CSP Magazine

Island Hopping

Retailers look to mobile technology to spur in-store purchase from pump transaction

Streamlined efficiencies. Cost-effective measures. New revenue streams.

Today’s forecourt is rapidly transforming into a commercial enterprise, making filling one’s tank a merely utilitarian function. More exciting—and potentially more lucrative—is mobile-friendly dispenser technology that seeks to integrate the fuel island with the store and draw more motorists inside.

“Retail petroleum operators are increasingly focused on engaging with their consumers on a more reliable and recurring basis,” says Parker Burke, director of marketing, payment and media solutions for Greensboro, N.C.-based Gilbarco Veeder-Root.

Retailers, he says, “are leveraging the time that it takes their consumers to fuel as an opportunity to project their brand and connect with their consumers through targeted entertainment and advertising content on screens at the pump.”

Gilbarco is tying the pump to mobile technology in three ways, and all aim to provide motorists greater flexibility via their smartphones:

Mobile payments: Whether through near-field communication (NFC) or the cloud, mobile payments are gaining popularity. To that end, Gilbarco has partnered with mobile-payment leaders such as the soon-to-be-renamed Isis [now Softcard], PayPal and National Payment Card Association [now ZipLine].

Consumer engagement: Gilbarco partnered with Gimbal Inc. to use low-energy Bluetooth beacons mounted in the pump to communicate with a consumer’s mobile device. “When a consumer is fueling,” says Burke, “the beacon can trigger an action on a consumer’s mobile device, such as offering promotions, syncing to video content playing on Gilbarco’s Applause TV color screen, or prompting a mobile-payment option.”

Loyalty: With partner Linq3, Gilbarco can now sell lottery tickets at the dispenser through a feature called Play at the Pump, enabled by Gilbarco’s Passport POS. “With Play at the Pump, a lottery player can play games such as Megamillions or Powerball while at the dispenser, and have their lottery numbers sent directly to their mobile device via text message,” Burke says. “This pump/mobile interaction not only differentiates a site but builds consumer loyalty.” (For more on lottery, see the October issue of CSP.)

Gilbarco is not the only major fuel dispenser supplier tying its hardware and software with mobile technology. Austin, Texas-based Wayne recently introduced its Wayne TAP Contactless/NFC Reader, which supports emerging NFC mobile wallets, as well as magnetic-stripe and EMV contactless credit cards. Motorists simply tap their mobile wallet to safely make payments and collect loyalty points. The technology of the Wayne TAP reader allows retailers to transact payments, increase loyalty and offer additional marketing opportunities to customers.

Aggressive movement by the industry’s two largest dispenser makers toward mobile-friendly payment technology will buoy a fully integrated shopping experience, says Gray Taylor, executive director of Conexxus (formerly PCATS).

Taylor stresses that, for now, mobile-friendly technology is more effective from a “buy it” perspective, rather than as a stand-alone loyalty system. “Promoting other items does have a future, but the offer really needs to be compelling to get a fuel customer into the store to take delivery,” Taylor says.

That said, despite the extraordinary expansion mobile tech promises, Taylor underscores that what customers really want is to reduce complexity. “This is where payments will dominate mobile commerce on the pad for some time to come,” he says. “Eventually, you will see mobile apps smart enough to advise a customer on which card should be used to yield the lowest ‘price,’ including points, rebates, etc.”

Indeed, as Anton Bakker, CEO of Norfolk, Va.-based Outsite Network, explains, “beacon” technology at the pump triggers relevant offers—based on shoppers transaction history—to lure fuel-only customers into the store. “There also is a need for ‘pump conversion,’ as a large percentage of fuel customers do not shop in the store,” Bakker says. Various data trackers suggest that roughly only one in five fuel customers enters the store for additional purchases.

“While fuel discounts have the appeal, pump conversion has the profitability,” Bakker says. “Fuel discounts without pump conversion is a cost center.”

CONTINUED: Customer Response

Customer Response

While operators and consumers desire faster and easier transactions at the pump, Burke of Gilbarco cautions patience, saying the industry is still in its relative infancy.

More retailers are using branded apps to drive loyalty, he says. “And successful pilots have included a benefit to the consumer for use of the application,” such as cents off per gallon and in-store enticements.

However, the percentage of actual purchasing of products using mobile devices remains small, Taylor says. “According to most reports, over 60% of smartphone users do at least some banking and online shopping on their device each year, some habitually and some sporadically,” he says. “What is interesting is that despite the majority of bank customers performing banking functions on mobile, only a small segment has actually used the phone to buy at a brick-and-mortar location using a bank-supported app.

“Why this disconnect exists is an interesting question that needs to be answered,” he continues. “I believe it circles back to convenience, or the lack thereof.”

That said, the benefits of merging mobile technology at the forecourt to c-stores are plenty. As Burke explains, both chains and single-store operators can benefit from leveraging mobile technologies to engage their consumers.

Likewise, customers benefit from c-stores providing mobile interaction at the pump because it simplifies and enhances their fueling experience through more payment options and a customized fueling experience.

“There is electronic transaction engagement with the customer,” Bakker says. “It is most relevant based on their transaction history, and it offers instant gratification.”

Challenges Aplenty

There are a few big challenges facing mobile-friendly dispenser technology over the next five years.

One is the issue of apps, and whether a retailer should customize one. “Retailers looking to deploy mobile applications should consider whether they should leverage a broader network of users or their own branded mobile network,” Burke says.

Another challenge, he says, is overcoming safety concerns about the use of mobile phones at the fuel dispenser. “While a variety of resources have published research stating there is no risk, there is still some consumer concern around their use,” Burke says.

Taylor sees the main challenge with mobile-friendly dispenser technology as determining “which technology” should be supported by the retailer. “My answer is: You have to support all of them,” Taylor says. “This is why Conexxus is so focused on mobile commerce—not to design the platforms, but to ensure vendors and retailers are capable of readily plugging the innovations into their store systems with minimal effort.”

When considering investing in mobile- friendly dispenser technology, retailers need to consider bandwidth to the island—because that is an infrastructural issue that lasts for years.

“In Israel, some stations have fiber-optic cables going to the island,” Taylor says. “We need to think how we will deliver gigabit service to each service point.”

Consider incorporating open-architecture pump electronics, Taylor suggests. “I don’t see the pump getting ‘smarter,’ but nothing provides the flexibility of integration down the line better than an open platform with support for standardized connectivity. And don’t forget that PCI requires ‘managed endpoints,’ which means a higher-end capability in the pump.”

Retailers also need to determine if incorporating mobile-friendly dispenser technology into their commercial sites makes financial sense.

“Pumps have a long capital depreciation cycle, and not all pumps are ready for new mobile integration,” Bakker says. “Also, there can be costly upgrades.”

Bakker also stresses that mobile consumer marketing makes sense only if it is based on the consumer’s transaction history to ensure relevance. “Anything non-transaction is just more spam and clutter that will be tuned out by the smart mobile users,” he says.

CONTINUED: Looking Ahead

Looking Ahead

The future of mobile-friendly dispenser technology is, quite frankly, unknown.

“You may see the dispenser payment terminal vanish,” Taylor says. “One of the great advantages of mobile is the transference of the user interface to the phone. Take away the need to swipe a card or enter a PIN, and then you need to ask why you even need a dispenser payment terminal that constantly needs upgrading.

“This is where Visa and MasterCard don’t get it,” he continues. “They should be looking for ways to put the payment terminal in the hands of consumers instead of the retailer.”

This solves a few expensive problems, Taylor says. It segregates the availability of cardholder data to billions of devices instead of retailer choke points where it can get stolen. And because it is software-based (with a few well-defined connection methods), it can be upgraded and provisioned without the time and expense of terminal upgrades and new cards.

“It’s the same value proposition we saw in automation in the late 1980s and ’90s— dump paper for digits,” Taylor says. “When I first looked at Internet at the island, we believed that the dispenser would be the epicenter—because wireless was too rare, inefficient and inexpensive. We also underestimated the power growth curve of the handsets, which has pretty much blown away everyone’s expectations.

“Now it is the handset and consumer who are the epicenter going forward, which means our industry will need to be far more reactive than in the past, where we created everything to present to the consumer.”

Of course, as mobile technologies continue to mature, they will be fully integrated into the consumer experience at the pump. “The consumer’s mobile device will enhance the fueling experience,” Burke says. “This will be accomplished by making it easier to pay and linking relevant content shown on the dispenser color screen to the customer’s smartphone.”

Before You Invest ...

▶ Consider the bandwidth of each of your dispenser islands.

▶ Find a reputable partner who can handle incorporating new mobile technology into existing dispensers.

▶ Determine the expense of incorporating open-architecture pump electronics, which will allow you to make additional changes to your dispensers as technology changes in the future.

▶ Study your consumer demographics and buying patterns, as well as potential buying behavior to make sure that your customers are mobile users who will embrace mobile-friendly dispenser marketing and payment options.

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