How coronavirus fears could accelerate mobile self-checkout in the U.K.

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U.K. supermarkets which have been experimenting with mobile scan-pay-go may see more consumers adopting the technology due to social distancing requirements in stores.

While the supermarkets claimed enthusiastic responses from shoppers to scan-pay-go, there were also reports of difficulties with scanning items and registering for the loyalty cards required by the apps. But customers may decide it’s worth putting up with the friction to avoid standing closely in line with fellow shoppers at checkout.

“Fears about COVID-19 have provided a huge boost for contactless and mobile payments schemes,” said Richard Crone, CEO of U.S.-based Crone Consulting.

The Co-op, Marks & Spencer, Sainsbury’s and Tesco have introduced scan-pay-go in a small number of stores for fast purchase of convenient "food to go" items. This represents an evolution from the handheld bar code scanners and self-scanning apps that U.K. supermarkets already offer customers, requiring them to pay at specially designated tills or self-service checkout terminals.

M&S has rolled out its Mobile Pay Go app to 50 stores, after a pilot found the technology was popular with consumers. M&S selected the stores offering Mobile Pay Go based on their traffic at peak times. Shoppers using the app must sign up for M&S Sparks rewards, and can scan products up to the value of £30, paying on their phones using the card saved in the app. In the six original London pilot stores, a Mobile Pay Go transaction occurred every three seconds over lunchtime, and shoppers found they could use the app to buy their lunch in 40 seconds.

The Co-op is testing its Pay in Aisle app in 30 convenience stores using technology from ACI Worldwide. The app allows customers to scan products on their phone, and pay for purchases via Apple Pay and Google Pay, or by entering their card number on the app, with ACI handling tokenization. Co-op members receive a 5% reward on the purchase of own-brand products when using the app.

“We found that Pay in Aisle transactions are driven by convenience shopping such as food on the go and evening meals,” said Co-op press officer Andrew Torr. “The app appeals to time-pressed shoppers, as it enables them to pay for items with the press of a button, rather than heading for a till.”

The payments part of the Pay in Aisle app, implemented using ACI’s Mobile Commerce software development kit, was less involved than other aspects of the deployment.

“The main work of the project occurred prior to the payments aspect,” said Benny Tadele, ACI’s vice president of global merchant solutions. “This involved mapping the customer journey, understanding the market, and developing the application to ensure the right user experience and catalog linkage. The payment piece is the simplest part of the process, as most of the work involved in the payment flow and the PCI certification is prepackaged in our SDK.”

Tesco has been testing its Tesco Scan Pay Go app with staff in a convenience store at its Welwyn Garden City HQ, and in February launched its first cashless store.

At the Tesco Express store in London’s High Holborn, a district with a high concentration of office workers, shoppers can pay at self-service terminals using debit and credit cards plus Apple Pay. They can’t use cash, nor can they use the Tesco Scan Pay Go app at this point. Although in some Tesco Express stores the vast majority of payments are electronic, the retailer has no plans for further cashless stores.

Sainsbury’s offers its SmartShop Scan, Pay & Go app at nine London convenience stores. In February, Sainsbury’s said it plans to open nine new convenience stores where the app can be used. Shoppers scan groceries on their phones, pay with Apple Pay or Android Pay in the app, and scan a QR code for proof of purchase before leaving.

In April 2019, Sainsbury’s launched a three-month cashless pilot at its store in Holborn Circus. In the pilot, customers could only scan and pay with their smartphones, as there were no tills. The store wasn’t totally cash-free, as people could pay with cash or cards at a helpdesk, if they were prepared to queue. After the pilot, Sainsbury’s added a till and two self-checkout kiosks to the store.

Sainsbury’s said that feedback about the Holborn Circus pilot such as difficulties in scanning the proof-of-purchase QR code and signing up for in-store Wi-Fi led it to improve the customer experience for SmartShop Scan, Pay & Go.

A barrier to mobile shopping adoption in the Holborn Circus pilot may have been the app registration process, as Sainsbury’s requires SmartShop Scan, Pay & Go users to register for a Sainsbury’s Nectar loyalty card through a separate online sign-in, and input their Nectar number into their app. Nevertheless, Sainsbury’s found that mobile shopping adoption in the trial was better than it had expected at peak times.

“U.K. supermarkets have limited their rollout of scan-pay-go to small numbers of convenience stores because they think the uptake isn’t currently compelling enough for mass rollout,” said Miya Knights, head of industry insight at marketing software provider Eagle Eye Solutions. “The likes of Amazon Go ‘Just Walk Out’ tech is expensive and still in its relative infancy, and many supermarkets have invested in self-checkout terminals and handheld scanning systems. However, evidence from Sainsbury’s Holborn Circus pilot suggests that scan-pay-go increases in-store dwell time and basket size, compared to shoppers using conventional checkout, as well as transaction throughput in smaller format, convenience stores. I think Sainsbury’s will roll out SmartShop Scan, Pay & Go on a location-by-location basis in its smaller-format urban stores.”

A challenge with cashierless checkout is ensuring customers pay for what they have in their baskets, without instituting random checks which could harm customer relations.

“Several large U.K. supermarkets' theft and loss increase after implementing mobile pay-in-aisle technology,” said Paul Kirkland, Fujitsu’s retail and hospitality business development director. “Some retailers struggled to get enough uptake in the early phases from customer demographics they fully expected to adopt pay-in-aisle. This may be due to insufficient promotion or to the fact that Brits don’t feel comfortable scanning and leaving without paying at a till.”

Supermarkets that implement cashierless checkout tied to their loyalty schemes may be able to strengthen their customer relationships, given the highly commoditized nature of U.K. food retailing.

“The growth of Aldi and Lidl has eaten into established U.K. supermarkets’ market share, but these new entrants lack digital strategies or loyalty schemes,” said Nick Maynard, a senior analyst at Juniper Research. “So traditional supermarkets are differentiating themselves by increasing their focus on apps that incorporate loyalty and payments. For example, Tesco has launched two shopping apps, Tesco Clubcard and Tesco Pay+. Tesco Clubcard is a digitization of the existing Clubcard scheme, but adds targeted rewards and redemptions. Tesco Pay+ offers payments at Tesco stores through the app, without mobile scanning, while tracking spending and automatically validating Clubcard points.”

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