Retail IoT: Co-op adopts smartphone checkout tech in stores

Shoppers at Co-op supermarkets will soon be able to checkout their own purchases via their smartphones, in a bid to avoid time-consuming queues.

A new app, built on Mastercard’s ‘Masterpass’ secure mobile payments technology, allows shoppers to use their phones to scan barcodes as they walk around Co-op stores. On finishing, the amounts owed are deducted from their connected accounts with a single click.

The technology will be introduced alongside conventional self-service tills and manned checkouts.

A Co-operative approach

The Co-op is one of the world’s largest consumer co-operatives, owned by millions of members. As well as being the UK’s fifth largest food retailer, with more than 2,500 local, convenience, and medium-sized stores, it provides legal and financial services.

The Co-op has said that it has seen the use of cash in its food stores diminish rapidly as alternative payment methods have become more popular. Cash transactions have fallen by more than one fifth over the last five years, and by 15 percent in the past 18 months alone.

Matthew Speight, director of Retail Support at the Co-op, said:

Our ambition is to harness technology to deliver the shopping experience that our diverse customer-base requires – when, where, and how they need it. It is all about consumer choices and convenience.

Choice and mutual benefit stand at the heart of the Co-operative’s approach to business at a time when omnichannel retail – linking clicks, bricks, and location-based services – is the goal for many retailers.

In a fiercely competitive space where established supermarkets are locked in battle with new low-cost rivals, the Co-op is eager to differentiate itself as the most convenient of convenience stores.

“We recognise that there are many communities where customers pop in to their local Co-op and enjoy a friendly chat – it’s all part of the service,” said Speight. “Whereas for others, perhaps with a train to catch or on the school run, every second can count as consumers seek increased convenience.”

Frictionless payments

At our Internet of Banking and Payments conference last November, Mastercard spoke about how payments are becoming increasingly frictionless.

The transaction services provider is currently re-positioning itself as a technology company, and sees itself as the perfect partner for the service-based Co-operative approach. Elliott Goldenberg, head of digital payments at Mastercard UK, said:

With the Co-op we are bringing our online and mobile capability, Masterpass, into the physical store, and offering consumers who want a fast and frictionless buying experience, a secure and reliable way to pay.

“By scanning products using Co-op’s mobile app, shoppers can checkout using payment card details securely stored within Masterpass, and leave the store with both the Co-op and them knowing they have paid.”

The ‘shop, scan, and go’ initiative is being trialled in a store at the retailer’s support centre in Manchester. Co-op plans a further trial at a store in Reading – UK home to a number of technology companies, including Microsoft.

If the trials are successful, a wider rollout of the scheme could begin as early as this summer, said the Co-op.

Internet of Business says

Frictionless shopping is becoming increasingly important to customers. Many use their smartphones for shopping lists, while others compare goods online, along with in-store prices from other retailers as they browse.

Flipping between these choice-led processes and the Co-op app could be a convenient way to shop, not to mention an incentive to buy and save valuable time. The result could be greater loyalty to the Co-op brand – the Holy Grail for all retailers, especially in the squeezed mid-market – and a more efficiently run business.

Convenience is the key, not just for cash-rich, time-poor consumers, but also for anyone who is juggling work and family commitments, or living on a tight budget.

For Co-op and other retailers, the opportunities for streamlining go far beyond payment itself. For example, there is scope for integrated shopping lists in the app that check-off items as they’re scanned. Meanwhile, the ability to link membership or loyalty cards to mobile shopping apps would be a welcome departure.

Behind the scenes, it stands to reason that there could be further benefits in terms of more efficient supply chain and stock management processes.

In urban areas, there has been a shift in food-shopping habits, away from the weekly ‘big shop’, and towards a daily top-up approach that requires less planning and results in reduced waste. Co-op’s new service could be at the centre of these more user-focused trends.

Doubtless competitors will be watching with interest to see how secure the system is, what the impacts are on shopper numbers and the bottom line, and whether the system is used or abused.