepest dives yet into technology, e-commerce and mobile payment. Additionally, we continue down a popular path from recent years by having respondents answer questions about and rate specific retailers.Download a copy of the complete report:Mobile Payment & Shopper MarketingWhen the Google Wallet mobile payment app went public in September 2011, its debut was met with the sound of crickets, according to an industry insider. So, too, was the announcement in the spring of 2014 that Starbucks may license its highly successful mobile payment app to other retailers.By contrast, the release of Apple Pay, Apple’s mobile wallet initiative, “was greeted with a lot of media hoopla” including predictions that it will “change commerce forever,” wrote the Path to Purchase Institute’s Bill Schober in his October editorial.Does that mean mobile payment has finally come into its own? We posed the question to six shopper marketing professionals who know as much as anyone about the state of walletless payment. The short answer: not yet.While Google Wallet remains quietly in the background, the two contenders for dominance are Apple Pay and CurrentC, a pilot-stage system developed by the Merchant Customer Exchange (MCX) made up of retail giants including Walmart and Target. Whereas Apple Pay links to users’ credit cards, CurrentC takes payment directly from their bank accounts. This frees retailers from paying credit card processing fees but raises concerns for shoppers.“Consumers want to know, ‘What’s in it for me?’ before they’ll switch over from credit cards,” explains Terry Logan, group director, digital, at The Integer Group, a shopper marketing agency headquartered in Lakewood, Colorado. “Since MCX doesn’t link to credit cards, consumers are left wondering, ‘My cash back, my points, my miles – does it all get lost? With a credit card, the retailer pays the fees and I get the points. With MCX, the retailer avoids the fees, but do those savings get passed on to me?’”PayPal, Square, wireless carrier-backed Softcard (formerly Isis) and Level Up are the other principal players in these early stages of mobile payment. To prevail or even stay in the game, players will have to incentivize shoppers to replace a simple credit-card swipe with some other payment method that is not likely to save them any time. This is where shopper marketing enters the picture, with offers, coupon tie-ins and promotions somehow built around the actual transaction.What that might look like is anyone’s guess. It’s not even safe to say that the smartphone will serve as the mobile wallet of the future, according to the experts who took part in our virtual roundtable. It does seem certain that mobile payment will eventually gain widespread adoption, but not before it solves an actual problem and provides additional payoffs.Do consumers want mobile payment?Patrick Moorhead: I can walk my mom through all the advantages and how it’s intended to work, and then she’ll pull out her wallet and credit card and say, “This is easier.” And she’s right! Mobile payment still feels like a solution looking for a problem.Joe Rogness: Consumers don’t necessarily want mobile payment, but they want value. So how do we add value to drive adoption? At what point will consumers change their purchase behavior to receive value? A 50-cent savings probably isn’t enough for me to change how I buy stuff, but if I get 50 dollars off a high-value item, maybe I’ll go through the steps to try a new method of payment.What would make consumers come around?Moorhead: Payment is not the end game; for consumers, it doesn’t matter. It’s everything you can wrap around payment to make my life easier, make my shopping trip faster and save me money that’s going to drive adoption. People aren’t going to use it because it’s easier. It’s not. People will use it in exchange for value.Bryon Morrison: We’ve been myopic in our view of mobile payment as the literal transaction. Mobile technology can provide real solutions, making the entire shopping experience better and making payments a nonissue – something that just kind of fades in the background. Say you open an app, scan products as you shop, total it up, pay with your device and you’re done. Shoppers consistently complain about standing in line, so if you eliminate that, you solve a real problem.What are the other barriers to adoption?Morrison: The one that everyone brings up is ubiquity. Mobile payment needs to be everywhere or consumers won’t use it.Cezar Kolodziej: If I go to 10 different stores and only half of them accept my specific mobile payment but all of them take my credit card, I’m going to use my credit card. For mobile payment to work, everything must be integrated and converged into, ideally, one worldwide solution so I can use the same technology to pay at any location.Morrison: There’s a whole host of other barriers that are just realities of using a device, like battery life. We’ve all had our phones die and it’s no big deal, but if I need to get out of a situation by paying for something with my phone, battery life becomes a real concern. Little things like that make us cling to our wallets a little longer.“Until there’s massive consumer adoption – [consumer product marketers] don’t care. Until there’s massive retail adoption – don’t care. And until someone figures out a way for brands to play in the mobile wallet space – don’t care.”— Patrick MoorheadWhat about privacy and security?Terry Logan: With all these retailers collecting all these data points – that could be scary. You go grocery shopping; you stop at Walgreens to pick up a prescription; you go to the doctor and pay your co-pay. That’s a lot of information. They can see those transactional pieces all the way through. They’ll say they don’t capture it, but at the end of the day, it’s there to be had.Rogness: As a consumer, I’ve heard about so many security breaches, so if I’m going to adopt mobile payment, how is that more or less secure than using a credit card? The consumer doesn’t know this new landscape.How do retailers fit into the equation?Moorhead: To Apple, at least, retailers represent a hurdle. Various retailers have come out and said they won’t accept Apple Pay on their mobile payment network and have gone as far as disabling their NCF.Bryan Leach: What Apple Pay is doing is, more or less, just housing a credit card. So it’s the same Visa or MasterCard that retailers have always dealt with; it’s just being held in a different format than the magnetic strip of a credit card. If it’s costing retailers the same, what’s their incentive?Rogness: Merchants want to avoid those interchange fees, and that’s why they started MCX. Let’s be honest.Logan: But the participating merchants – those are all big retailers that I might go to once a week or once a month. That’s not going to change my behavior. Until I can use the same mobile payment at my gas station and coffee shop and clothing boutique, we won’t see widespread adoption. Until it’s everywhere, my mindset is to use a credit card because most stores accept it.Leach: Retail-specific currencies may be where all this is headed. The future of mobile payment to me means housing different retail currencies on a mobile device as loyalty rewards – $10 for REI, $5 for Starbucks, $15 for Target. That, I think, is where mobile payment will go and where it actually becomes relevant to the shopper marketing world.What role will mobile payment play in shopper marketing?Leach: With retail-specific currencies, consumers watch ads and learn about products, and once they buy a featured product they get digital currency for a specific retailer. If I’m a brand marketer, I want to be able to go to a retail partner like Target and say, “Look, we not only drove awareness and sales of Pampers, but we rewarded shoppers with a currency that will drive them back to Target.” Mobile payment per se is not going to do that. Moorhead: It comes back to that value-added experience. The experience provided around the transaction is where opportunities for CPG brands exist. You can do all kinds of things with mobile technology that you can’t do with a credit card like loyalty programs and promotions and personalized product offerings.Morrison: If Apple or Google took a step back from payments and became a de facto for building shopping lists, we’d have a rich environment for product marketers because at that stage they could start to influence what’s on the list. That’s where I see shopper marketing and mobile payment coming together (in an app). The ability to market in the app after someone makes a purchase makes it possible to influence the next shopping trip.Do consumer product marketers care about mobile payment?Rogness: I think capturing a large portion of their national media budget is the key to widespread adoption. It doesn’t make sense for the merchant to offer merchant-level discounts through a mobile payment platform – the math doesn’t add up. But the manufacturers of the products they sell have billions of advertising dollars and a lot to gain.Moorhead: I think marketers need to be in touch with what’s going on, but they don’t really have anything to care about until the principal parties solve their various issues. Until there’s massive consumer adoption – don’t care. Until there’s massive retail adoption – don’t care. And until someone figures out a way for brands to play in the mobile wallet space – don’t care.Has it come down to Apple Pay vs. MCX?Rogness: They’re the only two getting talked about right now. What’s fascinating is the omission of the third party, which is Google Wallet. True, since its launch there’ve been crickets around adoption, but I wouldn’t count those guys out. I think they’re going to let the space evolve a little bit and then reemerge. With all the advertising Google garners, they could really start to connect the dots and create an ecosystem from national brand to shopper.Moorhead: Google Wallet is still a player because of the amazing scale of Android. It’s available on pretty much any NCF-enabled Android phone that’s come out in the last three years, so there’s already massive infrastructure around Google Wallet. And let’s not forget the ancillary payment market, which is Square, PayPal and Level Up. Those aren’t to be trifled with.Morrison: But in terms of working out the experience with the terminals in stores, Apple, Google and MCX are driving that.How will widespread adoption of mobile payment affect purchasing behavior?Kolodziej: If this is the way we make all our purchases, it could provide reports on our spending trends and make us smarter, more efficient shoppers.Logan: I have three kids, so there are always eight containers of something in the refrigerator. The utility of the tool, regardless of the technology, should prevent redundant purchases and waste, but my spending might actually increase if it also shows me different benefit features.What will mobile payment ultimately look like?Morrison: It may be difficult to standardize mobile payment. Technology changes all the time, and while we’re focusing on how this might work on our mobile phones, in reality we may see wearables – watches, rings, bracelets – outpace the smartphone.Logan: The phone is a clunky way of doing it compared to wearables with biometric sensors for security.

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