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Behind Sainsbury’s in-store Mobile Pay solution

Last summer, Sainsbury’s made headlines with the launch of its new mobile ‘scan-and-go’ technology. A trial in a South London store saw customers scanning products with their smartphone app and paying for goods without having to visit a fixed till or self-service machine.

With the industry still looking at the checkout-less Amazon Go stores in awe, this development was a speedy move by Sainsbury’s to offer the customer a convenient solution to get in and out of a store quickly.

The technology is built on the retailer’s existing ‘Smartshop’ offering. This supports consumers’ scanning of items on their phone to create a digital shopping list before paying at a till, but the Smartshop Mobile Pay initiative takes things a step further by solely requiring the customer to tap their phone against a QR code on exit to transact.

Scaling

It is now out of trial phase and in a total of eight London convenience stores, while the business figures out how to scale the concept nationwide.

Sainsbury’s product manager group digital, Daniel Hills, who led the Mobile Pay project during its roll out last year, says there are still a few learnings needed before the technology can be adopted more widely.

“Each store is different, you have to take into consideration the layout of a store, the amount of space it has, but also shrink – which is a major thing that has stopped a lot of retailers doing this.”

Hills says there is a natural assumption that letting customers scan and pay for their own products, without crossing paths with a colleague or a self-checkout scale, will lead to theft. But once the solution had been live in the first store in Clapham for several months, the data showed that shrink within the store had remained flat. “That’s a good thing, because if it had gone up by 1% there would have been a lot more eyes on it and it would have been difficult to move forward.”

Other results from the initial roll-out show that customers are putting more items in their basket when using Smartshop Mobile Pay.

“Our original hypothesis was that this would be people grabbing their lunch; a sandwich, a packet of crisps and a drink,” says Hills. “We have an average basket spend in store and we were expecting it to be slightly lower than that, but actually it’s coming out higher."

Hills describes that in the early trials the Mobile Pay basket was almost 10% higher, which rings true to the original Smartshop customers who also spend more in store because they are using their mobile or a handset to scan their products at their own pace.

“Customers have more time to browse,” he explains. “If they go into store and see a queue, they want to be quick and grab two things to get into the queue as quickly as possible. But now they take their time and buy three or four things.”

But Hills says the Mobile Pay basket is missing out slightly due to the fact that age-restricted products including alcohol cannot as yet be purchased through the app.

“The technology is definitely there, but it’s a case of a balance between what is technically possible and the policies and legal implications – there has to be a challenge and that challenge happens at the till.”

Sainsbury’s is looking at technologies to help with age verification. He said going forward the app could alert colleagues that an item needs verifying and find the customer on the shop floor to do so, or even facial recognition could help solve this problem in the future. But at the moment, because customers are told at the beginning of their journey that they can’t buy restricted items, they seem content with the app. “It’s about being upfront with them,” he adds.

“Customers have more time to browse. If they go into store and see queue, they want to be quick and grab two things to get into queue as quickly as possible. But now they take their time a bit and buy three or four things.”

Legacy systems

Amazon Go was a clear disruptor in creating this ‘just-walk-out’ technology, turning a lot of heads in the grocery industry. Hills admits Amazon Go, and solutions being created by the retailer’s traditional competitors such as Tesco, were putting pressure on his team to roll out a customer-facing solution to the queuing problem.

“We knew a number of competitors were looking at this type of technology,” he says. “And Amazon suddenly became a company I looked at a lot more than I did 6-9 months ago – I’d be looking at Tesco and Waitrose, all of a sudden [I was] looking at what Amazon was doing.”

He says the team made a few compromises to get the Mobile Pay solution out into a controlled test phase as soon as possible. And now much of the work is being done in the back-end technology stack to ensure it’s in a good position for further roll out.

“We’re a 150-year-old company and some of the technology systems are 40 years old,” he says. “Everything that happens with the transaction happens through the till, and the big piece of work for us was to decouple that transaction and create a virtual till that sits in the cloud and allows us to decouple the physical till element and still pump the data and transaction in the right way as a till would.”

Apple v Android

Next on the roadmap is creating an Android application, because the current offering hinges on the speed and security of Apple Pay.

“Apple Pay suited the proposition, it’s fast and effective and gives the customer an element of trust – that means we only have it running on iPhones, but we turned a lot of people onto Apple Pay,” says the self-confessed Apple geek.

“Ultimately this was a trial and we didn’t feel the need to create both options as there wasn’t a lot we would have learnt by doing both that we wouldn’t learn from doing one. Now we know the proposition is sound and we want to push it forward, we’ll allow Android to catch up.”

The future of shopping

Sainsbury’s understands not every customer will want to shop and transact on their mobile going forward.

“This isn’t looking to replace [the till], but be a complimentary feature that we feel allows us to interact with customers.”

Hills says retailers need to blend together the digital and the physical: “It’s about taking the digital element and bringing it into the store to solve a problem which also opens up more opportunities as you go forward.”

He uses surfacing marketing information within the Smartshop app as one example of an opportunity. “But you have to do it in the right way,” he warns. “The more people who adopt it the more we can interact.”

“By creating a digitally-enabled customer, the phone becomes an important device for us in the stores because of all the other features and opportunities, but ultimately we need to solve a customer problem at the same time.