NRF: Mobility Trends for 2014

by Kathryn Nassberg | 01/24/2014

The National Retail Federation hosted its annual exposition in mid January at the Javits Convention Center in New York City. The two-day event featured 550 retail solution providers and nearly 30,000 attendees, a record for the event. VDC’s Mobility Analysts David Krebs and Kathryn Nassberg took the opportunity meet and speak with a variety of retail technology solution providers and retailers at the expo and observe the emerging mobility trends firsthand. These are some of their observations:

Competition between Microsoft and Android for rugged handheld share intensifies

The competition between Microsoft and Android is heating up in the ruggedized device arena. While Microsoft platforms remained the undisputed leaders in the rugged handheld sector in 2013, VDC anticipates that 2014 will be a breakthrough year for Android. Already, OEMs like Motorola, Honeywell, and Bluebird are offering ruggedized handheld devices featuring the Android OS, which is rapidly becoming a credible challenge to Microsoft’s hegemony in the rugged space. However, Android still has to prove itself in this arena and the market will closely follow the success of several large-scale deployments planned for the first half of 2014. As with any new platform, there have been growing pains in introducing ruggedized Android solutions, with many early products falling short of expectations. However recent release issues, such as application performance, scanner integration and security have been largely addressed. Nevertheless, the perception of Android as a less secure and fragmented platform persist and the rugged mobile OEM vendor community would benefit from a more cohesive approach in addressing these issues.

A much-needed development has been clearer communication among rugged mobile OEMs with respect to their development initiatives. Although much of 2013’s lack of direction was tied to Microsoft’s timeline, industry leaders such as Motorola Solutions created solution among partners and customers as they hedged between Microsoft and Android. The timing could not have been worse as the challenge from consumer devices (especially iOS) intensified. Today, we are seeing much greater conviction from rugged handheld OEMs regarding their Anroid roadmaps and believe that the devices and Android services available today can materially impact the market in 2014.  

Recent research among retail technology decision makers conducted by VDC Research in 2013 supports rugged vendor’s Android efforts. According to respondents currently using rugged handheld devices with plans to upgrade their legacy devices, over twice as many intend to migrate to Android-powered devices (33%) as opposed to Windows Embedded 8 Handheld devices (15%).

Apple loses some of its retail luster

Make no mistake; the use of Apple iOS mobile devices for enterprise mobile workflows is not going away. In fact, Apple continues to up its focus on the enterprise segments and the enterprise features embedded within its iOS devices.. However, following much iOS fanfare over the past two NRF events, VDC is hearing about retailers’ frustration with some of their Apple deployments with increasing consistency. Despite tremendous success in the consumer markets, the sheen has begun wear off for Apple devices for enterprises using the devices. Given Apple’s near-exclusive customer orientation, managing devices operating on iOS is no easy task and support in an enterprise setting is proving challenging. Moreover, firms are also encountering issues with wireless performance and supporting multiple users per device, further lessening Apple’s enterprise appeal. On top of these technical setbacks, there is also the pervasive issue of employee theft. VDC believes that in light of these issues, companies will increasingly look to other OEMs to meet their enterprise mobility needs.

EMV Compliance as a Mobile Payment Forcing Function?

The looming EMV compliance deadline of 2015 was a almost predictably absent theme at NRF. Although technology vendors are eager to sell EMV-compliant POS solutions and certain retailers (see WalMart) are moving forward more aggressively with their EMV rollouts, all will be moot until card issuers get serious. A major barrier in the US is that card issuers and their networks are married to signature-based interchange fees for credit and debit card transactions (PIN based transactions generally cost less for merchants in comparison to signature transactions). However, the fact remains that while the US accounts for nearly 30% of all charges/transactions, it also accounted for 47% of losses stemming from fraud.

Nevertheless, even with such a strong headwind, it is expected that EMV compliant investments will increase substantially over the next few years as retailers upgrade their POS infrastructure. The wild card here will be the impact of the continued shift to mobile solutions. Some retailers – such as Abercrombie – have announced plans for an all-mobile POS future. According to VDC’s most recent retail research, almost eight in ten respondents currently or plan to support mobile POS solutions within their retail organizations. While the shift to mobile does not necessarily mean a move away from EMV, it will open the doors for retailers to think of alternative payment options such as NFC and tap to pay solutions. Although card solutions are not going away, it is entirely conceivable that mobile payment will account for an ever-increasingly share of the market.

“Wait and see” was certainly a prevalent mantra among retail executives in regard to next generation POS solutions. The door is open for retailers to address both EMV and mobile payment needs and vendors such as ROAM are complying with the launch of an EMV-compliant mPOS terminal. However, addressing both simultaneously is perhaps too much to expect.

Low Frequency Bluetooth iBeacon technology ushering new customer engagement and in-store location paradigm

According to VDC’s most recent retail research conducted in 2013, 23% of retail organizations currently offer dedicated mobile applications with an additional 42% planning to roll out mobile customer engagement applications. These mobile applications are at the heart of many retailer’s omni-channel strategies and offer critical capabilities like price checking, product availability at other stores, mobile checkout, etc. However, the in-store experience of many of these applications have left customers expecting more.

What could fundamentally change this and boost their value to customers and especially enhance their in-store experience is by providing both time and location context. iBeacon technology delivers just that, but  without the need for a persistent WiFi or cellular connection. The micro-location technology leverages low-energy/low-frequency Bluetooth technology (BLE) that is increasingly integrated within today’s smartphones. These ‘beacons’ ultimately enable mobile app experiences with much higher accuracy than GPS. Transmitters are distributed through the store and shoppers who have downloaded the mobile app are detected when they enter the store. Use cases are solidifying as roll outs among major retailers such as Macy’s and Apple stores expand. This technology is uniquely positioned to address some of the major usage limitations of today’s mobile and potentially drive much higher customer engagement and loyalty.

Keeping technology investments in perspective…or avoid becoming the next JC Penney

The amount of innovative solutions and new partnerships unveiled at NRF is virtually limitless. However, retailers are already clearly challenged by the task of retraining staff and upgrading legacy IT and POS infrastructure. The memory of how JC Penny was crippled by insufficiently tested and implemented change is still fresh in everyone’s minds. The lesson here is: “unless the technology can directly improve retail sales performance, I don’t want it even if it is free.” This was reinforced by VDC’s recent research among retail decision makers who identified “increased revenues” as the number one metric used to measure mobile investments, followed by reduced operational costs and improved customer experience and loyalty.

All too often, retailers fall victim to hype and fail to fully think through the impact of a new solution. Although the role and impact of technology in retail is clear, one need only look at the ‘promise’ of item level RFID tagging to appreciate the challenge represented. However, often it is not an issue of technical limitations (as with RFID) but rather with how the technology is applied. In the case of mobile solutions, mobile payment and mobile POS offer some great examples. Starbucks is often identified as a pioneer in mobile payments. However, their mobile solution is hardly transforming the customer’s retail shopping experience (pulling out smartphone vs. pulling out a credit card). How about mobile POS solutions? Many today are glorified queue-busting solutions that do not fundamentally change customers’ experience, as goods still need to be bagged and security tags deactivated at a traditional check-out counter.

Frequently, it is not the technology that is the limiting factor but the fact that its implementation has not been fully vetted. Mobile investments are expected to continue to rise – 53% of retail respondents indicate an increase of 10% or more in their mobility investment budgets. The challenge will be aligning them with measurable improvements to a customer’s experience, loyalty and ultimately share of wallet.

These are themes that VDC Research will be tracking very closely as we launch our 2014 retail mobility research programs. Stay tuned!


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