'Mobile Retailer' Role Debated

Mobile phones may become a way for customers to make purchases, receive coupons and interact with retailers, but that day won't be anytime soon, according to analysts at retail user conference.

That was the message at a roundtable discussion on "The Mobile Retailer," held in Boston during the ERIeXchange retail user conference this week.

Panelist Marina O'Rourke, director of retail technology at the Subway restaurant chain, painted a bright picture for the use of mobile phone technology in the retail industry. As the cell phone becomes more ubiquitous, there are many opportunities for retailers to use mobile phone technology to market products to customers, she said.

O'Rourke said she envisioned a customer using a cell phone's GPS to locate a Subway shop, send an order via text message to the store and then pick it up. Or the Subway shop could reply to the text-message order with a coupon offer for free chips and a Coke. Customers could pay for their purchases using a securely protected phone instead of a credit card.

Subway franchisees are interested in such mobile applications, and the company has been conducting tests, O'Rourke said. Without offering details, O'Rourke said Subway is in the "early stages of piloting some different options for mobile. We want to understand the return on investment and consumer demand and reception."

O'Rourke said the market might start taking off in 2008. She added, however, that customers must want to participate in the cell phone-based program. "They have to want to opt into the program, that's important, or you'll turn people off," she said.

There is no question that smart mobile phones will be used heavily by retailers, but the question is when, said panelist Tamara Mendelsohn, an analyst at Forrester Research Inc. Acceptance of the cell phone as a medium for interaction with retailers will be mostly incremental, and so she advised moving ahead cautiously. Most companies currently are conducting small tests with mobile technology.

Ultimately, she said, customers won't change their behavior unless you show them it will save time or money. "For a New Yorker, if you can save them two minutes, they'll be willing opt in."

In a report released in March, Mendelsohn said security and privacy remain big concerns for mobile retailing. She said 57 percent of wireless device owners polled said they worried about the security of paying for goods or services by phone, while 20 percent had no fears about security or privacy. The report also predicted that younger mobile phone users would be most willing to use the technology for retail purposes.

Panelist Nikki Baird, analyst at the Retail Systems Alert Group, a retail industry research group and the sponsor of ERIiExchange, also saw mobile retail as a more futuristic technology that raises lots of questions.

"For retailers, in general, mobility and 'm-commerce' is still something that they are learning about, rather than doing. There are a lot of unknowns still. How, in the U.S., will true commerce take place on mobile phones? How will consumers actually embrace and use the technology? And what infrastructure will retailers be required to put in place in order to enable it?"

Security is a big issue, she noted, adding "What happens if a retailer unwittingly gives a consumer a virus?"