At the Apple Store, people don't pay the same way they do everywhere else. They swipe cards on mobile devices and accept emailed receipts instead of printed ones. Now that Google is reportedly kicking the tires on a retail store concept, maybe it can do the same, putting Google Wallet in the spotlight.
"It's certainly a way to drive adoption of the Google Wallet. I think having a device that you can try out always makes the buying decision easier," says Andy Schmidt, research director at CEB TowerGroup. "Being able to get your hands on technology and see how it works, especially when that technology can be expensive, will benefit them in the long run."
Google Wallet relies on smartphones built with Near Field Communication chips to make contactless payments at the point of sale. Because of its design, Google Wallet faces numerous obstacles: it works only at merchants that have the right terminals, and only on phones that have the proper hardware and carrier support. Google Wallet also faced some early security issues and struggled in its first year to attract more than one bank partner.
Google is reportedly planning to open retail locations in major U.S. cities by the end of the year, according to media outlets including the Huffington Post, Bloomberg and 9to5Google, a tech blog. Google would not comment for this article.
"Google's rumored move of opening its own stores strengthens the belief that having contact with customers in brick-and-mortar stores is of supreme importance to create an emotional relationship with consumers," says Mario Fernandez, an industry analyst for Frost & Sullivan, a business consultant.
Mobile wallets are not products as such for consumers, but are a means to obtain "real" products, Fernandez says.
"Google may use its stores to try some features of its Google Wallet, such as coupons and loyalty programs. The company could use its stores to learn more about customers' behavior in real environments," Fernandez says.
If shoppers at the Google Store are urged to pay with Google Wallet, that behavior could carry over to other transactions, says Rick Oglesby, a senior analyst at Aite Group.
"If you shop on Google, but pay with PayPal, there's a good chance you'll eventually shop on eBay and pay with PayPal. But if you shop on Google and pay with Google, that's better for Google," Oglesby says.
Competition from Apple's stores is just one challenge. Google is playing in a mobile space in the U.S. that's very dynamic, Fernandez says, adding that the Merchant Customer Exchange (a payments initiative formed by the mega-retailers) is expected to launch its mobile payment application. PayPal also has a solid strategy for online-to-offline commerce, he says, and Isis has reported successful trials.
The idea of a Google Store did not earn universal praise. "Sure, Google can use their retail stores to bring their wallet to life, demonstrate features and functions. I'm not convinced it will help them move the needle on adoption," says Denee Carrington, an analyst for Forrester Research.
Apple and others like Starbucks and Wal-Mart have shown how new payment methods and models can be successfully introduced in one's own controlled retail environment, Carrington says.
"This enables the payment provider to pilot, test, learn and refine their new payment approaches and capture valuable insights around consumer experience and payment model effectiveness," she says.
But this model breaks down when applied to Google, Carrington says. Apple sells business-to-business and business-to-consumer products and services—and its payment approach—using Apple ID—can be used for both of those models. "Google Wallet is targeted toward consumers, but they primarily sell B2B services," she says.