There is no doubt that consumers – and retailers – are in the midst of the most frenetic shopping season of the year. Retailers generate 25% of their annual sales during the holiday season, and as ecommerce has continually gained popularity among consumers, brick and mortar stores are feeling the pressure to compete with their online counterparts.
To stay competitive, retailers are using technology to draw in customers just as much as consumers are using technology to make their purchases. Here are just a few of the payment channels and technologies retailers are leveraging to increase consumer sales.
Leveraging Online to Create “Mobile Wednesday”
For years, the official kick off to the holiday shopping season has been Black Friday, but with retailers moving to ecommerce and mobile payments, this shopping day has been re-written. Merchants promote Black Friday deals online weeks in advance. To compete, brick and mortar stores open earlier – some on Thanksgiving afternoon – and stay open later to capture their share of the holiday sales. Some online retailers such, as eBay, even created their own ‘mobile Wednesday,’ posting sales for consumers to browse while traveling Wednesday night – contributing to some of their best growth in sales on this date.
“EBay’s bet on mobile shopping is understandable. After a slow start, Americans are increasingly using their phones to buy everything from furniture to food. In part, that’s because retailers have made their mobile websites easier and faster to use. Shopping on mobile devices — including tablets — is growing at a much faster pace than desktop computers and in stores overall. Mobile spending will reach $123 billion this year, up 39 percent from a year ago, according to the research firm eMarketer. Plus, almost 49 million Americans are expected to hit the road this year for Thanksgiving, the most since 2007, according to AAA. Wednesday is typically the busiest of the five-day travel period.”
Closing the Store on Black Friday but Leaving the Online and Mobile Channels Open
Some hybrid retailers, who offer both brick and mortar shopping as well as online, are opting out of the Black Friday in-store hustle, choosing to keep their physical doors closed yet leaving their digital channels open for business. Barnes & Noble, GameStop, TJMaxx and REI chose to remain closed on Black Friday but still took advantage of online buying – with Barnes & Noble cleverly releasing a new Nook e-reader on their website for shoppers to download books at any time.
“The latest product from Barnes & Noble, not coincidentally announced a couple of weeks ahead of Black Friday, looks to be competing with Amazon on price, as well — a tough proposition when you’re going up against the reigning champion of consumer hardware subsidies.”
Apple, who has sat out Black Friday in the past, created a page on their website as a teaser to promote Apple’s upcoming one-day sale. The page did not promote any specific sales, but sited the Apple mobile app as the fasted way to shop their sale’s event while also encouraging consumers to check their local store’s extended hours.
And by shifting sales online, merchants were actually able to thwart consumer (and retailer) frustrations surrounding the painful U.S. EMV shift, which includes continued customer confusion and added time at the checkout. Experts say the mixed EMV landscape consumers will face at stores this holiday season – plus the widely reported consumer perception that EMV transactions take longer to process – could stretch patience thin.
It is worth noting that regardless of the pain EMV causes at the checkout line, those merchants that have adopted EMV are more likely to see a decrease in card present (at checkout) fraud.
“Compared to last year, Visa has observed a 43-percent decrease in the amount of counterfeit fraud among merchants who have upgraded to EMV-compatible payment systems,” says Stephanie Ericksen, vice president of risk and authentication products at Visa, told Small Business Computing. “Currently, EMV-compliant merchants represent 41 percent of Visa’s in-store payment transaction volume.”
Leveraging IoT Devices for Shopping
Companies like Amazon have forged the path of sales innovation, creating new shopping channels through internet-connected appliances and its voice-controlled digital assistant, Alexa.
Amazon’s Prime Day in July served as a test run for the holiday season to see if consumers would shop via Alexa to get exclusive deals.
Augmented reality (AR) is another channel retailers are using to help consumers view 3D product models at home in real size before buying, using their smartphone or tablet. The real-time rendering removes the guesswork for the consumer, facilitating the path to purchase.
Top retailers have already started offering AR solutions to their customers this holiday season.
In early November, Wayfair launched its AR application, WayfairView, a device that has depth sensing and rooming mapping built in, and allows shoppers to check the scale of products before they purchase to facilitate home-improvement planning, from furniture pieces and décor to ceiling lamps and chandeliers. Lowes and Ikea are also among the retail giants that have launched augmented reality shopping apps.
Fraudsters are Always One Step Ahead of Tech Trends
Along with the technology trends that are shaping the holiday shopping landscape, there is always the underlying threat of fraud. With millions of retail and online transactions, the incidence of fraud will only continue to increase as cyber thieves find new ways to hack into payment systems and steal credit card data.
The nature of payment fraud changed slightly this year due to the EMV shift, increasing the amount of card not present (CNP) fraud attempts. A recent survey of 125 retailers representing 13% of online sales projects that online fraud attempts will rise 43% this year over last.
While having EMV capabilities help curb card present or counterfeit card fraud, EMV does not encrypt the payment data itself – leaving clear-text data vulnerable to theft from malware. In fact, 90% of all POS breaches are due to malware, with 5 malware attacks occurring every second or 170 million each year. Malware is inserted into the POS through brute force attack, stolen credentials or a faulty firewall, and once in the POS, it scours the network and systems for clear-text credit card data. If clear-text card data is located, it is sent to hackers’ servers and sold on black market websites.
As merchants continue to grow their shopping channels with new technology, the need to encrypt card payment data will only increase. Experts including the PCI Security Standards Council agree that the only solution that prevents malware attacks is PCI-Validated Point-to-Point Encryption (P2PE). Bluefin’s PCI-validated P2PE solutions encrypt cardholder data at the Point of Interaction (POI), preventing clear-text cardholder data from being present in a merchant or enterprise’s system or network where it could be accessible in the event of a data breach. Plus they reduce merchants’ PCI scope and assessment because of their rigorous security standards.
Learn more about how to keep your card data safe from data breaches during the holiday season – and through 2017!