Walletless shopping still a dream this holiday

Tue Sep 18, 2012 12:21pm EDT

1 of 2. Attendees watch a demonstration of the Google wallet application screen during a news conference unveiling the mobile payment system in New York May 26, 2011.

Credit: Reuters/Shannon Stapleton

(Reuters) - Tech-savvy holiday shoppers who are counting on using their mobile devices to avoid miles-long check-out lines are unlikely to see that Christmas wish come true this year.

Apple Inc (AAPL.O), Amazon (AMZN.O), Nokia Oyj (NOK1V.HE) and Samsung Electronics (005930.KS) are delivering hot new mobile devices for the holiday season, and it is easier than ever to research products, compare prices and make purchases from online stores.

But with mobile payment still in its infancy, the online revolution stops at check-out -- shoppers still have to pull out their wallets and hand over cash or a credit or debit card.

"Everyone's trying to find the right way to make (mobile payments) easy and no one's found it yet. No one has the secret sauce," said Mark Belford, managing director and co-head of the consumer and retail investment banking group of Janney Montgomery Scott LLC, speaking at the Reuters Retail and Consumer Summit in New York.

When someone builds it, the shoppers will come, Tim O'Shaughnessy, chief executive of LivingSocial, said at the summit.

Mobile payments are the new mantra in retail technology -- the proliferation of tablets and smartphones, and social media feedback have made retailers sit up and take notice. But aside from a few mavericks, most are shy about experimenting.

Marshal Cohen, chief industry analyst for market research firm NPD, said retailers like to wait and see what works before adopting new technology.

"Retailers in the United States have not taken retail to the next level," Cohen said.

"It is about making an investment. Many retailers (do) what is right for them from a fiscal point of view rather than the consumer's point of view," he said. Although studies suggest mobile payments should improve sales as shoppers get a seamless buying experience, this has yet to be proven beyond a doubt, he said.

As a result, few retailers have moved beyond tried and tested services such as eBay Inc's (EBAY.O) PayPal online payment service and Google Inc's (GOOG.O) Wallet -- if at all.

Starbucks Corp (SBUX.O), which does a booming holiday business, leap-frogged many retailers in August when it announced a deal to use startup Square Inc to process payments.

Experts said the move by the world's biggest coffee chain could threaten established payment processors and shake up retailing.

Wal-Mart Stores Inc (WMT.N), Target Corp (TGT.N) and Japan's 7-Eleven quickly followed with news that they are developing their own mobile payment network.

Elsewhere, Aeropostale Inc (ARO.N), Foot Locker Inc (FL.N) and Macy's Inc (M.N) announced a deal with Isis -- a mobile commerce joint venture created by AT&T Mobility LLC TCNCW.UL, T-Mobile USA and Verizon Wireless Capital LLC VZCAP.UL -- for mobile payments in Austin, Texas, and Salt Lake City. But this is just in the testing phase.

Neiman Marcus Group NMRCUS.UL Chief Executive Karen Katz said retailers are trying to figure out which of the many mobile payment providers is the best partner. They also worry about privacy and security issues.

A recent survey by Shop.org and Forrester Research Inc (FORR.O) showed many retailers were being conservative even when it came to the use of broader mobile technology, not just payments.

Half of the retailers surveyed said they spent less than $100,000 on smartphones in 2011, and 74 percent spent about the same amount for tablets.

Though companies are indicating a desire to grow their investments in tablet initiatives, their numbers still remain "conservative," the study said.

While brick-and-mortar retailers work to figure out how mobile investments fit into their overall strategy, e-commerce players like LivingSocial, Groupon Inc (GRPN.O), HSN Inc (HSNI.O) and a few other nontraditional retailers are running ahead.

"I still see people looking at their e-commerce strategy and saying mobile comes later. Actually, it should be the opposite," said HSN Chief Executive Mindy Grossman.

Grossman said her company did more business in mobile in the first half of this year than it did all of last year. But for traditional retailers, the pressure is not very great.

"We continue to monitor which brands make sense for mobile," said Richard Dickson, CEO of branded businesses at Jones Group JNY.N.

Dickson added that while the company is more active in engaging mobile activities for its Nine West brand, Jones' broad portfolio tends to be for older shoppers who are not known to be early adopters of technology. So the company has "more time to sit and watch," he said.

(For other news from Reuters Retail and Consumer Summit, click here)

(Reporting by Nivedita Bhattacharjee in Chicago; editing by John Wallace)

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