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Future of Retail: Last-Minute Holiday Shopping in 2015

Future of Retail: Last-Minute Holiday Shopping in 2015

You think shopping was hard this year? Jump ahead to 2015 and see what the brave new world of augmented salespeople, credit card emulators, behavioral prediction, and hyper-targeted coupons has in store for you. Unlike Scrooge's visions, this one is already coming to pass.

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Future of Retail: Last-Minute Holiday Shopping in 2015

Sales over mobile phones will reach $12 billion

Sales over mobile phones will reach $12 billion

By Chris Dannen

Illustrations by Scott Brundage

It's holiday time in 2014, and you're dreaming of a new Apple (AAPL) TV 4 for your family. A few years ago, you would have sat down at your PC to comparison shop. These days, you turn to your smartphone.

In the U.S., mobile shopping is predicted to increase six-fold over the next four years, reaching $12 billion in mobile sales by 2014 (ABI, Juniper). By then, over half of all domestic retail purchases will be "Web-influenced," or researched online first  -- up from 42% this year (Forrester).

E-Commerce giants like Ebay (EBAY) will capitalize on the disruption, using smartphone apps to siphon sales from brick-and-mortar commerce. Retail stores like American Eagle (AEA) will be offering their own in-store apps to combat the invasion.

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Future of Retail: Last-Minute Holiday Shopping in 2015

Everyone's getting a smartphone

Everyone's getting a smartphone

The mobile boom will also bring mobile vices. Gambling on smartphones is predicted to be a $48 billion business by 2015, and by the same year mobile game revenue will top $11 billion (Juniper 1, 2). But you're on task, grabbing the keys to your all-electric sedan and whizzing noiselessly toward your local electronics store.

It's not just spending that is going mobile -- it's everything. By the end of 2011, 49% of American adults are predicted to own smartphones, up from 28% today, and by 2015 more people will use these devices to access the Web than use a computer (GfK, MorganStanley).

The whole world is coming with us. Mobile shopping transactions in Western Europe are growing at least as fast as in the U.S.; Japanese smartphone users already buy $10 billion worth of retail goods per annum (ABI).

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Future of Retail: Last-Minute Holiday Shopping in 2015

Foursquare is reaching critical mass

Foursquare is reaching critical mass

You're on a budget, so you first "check in" to the store's TV department (that's called a "micro check-in") with a location-based service like Foursquare, which can bring discounts from retailers. Like its smaller competitors, Foursquare has grown explosively in 2010, topping 5 million users in December after counting just one million in April. That's 500,000 new users per month, or about Twitter-speed growth.

Best Buy is one retailer that has disclosed plans to test "augmented salespeople" carrying smart-devices, which the company says will enable every "blue shirt" to access the deep technical knowledge of their peers. It may also mean that salespeople will take payments on their devices, eliminating the need for checkout lines.

Over 15,000 venues in 2010 use Foursquare to reward users with coupons and deals, including Starbucks (SBUX), Tasty D-Lite, Coach (COH), EXPRESS (EXPR), Juicy Couture and Whole Foods (WFMI). Other retailers, like Gap (GPS), offer rewards to users of Loopt (3 million users), and still others with Brightkite (2 million users). Shopkick, another promising service, has deals with Crate & Barrel and Target (TGT).

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Future of Retail: Last-Minute Holiday Shopping in 2015

Paying by phone is getting easier

Paying by phone is getting easier

While in the store, you turn to a product search app like eBay (EBAY) or Google Product Search (GOOG) to compare prices and features between online and brick-and-mortar retailers. It queries competing retailers for deals in the form of hyper-targeted coupons delivered straight to the phone. Over $1.4 trillion of domestic purchases -- clothing, electronics, soap, groceries -- will begin this way in 2014 (Forrester).

You'll probably be paying with your phone, whether you choose to buy from the brick-and-mortar store or a Web retailer. Thanks to a joint-venture made in 2010 between T-Mobile (DT), AT&T (ATT) and Verizon (VZ), by 2012 most smartphones will have "near-field communication" (or NFC) chips that let users swipe their phone at the register to pay.

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Future of Retail: Last-Minute Holiday Shopping in 2015

Facebook Likes and other data drive discounts

Facebook Likes and other data drive discounts

Eager to make a sale, the sales associate pulls up your store account, along with data from your "social graph" -- that is, your history on Facebook and similar sites. It turns out you've clicked the "Like" button on a lot of stereo gear on this store's website, so the salesperson's computer thinks it can tempt you to add a big pair of speakers to your TV purchase -- for a deep discount, of course.

"Our system is probably trying to get rid of those speakers," says the salesperson. Hence that deep discount the store is giving her: it's predicting a surplus of that item in that area based on real-time search data from shoppers like him.

Based on your purchase history, Facebook activity and recent Web searches, the salesperson's computer predicts you'll take a pair of Sony (SNE) speakers with the Apple TV 4 if the savings are greater than or equal to $700.

That's a hell of a deal! You're not so hapless as you thought.

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Future of Retail: Last-Minute Holiday Shopping in 2015

Savings tools will also offer discounts

Savings tools will also offer discounts

You check your bank balance with Mint to make sure you can spring for the deal. Your account shows that you've met a Savings Goal -- because, like millions of other Americans, you started using online banking software to help budget for a new family TV a few months ago. Now that you've met the goal, Mint offers you a different deal from one of its brand partners.

You know exactly what these deals are worth; Mint's data service has shown you the average prices paid for these items in this geographical area, so you know that most of your neighbors have paid much more for their home theater systems than this!

Meanwhile, the store's salesperson is inches from losing the sale... to your phone. This retailer might have had a better shot at your business had you bought something on the way over using the store's branded mobile site. That's why stores like Lowe's (LOWE) are offering incentives to users who use their mobile site, like available pickup only 20-minutes after buying from m.lowes.com. Brands like Chanel have been especially aggressive about fitting mobile stores into their brand.

It's only a few hours til dinner, and this TV has to be under the tree by morning! You weigh your offers.

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Future of Retail: Last-Minute Holiday Shopping in 2015

Smartphones will replace wallets

Smartphones will replace wallets

Your phone pulls the SKU and configuation of the Apple TV 4 and compares the two offers. The salesperson looks in inventory, and behold! She's got a way-cheap refurbished model in stock. You take it, and the speakers, on the spot.

Retailers like Best Buy are experimenting with "de-centralized" checkout that allows shoppers to buy from the aisles using their phones.

By the end of 2013, 90% of mobile transactions will be validated by the phone itself, and banks and credit card companies will be forced to improve their fraud detection systems to new levels (Gartner).

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Future of Retail: Last-Minute Holiday Shopping in 2015

Your phone emulates credit cards

Your phone emulates credit cards

Thanks to the NFC chip like the one in the new Google Nexus S, your phone can emulate all your credit cards, debit cards and payment services. Open APIs from PayPal (EBAY) and Mastercard (MC) have totally democratized mobile payments systems, so you typically pay with your phone -- even when giving your daughter her allowance.

Now quite satisfied with yourself, you choose to pay with your Chase (JPM) checking account. In 2010, Chase's mobile app launched a "mobile deposits" feature that scans paper checks with the smartphone's camera. You pat yourself on the back for promptly depositing that last check.

You punch in your Chase PIN and your payment is zipped off to the store's servers. Somewhere, the guardian angel that protects the Elon Musk Empire is just totally disappointed that you didn't pick PayPal.

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Future of Retail: Last-Minute Holiday Shopping in 2015

Delivery options will vary by product

Delivery options will vary by product

Transactions like this one may eventually lead brick-and-mortar chain stores to look and feel less like individual outlets and more like nodes on a retailers' online ordering network, or touch-and-feel, front-end showrooms for the Web.

Like Amazon.com, your chosen retailer has been experimenting with different delivery options for different products. Like most TV buyers, you've opted for same-day home delivery.

Feeling like the master of his own universe, you rush home to beat the delivery truck. The receipt? Emailed. The TV? Reviewed on Blippy.com. The unboxing photos? On Facebook. The delivery truck? Hover-powered.

Ain't the future grand?