How shifts in behaviors, technologies and retailers are shaping connected experiences
A New North Star
Seeds of Change
- New Behaviors
- Technology Changes
- Form Factors
- Mastercard Tap on Phone
- Converging Physical & Digital
- Points of Interactions - In Store
- Early Explorations
- Case Study: PrivatBank
- The Future of Retail
- Mastercard Shop Anywhere
- Incorporating Mixed Interactions Beyond Touch
- The Points of Interactions Journey for Tomorrow
The Evolution of Consumer Engagement
Consumers have long enjoyed different and varied experiences in the retail environment. The acceleration of digital adoption also resulted in people welcoming digital experiences that offered new ways to engage with brands.
Contactless interactions have become the norm in the wake of the pandemic as people are more sensitive to physical contact and now seek touchless experiences. Consumers are also beginning to reimagine the way they shop and interact. New technologies designed to improve the experience can certainly complement and enhance the physical experience.
Businesses have adapted to this changing environment, embracing digital technologies and reimagining their physical spaces. The advantages of user recognition, tailored recommendations, and frictionless checkout experiences all have the potential to transform points of interaction fundamentally. We believe this is just the beginning for technology-enhanced retail journeys fused into everyday commerce.
"People are always going to go shopping. A lot of our effort is just 'how do we make the retail experience a great one?'"
New North Star
– Phillip Green Chairman, Arcadia Group
FORCES OF TRANSFORMATION
Consumer behaviors have significantly changed since the pandemic, impacting shopping and payment habits.
of global consumers have used a new form of payment since the pandemic
of consumers say they have increased their online shopping habits
of people say they are interested in using AR for help when shopping
1. Statistics, 2021
Lack of security has been cited as a common barrier by non-users of digital wallets and wearables. Therefore, biometric and authentication technology improvements are expected to drive significant adoption of these wallets. Furthermore, as consumers become more informed about tokenization and its benefits, we anticipate consumers will become more active users in the low-touch economy.
Lower hardware costs
One of the most significant drawbacks to adopting AR and digital wallets is the associated hardware costs. However, the good news is that smartphone prices continue to decrease as manufacturing technology improves. In 2010, the average global cost of a smartphone was $340, and this has now been cut by 40% to $215.* Naturally, a further decline in prices will be a significant catalyst for the growth of the low-touch economy.
The Rise of 5G
A frictionless AR experience relies on heavy rendering of graphics, and the advent of 5G makes this possible. 5G technology has enabled data transfer speeds up to 20 gigabits per second which is 200 times faster than the average broadband speed of 100 megabits. Users of this technology can enjoy a more immersive experience without buffering. Experts predict that when access to 5G becomes the norm, consumers will view an average of one hour of video content on AR per week.
As technologies advance, it opens new possibilities for the low-touch economy.
FORCES OF TRANSFORMATION
1. Mastercard New Payments Index 2021
2. Mastercard, 2021
3. Google Consumer AR Survey, Global, 2019.
As new points of interaction develop and come to market, it leads to new consumer applications.
1. WARC, 2020
2. Payments Dive, March 2021
3. Mastercard, 2019
4. Mastercard, 2020
5. Global Market Insights 2021
6. Internet Retailing, 2021
shoppers claim they're willing to pay more for products they can test through AR
2 in 5
The sweet spot for today’s augmented shopping capabilities is product sets that are highly standardized with a high degree of opportunity for customizing features, such as in automotive, furniture, makeup, home goods, shoes, and apparel.
By 2021, the global social commerce market will increase by about 34%.
The use of social media platforms to promote and sell products and services. It enables direct conversations between the seller and buyers and increases stickiness and impulse buying.
Self-checkout system market size is set to surpass USD6.5BN by 2027.
A new form of shopping that combines artificial intelligence, sensors, and facial recognition, to create personalized, low touch commerce experiences.
The number of unique digital wallet users are expected to exceed 4.4bn globally by 2025.
Going beyond smartwatch or fitness straps, contactless payment chips can be tokenized and embedded onto any fashion accessory (rings, key fob, sunglasses), transforming them into payment-enabled wearables.
Tap on Phone allows businesses to accept payments from any contactless card or mobile wallet right from their NFC-enabled device. With no extra hardware required, companies can take advantage of this on-the-go solution to enable quick and convenient payment options. At Mastercard, we work with our partners to increase the acceptance footprint by leveraging the contactless expansion. Tap on Phone brings an enhanced consumer experience and allows small businesses to accept in-person payments quickly by using a device they already have— their phone.
Tap on Phone
OPPORTUNITIES FOR CHANGE
1. Biometrics use is on the rise for payments,
Mercator Advisory Group 2021
Mastercard is collaborating with biometric industry partners so consumers can use their physical features – such as face - as a biometric identifier for in-person transactions, without cards or mobile devices.
Network standards addressing security, performance, and privacy of biometric payments.
Framework enabling biometric innovators to collaborate with other Mastercard customers
Mastercard assets to make each biometric payment experience seamless and secure
Mastercard biometric checkout program
of consumers will have used biometric authentication methods in 2021
Recognition of a user at point-of-entry is crucial to identifying a user to kickstart the omnichannel journey. While this is already possible via device-led points of interaction, with biometrics, device-less solutions can instead be deployed for greater convenience and greater security too. Adoption and acceptance of biometric solutions are also growing among consumers. Different forms of biometrics are also currently being trialed.
Biometric identification and authentication enable the shift from password to person
Security & Privacy
Ensure accuracy rates in matches
Consistency of standards/certifications across various closed loop solutions
Need to register biometric identification with every merchant
Unifying the User Journey through Biometrics
There is still scope to deliver a more ubiquitous biometric-led retail experience across stores and brands.
Presently, providers are building their own versions of biometric identification and verification for their unique customer bases. This means consumers must repeatedly register and reregister their details into each new system adopted. This adds friction to a process that is not fully owned and utilized by any one party.
The credibility of biometric solutions is also called into question when there are different results and standards being adopted by different providers.
Considerations for building out a unified biometrics-led retail journey
Consistent standards in applications
An individual’s biometric info may pass through data points involving multiple parties.
Safe deployment across different closed loop solutions needs consideration and good governance.
SEcurity and Privacy concerns
Where individuals register their biometric Identities once with a service provider, permission is then requested and granted for different solution providers to access biometric Identities for transactions with other merchants.
A trusted platform promoting interoperability among different biometrics service providers may be in need to facilitate payment provisioning, and privacy.
A single onboarding required
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eCommerce transactions carried out using Voice Assistants are set to hit USD19.4bn by 2023.
enables consumers to purchase items using just your voice and compatible smart devices.
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Engagements can start prior to a physical interaction with a brand. Within retail, visitors are ‘anonymous’’ until they identify themselves, unlike their digital footprint where interactions may be tracked and codified by merchants. As smartphone and internet penetration grows, leveraging user-recognition technologies in the right way can provide customers flexibility and control in how they identify themselves from the start of any journey, merging both.
Smartphone users globally
Experience is digitally driven prior to visit
Points of Interaction for Consumers are Transitioning in Experiences
AN EVOLVING LANDSCAPE
The Impact OF PERSONALISATION
Converging Physical and Digital Touchpoints
AR-Powered Shopping Experiences
Retailers are leveraging AR technology to improve conversion rates for online shoppers. Argos, recently launched an augmented reality powered shopping app which allowed consumers to view the product in AR, to help them visualize usage.
Voice Commerce has been growing in popularity, the number of people who use voice-ordering technology to order grocery items has already reached 20%. Coles supermarket has been experimenting with a device called ‘Hiku’ which allows shoppers to simply say what they want and have it delivered to them directly. The Hiku is a WiFi-enabled device that attaches to your fridge. It can listen to your words and add required products such as milk and bread to an online shopping list.
Retailers are adapting their environments to meet customers needs across the global
In 2021, PrivatBank, the largest commercial bank in Ukraine, partnered with Labs as a Service (LaaS) to reimagine what retail banking could be for customers. LaaS created detailed customer personas and agile service attribution to ensure the branch experiences and financial products were aligned with PrivatBank's retail customers' needs and expectations. Virtual reality technology was then used to custom design and create a digital-first, retail banking experience with the customer at the center.
The result: a 2,500sq ft branch space where biometric technologies are integrated to identify the customer upon entering the branch. Once inside, digital screens, multi-touch bars, and self-service kiosks enable customers to access the latest banking solutions. Should they need help, a live person is available to assist.
This immersive branch was also designed as a collaboration and education workspace. It can include remote training sessions and live workshops, during which finance and innovation experts can share their knowledge and experience with customers via live streaming.
Setting a new standard for retail banking excellence, PrivatBank hopes to introduce more technologies and service models across their branch network. "I have the utmost faith that the synergy of technology and game-changing service will enable us to create an exciting digital user experience," says Razvan Munteanu, deputy chairperson of PrivatBank's Management Board for Business Development.
Re-imagining Retail Banking:
Opening Ukraine’s First-Ever Digital Banking Branch
Connecting a users' digital journey with their physical brand experience enables a holistic overview of the user. It also enables personalised recommendations based on their retail journey for an evolved omnichannel experience.
At the same time, adding digital tools in-store enables access to experiences beyond those four walls. Embedding intelligence in brick and mortar spaces can bring about enhanced experiences for the future.
of businesses with a personalization strategy experiences revenue growth
global consumers prefer to shop at stores that have both in-person and online presence
Consumers grow more comfortable with self-serve experiences and self-service kiosks are accelerating.
The blend of physical and digitally-led interactions can be facilitated by kiosks and even AR experiences within the retail space or via customers’ devices. They help expand the repertoire of what services can be offered.
in value by 2027
Industry tailwinds are heading towards self-service in-store
Global Self- Service kiosk market forecast
↑7.3% YoY (Jan 2021)
Technology in physical spaces has evolved to be more responsive to customers’ footprint in stores. Smart beacons are actively being deployed for indoor navigation and monitoring within retail spaces. They can also push out marketing/ promotional offers that may be relevant to the consumer.
Relevant recommendations can be pushed out
Smart beacon market expected to grow at a CAGR of
As hyper awareness of hygiene and personal space became a way of life thanks to Covid-19, we observed an accelerated adoption of digital transactions, including biometrics solutions.
Adoption of self checkout systems increased alongside comfort with digital payment tools. It’s not just the process of checking out, the plethora of how one pays for services delivered are also rapidly evolving.
Expanding checkout options
In size by 2026
Global self-checkout systems
CAGR by 2024, representing 8.9M biometric terminals
Global “retail biometric market” to grow
1. Mastercard Global New Payments Index 2021
2. Mastercard Pay with Rewards
1. How many phones are in the world, Bankmycell.com
2. Digital 2021, We are Social
3 .Worldwide self service kiosk market, Statista.com
4. Accenture G20 YEA Report
5. Smart beacon market 2021, Global News Wire
6. Global Self- checkout systems market, Reportlinker
7. Juniper Retail Biometric Forecast 2021
Market spending on XR in the retail industry is projected to reach
Live Streaming Shopping
Live streaming is one of the fastest evolving e-commerce business models with the highest growing potential. Alibaba’s Singles Day 2020 presales campaign on Tabao live generated $7.5bn in total transaction value in just the first 30 mins.
Live video broadcasts showcase product features, offer flash discounts and answer customers’ questions on the spot.
Retailers are using QR codes to scan items and pay via the retailers application. Recently, IKEA introduced a QR-based mobile check-out option to make it easier to pay for large furniture purchases.
Check-out Free Experience
An Amazon Go trial in 2018 removed the need for devices altogether after checking into the store. Multiple RGB cameras with motion detection and object recognition software located throughout the retail space have been set up to deliver a completely checkout-free experience. Amazon currently has 26 Amazon Go convenient stores and is looking to expand to a further 3,000 Go stores in the next several years with larger formats in mind.
1. TechCrunch, 2021
2. Retail Insights Network, 2021
3. Mckinsey, 2021
4. Insider Retail, 2019
5. Pymnts, 2016
1. Glossy, 2021
Retailers have developed augmented reality-based applications, that allow their customers to shop at the convenience of their home. For example luxury brands such as Gucci have added an AR feature to its app to let users try on sneakers, switch to different pairs, and then take photos to share socially. Equally, the technology has proven to be beneficial to reduce returns too. Shopify reported they saw a 40%* decrease in returns thanks to AR visualization last year. Creating virtual product options and providing visual representations of themselves enables consumers to buy with more confidence. AR becomes an extension of the brand experience to drive personalized engagement with customers wherever they are.
Shop windows will become more interactive,
to allow customers to browse through the store catologue and make a purchase without even entering the store. Consumer access could be granted via biometric authentication and payments could be accepted via digital wallets. Mastercard in partnership with Fred Segal launched an interactive pop-up shop with a digital display window into the store's environment.
Retail stores will be converted to experience centers that will enable consumers to touch and feel products using AR and VR technology. Nike is providing shoppers with an augmented reality-based immersive retail experience with their "House of Innovation" concepts around the globe. They allow connecting shoppers to the global and local community of sport and exclusive member benefits. These experiences allow retailers to create more personalized experiences for their customers based on past purchases and interests.
mixed reality in SHOPPING AND DIGITAL CUsTOMER EXPERIENCE
Shopping and payment
experiences need to be frictionless
Consumers want unique
Consumers increasingly value
doing over acquiring
There is a desire for instant
access to products which instore
"Try BEFORE YOU BUY"
Consumers want to be sure of the look/feel of a product before purchase
The Future of Retail
Technologies for both authentication and verification offer security, but current verification steps often still involve entering a passcode or rely on a device-led biometric verification. To minimize such touchpoints, Mastercard is exploring proximity scanning Point-of-Sale (POS) devices and contact-free and gesture-controlled solutions. What if we could enable a holographic contactless solution to allow users to interact with smartphones, screens, displays, and other devices as they complete their purchase journey virtually?
As the line between the real world and digital world dissipates, these innovations are also a means for us to offer new POS solutions that meet the needs of the metaverse. Authenticating transactions within a virtual experience requires innovative solutions that still offer real-world certainty. This is where the intersection of human behavior, information and advanced technology can inspire a new cycle of innovation to provide consumers with both the convenience and the security they seek.
Mixed Interactions Beyond Touch
Mastercard’s Shop Anywhere and AI Powered Drive Through are applicable and adaptable to any retail environment – from restaurants to pharmacies – and deliver low touch experiences for retailers and consumers. Mastercard is deploying these solutions with retailers and sport, entertainment, and hospitality partners including Circle K, Delaware North, Dunkin’, and White Castle.
The Shop Anywhere platform, supported by AI, enables retailers to create simple, personalized shopping experiences in stores based on consumers' needs and without compromising privacy. Besides, the platform facilitates the shopper's journey through robust inventory and participating shopper analytics. Shop Anywhere also gives shoppers access to stores outside of regular opening hours if selected by the retailer, in addition to unique and exclusive merchandise.
June is looking to purchase a new device for her home with her preferred electronics store.
While browsing the e-store, she is invited to scan a QR code to learn about the new device.
Through AR, June is introduced to how the product would fit her living environment and its relevant features.
As there are different models to choose from, she decides to visit a self-serve store to examine the options.
In-store, June identifies herself at the entrance using her biometrics. Her account details are retrieved, and she enters the store.
She examines the product options. June is invited to interact with a voice- activated kiosk to peruse the various use cases.
She is notified of a personalized promotion that can be applied due to her recent subscription renewal.
June decides to purchase the device with the given promotion. A holographic calendar appears in front of her and she keys in her preferred dates for at-home installation.
She provides her biometric authentication as she leaves the store to confirm the transaction.
June’s issuer receives the transaction and approves the payment. June receives a notification
and her receipt.
The Points of Interaction
Journey for Tomorrow
June has registered her biometrics with an identity service provider (i.e. bank) and enabled the use of biometric identification/ authentication for future transactions.
next-gen retail experiences
A New North Star
As technology and consumer behaviors advance, we can expect to see new connected interactions develop around the ease of the overall experience.
The critical factor in building out the next generation of consumer experience is personalization. Biometric identification and authentication will support personalized interactions from the moment you enter an experience. Existing points of friction become a thing of the past.
An ecosystem that affords all players choice is the common goal, enabling different ways consumers and merchants interact and engage, and how transactions and payments happen. We are shifting towards a hybrid model where augmented and virtual reality will take try-as-you-buy to the next level.
For service providers who support bringing these new tech-enabled solutions to life, the ecosystem also offers opportunities to cast their nets to a broader market while providing robust security measures, so the industry can safely grow. And Mastercard’s north star? Enabling the next generation of connected interactions for retail experiences, supported by innovative payment solutions and credentials.
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