Comment - Wine - How Would You Like to Pay? Cash, Card or 'Phone?
A self-confessed Luddite, Chris Losh has had his eyes opened this month to the future of transaction payment. Could the smartphone be the silver bullet for the wine industry?
A couple of months ago, I was at a wine tasting hosted by a large supermarket chain. As usual, there were several hundred wines and, as usual, most of the journalists/educators there were in a hurry. It soon became obvious that most of us were missing out the same bottles – those that were online-exclusive.
"I never taste those," confided one fellow taster. "My editor doesn’t like me recommending anything that’s not available in store."
Later that week, I was chatting to someone who worked for a technology company. His vision of what the retail world might look like in ten years’ time was amazing, baffling and stimulating all at once. Think ‘Walmart meets Minority Report’.
Coming as it did just a few days after the "I don’t recommend website-only wines" conversation, I was struck by the way traditional industries like journalism and retailing, stuffed as they are with middle-aged people such as myself who grew up in a pre-internet world, are struggling to adapt to the new reality.
Nowhere is this more clearly seen than in our attitude to mobile 'phones, which we still essentially use for calling or texting people, and which I, at least, am quite happy to turn off for hours at a time.
Compare this with the majority of 20-somethings who seem to be permanently connected, but use their 'phone less and less as a 'phone.
It’s why I’m wary of my own cynicism about the news that retailers are close to developing technology that would allow shoppers to access information about any bottle of wine just by pointing their 'phone at the label. In the frenzy of the aisles, is there really time, I wonder, for 30-second educational videos?
Maybe there is, and I guess there’s no harm in trying.
In comparison to mobile technology, the internet looks rather pedestrian. Even so, its significance has increased hugely over the last few years, and its attraction to the big retailers is both understandable and obvious.
Not only does it allow them to extend their range significantly without putting pressure on floor-space - half of Tesco’s 1,300-strong wine offering, for instance, is online-exclusives - but it allows them to stock products that they couldn’t take in-store, either because the products are too esoteric or the volumes are too small.
As Tesco’s commercial manager of wine-by-the-case, Nick Juby, says: "There are no limits of space. We can be flexible and lighter on our feet."
Where the "flexibility and lightness" breaks down is once online retailing moves back into the real world. Deliveries remain an Achilles heel for most online retailers, even if they have their own delivery fleet.
Somewhat ironically, given that the internet was initially seen as a way of increasing a business’s reach from local to national and helping the smaller players to compete with the big guys, it increasingly seems to be playing into the hands of the latter. While Tesco’s online wine sales are growing at a double-digit rate, few of the smaller retailers do more than 5% of their business online.
If mobile is embryonic but growing, and the internet is established but imperfect, the one area of technology that has unquestionably delivered is analytics. This, essentially, is gathering data about customers, then processing it to give them information (or offers) that will appeal specifically to them, and not simply bombarding them with spam.
"Tesco redefined the data around analytics," says Ian Murphy, principal analyst at industry analyst firm Creative Intellect. "It used to be all about money off, but they’ve shifted the argument unilaterally."
Or as Tesco’s Juby himself puts it: "If someone only ever buys Rioja, there’s no point telling them about New Zealand Sauvignon."
The kind of data-crunching that Tesco in particular, but most big retailers in general, are excelling at now is only going to increase in its sophistication. Experiments are already being carried out to monitor shoppers’ movements in-store through their mobile 'phones; to see where the ‘hot spots’ might be, and which areas people hurry through.
For wine, this kind of information could be hugely helpful. Particularly if, as is quite possible, it were to be allied with eye-recognition technology that would allow cameras to observe people’s reactions while they shop. What excites them? What puzzles them? Access to information like this could shape our shopping behaviour sooner than we think.
If you think this sounds far-fetched, then you’re clearly not conversant with the ‘internet of things’ idea, whereby an increasing number of devices in the home, from your TV to your toaster will be internet-enabled. The vision is of a world where, for instance, your fridge, with information based on your past buying decisions, might re-order groceries. The same, presumably, could go for a wine cooler or wine rack.
If, like me, you find the idea of your house running itself a bit too much to take in, then mobile payment technology is, at least, comprehensible – and, though still embryonic, it’s likely to be much more widely-available in the next year or so.
Contactless card payment has been around for some time, but justified concerns around security have limited its scope. However, thanks to biometric recognition and a variety of protection mechanisms, there are far fewer problems with, essentially, turning your phone into a credit card.
This is liberating, not just because it allows for impulse purchases on the part of the customer who has left their wallet at home (and increasingly, 'phones will be more important than wallets), but also for retailers, who will be able to use tablets to process payments from 'phones.
Informal, spur-of-the-moment wine pop-ups and wine-sales will become more common, simply because the logistics of making them profitable will be so much easier.
If this is of obvious benefit to smaller outfits, there’s also the possibility of using mobile payment technology to merge the online and in-store operations.
Imagine that you’re a big retailer. Why not put half a dozen of your online wines on trial in store, with a discount for people who order a case there and then? A scan of the 'phone, a tap of a pin number, and it’s done: An instantaneous purchase unconnected to the ‘save money’ mentality of the main grocery shop which would still be paid by credit card.
It would be interactive, experiential and co-relational: Words that even those of us in the wine world are familiar with.
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