The rise of commuter commerce

The introduction of the first 4G mobile network nearly four years ago has not only bolstered the adoption of smartphones in the UK, but changed how people use those devices. Having a fourth-generation wireless service, which is more than twice the speed of 3G, has allowed people to get the most out of their phones while on the go. And generous data packages mean we are no longer restricted to home Wi-Fi to download the latest episode of Game of Thrones, while customers are even doing the weekly grocery shop on their daily commute, thanks to the proliferation of Wi-Fi services in transport hubs to alleviate the burden of no signal.

In fact, research from mobile payment service, Pay by Bank app, found 39% of London Underground passengers are shopping daily on the Tube (see end of article for infographic). This equates to 1.5 million Londoners using their smartphone to purchase underground, with the Central, Northern and Victoria Lines the most popular shopping routes.

Popular purchases include clothes (61%), takeaways (57%), tickets for activities such as the theatre (55%) and food shopping (53%). The research also claims 61% of passengers are downloading on average £30 of digital content on the tube, while 37% of Underground passengers are researching and taking out insurance policies during the mundane commute to work, which is around 47 minutes.

Last year, the Centre for Economics and Business Research (CEBR) predicted British commuters would spend £9.3 billion on commuter commerce in 2015 alone.

Liam Spence, head of product for Pay by Bank app, says: "Some commuters are on the Tube for two hours so it makes sense to use this ‘dead time’ to shop. But getting out your credit or debit card and then keying in a long sequence of numbers on a packed Tube is not the ideal checkout experience – especially if you're using station Wi-Fi to quickly checkout between stops or while waiting for a train. If retailers are to capitalise on this they need to introduce quicker and safer mobile payment methods."

Pay by Bank said over half of commuters would shop more if they knew their banking details were safe, if check-out processes were quicker and if the Wi-Fi service was better.

Free Wi-Fi was introduced to Transport for London (TfL) in 2012 to meet the increased footfall generated at the Olympic Games. It is currently available at 250 of the 270 stations across TfL, provided through a partnership with Virgin Media and various mobile carriers, including EE, O2 and Vodafone. Meanwhile, TfL also introduced contactless payments in September 2014 for customers carrying debit or credit cards with an NFC chip. Since the UK launch of Apple Pay last year, customers are now tapping in and out of stations using their mobile devices.

Planes, trains and automobiles

Above ground, Virgin Trains has provided Wi-Fi on board for around ten years, but unlike London Underground it is not free unless you are a first class passenger, costing everyone else between £4-5 for an hour, pushing to £10 for 24 hours, depending on the route.

Virgin Trains is looking into how it can provide free and fast Wi-Fi to all its passengers, but a Virgin Trains spokesperson tells Essential Retail the popularity of the service presents challenges. "We want to make sure everyone has the best experience possible and are investigating how we can roll-out free Wi-Fi to standard class passengers on the west coast," he says.

Meanwhile, Virgin has launched an entertainment system for west coast passengers that is similar to the likes of Netflix. Virgin Beam is a free service using the on-board server – negating the need to pay for Wi-Fi – and customers user their own mobile devices to stream around 200 hours of video. Considering most Wi-Fi services are not strong enough to stream video content, this is a big improvement to customer experience.

Meanwhile, plane travel was traditionally a mobile dead zone, and only in recent years have customers been allowed to use their electronic devices at all – as long as they are in flight mode, which prevents any transmitting functions.

But increasingly, airlines are providing Wi-Fi access 30,000 feet in the air. For instance, Virgin Atlantic's 787 aircraft offers 150MB of data at a flat rate of £14.99, using AeroMobile, which claims the price is similar to roaming costs from another country. The technology negates any risk to the aircraft, connecting mobile devices using its lowest settings so they do not interfere with onboard electronics.

British Airways, on the other hand has been slow to provide Wi-Fi, but has signed a partnership with Gogo to soon provide connectivity, along with Iberia and Aer Lingus. But budget airlines, EasyJet and Ryanair are in no rush to implement the technology, although the latter is trialling an in-flight entertainment system in the same vein as Virgin Trains.  

And there are even innovations when it comes to the car – Volvo has been rolling out a connected car service which allows packages to be delivered to a car boot, negating the need for the customer to wait around for a delivery. Using the Internet of Things (IoT), Volvo's In-Car Delivery service is available in Gothenburg and is expanding to Stockholm, with plans to roll out globally.

Station dead time

But it is not just Wi-Fi which plays an important part in bolstering shopping on-the-go, there have been a number of examples of retailers and vendors contributing in other ways to the commuting ecosystem. The most famous example is arguably Korean grocer Homeplus – until recently part of Tesco's international estate – which implemented a virtual store in subway stations back in 2011. Commuters waiting for their train were presented with 2D grocery aisles where images of products had QR codes, which can be scanned to build up a digital shopping basket.  

Tiger also recently opened its first store on the London Underground with a small footprint at St James's Park station. UK MD, Philip Bier, says: "London Underground has a desire to get the retail offer more on trend with what's going on generally in retail, and we fit very well into that."

While Tiger is using TfL to expand its reach, the wider retail industry has also looked at transport networks as destinations from which to pick up online orders, with the idea being that they make for convenient locations and allow commuters to fit shopping into their everyday routines, rather than waiting at home for a parcel. Asda has opened around 24 click & collect hubs in and around London stations, while Tesco and Waitrose have dabbled with this type of format. John Lewis opened its 'click & commute' store in St Pancras at the end of 2014. The new outlet sells a range of electrical equipment such as iPads, laptops and cameras, as well as fashion, homeware and luxury gift food, but also provides a collection point for customers looking to pick up their online orders on their way home or back from work.

Parcel store network, Doddle, opened its first store near Milton Keynes train station in the middle of 2013, followed by its first in-station store at Waterloo which opened in September in 2014. The network now has 50 stores around the UK, located at shopping centres, universities and 15 of these are in or close-by train or tube stations.  

Doddle's CEO, Tim Robinson, tells Essential Retail: "Stores in commuter hubs are a core component of our network and we expect to open in a handful of new stations over the next 12 months, these stores will be complemented by our new formats including concession locations, Neighbour and Runner. This enables us to have locations and services that reflect the different lifestyles and schedules of our customers and bring their parcels closer to them, wherever they are."

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