At lastweek’s Smart Card Alliance Mobile andTransit Conference, the single consensus on NFC was that 2011 is,at last, “the year of NFC.” Between the long anticipated release ofiPhone 5 devices equipped with NFC chips and the flood ofannouncements at the Mobile World Congress (also this week),NFC-equipped handsets in North America will number in the tens ofmillions by the end of this year. At long last, this short rangecommunications channel –with its highly secure account credentialmanagement facility –will be available. Not that it willubiquitous or that its functionality will be available to all. Itis going to be a messy, even chaotic, introduction that will takeyears to sort out. More on that later.
Much of the NFC value proposition for merchants lies in its abilityto deliver coupons, discounts, and fine-grained merchandisingcapability, tuned to the specific individual wielding thesmartphone. This will prove true provided these services areoffered to merchants in a cost-effective manner. But thisdevelopment is not going to be an unalloyed blessing for merchants.The ability to read NFC tags on merchandise or the edge of storeshelves will also give consumers more product and pricinginformation and more choice over which product to buy and where tobuy it.
We are already seeing this weaponized consumer with today’sgeneration of smartphones. The smartphone camera and barcodesoftware, even simple 1D barcode scanning, has given consumersunprecedented power and choice in store aisles. Amazon has takenthis capability right into the aisles of its brick-and-mortarcompetitors. Its app includes barcode scanning. The consumer juststarts the app, scans the product’s barcode in the store, andimmediately gets the price from Amazon for comparison. If theconsumer likes the price, she’s one click away from purchasing itfrom Amazon with delivery a day or two away. The same app can beused to get the merchant to match Amazon’s price (a tactic thatworked well at the Ace Hardware store when I needed a new cordlessdrill).
Provided NFC reader access is available freely (and it should besince no secure payment account information will be needed), therewill be no end of clever programmers building comparison shoppingapps that make use of 1D and 2D barcodes and the new NFC readerfacility. With its hyper local capability, manufacturers andmerchants will be able to deliver coupons and other incentives toconsumers in the precise location where it matters most, right infront of the product. Indeed, it’s easy to imagine HDTVmanufacturers duking it out with dueling coupons or otherincentives in the corner of Best Buy with all of the televisions.Someone, Best Buy or Google or Isis or Apple or someone else, couldeven charge a fee to the manufacturers for the privilege of pushingthese just in time persuaders to the weaponized consumer.
The impact on retailing is going to be profound.