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Researchers develop risk-assessment tool for mobile, point-of-sale technology in retail

Date:
December 17, 2013
Source:
University of Arkansas, Fayetteville
Summary:
Researchers have developed a risk-assessment tool to help retailers preparing to implement mobile point-of-sale technologies.

Researchers at the University of Arkansas have developed a risk-assessment tool to help retailers implement mobile point-of-sale technologies. Their study identifies the challenges of such mobile systems as customers checking out with their smartphones and employees processing transactions on the sales floor with tablets and other mobile devices.

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"Only a few years ago, these technologies and the world they created were considered utopian," said John Aloysius, associate professor of supply chain management in the Sam M. Walton College of Business. "But today, in many scenarios, what was once considered utopian has become very real. The technology is ready -- retailers such as Walmart, Nordstrom, and Stop & Shop have already rolled out different versions. Eighty percent of all retail is considering using one form of it or another, and 30 percent have already deployed at least pilot projects."

Mobile point-of-sale technologies include current and emerging systems that allow customers to register bank accounts and credit card accounts with stores, so that they can use smartphones to scan items and, upon leaving the store, have those items automatically charged to their accounts. Such technology would provide greater freedom and convenience for the customer and both marketing and cost-saving opportunities for retailers.

With support from the Retail Industry Leaders Association, Aloysius worked with Viswanath Venkatesh, Distinguished Professor of information systems in the Walton College. They identified asset risks associated with these emerging technologies and to gauge consumer attitudes about them. The researchers studied 26 different retail scenarios and found that there is no "one size fits all" system. For retailers, solutions to asset-protection challenges posed by mobile, point-of-sale technologies must be highly individualized and tailored to fit the specific needs of each retail business. Customers adopt these technologies at varying levels and speed, based on age, gender and income, the researchers found. The main inhibitors to their adoption are privacy and security.

To address the needs of retailers, the researchers developed a risk-assessment matrix that provides a framework through which stores can find solutions uniquely suited to their business and customers. The retail association representatives said the study is the most comprehensive of any on a retail innovation, and that the matrix is a useful and practical tool available to retailers to help them decide which technology they want to deploy and how to design processes around the technology.

The matrix focuses on five risk areas -- technology, employee, retailer/store, product and customer risk -- within the three main stages of retail transactions -- scanning, payment and validation. Validation refers to exit inspections and other control audits to confirm that the person using the technology and smartphone is the same person tied to the account charged.

The researchers identified many challenges within each risk area. Some of the main concerns were wireless failure and limited battery life within a technology area; fear of layoffs among employees; the inability to master technology or resistance to change within the employee area; increased technology and equipment costs within the retailer/store risk area; age restrictions and identity requirements within the product risk category;, and, perhaps most importantly, privacy concerns within the customer risk area.

The researchers paid special attention to privacy. They found many customers dislike collection of personal and credit card information via their mobile devices and are worried that retailers' databases could include errors and inaccuracies related to this information. Customers are also concerned that unauthorized employees or hackers could access their personal and credit card information. Customers also do not want their personal and credit card information used by retailers for secondary purposes, such as marketing campaigns and promotional messages.

Identification of these concerns indicates that it may take significant time to fully adopt these technologies, Aloysius said. But, if and when these concerns are addressed, there are significant advantages to be gained from the technology.

"There are tremendous benefits associated with mobile shopping, including the ability to engage with customers while shopping and influence purchasing decisions," Aloysius said. "But the associated privacy issues need to be carefully examined because they could cause strong customer rejection."


Story Source:

The above story is based on materials provided by University of Arkansas, Fayetteville. Note: Materials may be edited for content and length.


Cite This Page:

University of Arkansas, Fayetteville. "Researchers develop risk-assessment tool for mobile, point-of-sale technology in retail." ScienceDaily. ScienceDaily, 17 December 2013. <www.sciencedaily.com/releases/2013/12/131217104106.htm>.
University of Arkansas, Fayetteville. (2013, December 17). Researchers develop risk-assessment tool for mobile, point-of-sale technology in retail. ScienceDaily. Retrieved January 28, 2015 from www.sciencedaily.com/releases/2013/12/131217104106.htm
University of Arkansas, Fayetteville. "Researchers develop risk-assessment tool for mobile, point-of-sale technology in retail." ScienceDaily. www.sciencedaily.com/releases/2013/12/131217104106.htm (accessed January 28, 2015).

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