PayPal has announced partnerships with two of the biggest point-of-sale (POS) terminal providers and the expansion of its in-store payment system to an additional 15 retailers. Together, the moves strengthen PayPal’s bid to become a key player in the emerging digital wallet arena.
The company has signed agreements with VeriFone, the No. 1 POS terminal company, used by 80% of the top 200 retailers, as well as Equinox, the No. 3 competitor in the space. PayPal had previously partnered with Ingenico, allowing it to roll out its payment technology through the three top POS terminal providers.
“While retailers still decide whether to adopt PayPal in their physical stores, we think the ability to quickly upgrade software on POS terminals removes a great deal of friction around the willingness of offline merchants to adopt PayPal,” noted JPMorgan analyst Doug Anmuth, in a research note Thursday.
PayPal also named 15 new retail partners, including Office Depot, Barnes & Noble, Foot Locker, JCPenney and Jamba Juice. (PayPal has worked mainly with Home Depot to date.) The eBay subsidiary also launched a payment tool for medium-sized businesses with multiple locations. Some 300,000 small- to-medium-sized businesses have already registered to use PayPal Here, its mobile payment service for small shops.
Unlike other mobile wallet initiatives such as Google Wallet and Isis, PayPal’s offline payment system is not built on NFC (near field communications) technology, making it easier for retailers to integrate PayPal with existing POS systems. At checkout, users can either enter their phone number and PIN linked to their PayPal accounts or swipe a prepaid PayPal card to pay.
Still, industry observers say PayPal will have to add more value to its in-store payment offering to truly entice consumers to switch from cash or credit. “We think upcoming enhancements to PayPal’s digital wallet — including loyalty card tracking, coupons, and the ability to change payment sources at a later date — could help drive consumer adoption,” wrote Anmuth.
PayPal unveiled its mobile wallet service in March at the SXSW conference in Austin, Texas.
A permanent display of rotating meal ideas can encourage time-strapped customers to buy more items, according to the Innovation Center for U.S. Dairy’s recent report “Dairy Meal Solutions: Merchandising Works.”
For 16 weeks, six retailers — Harris Teeter, Brookshire Grocery Co., Save-Mart, Weis Markets, Roche Bros. and Food City — offered refrigerated meal solution displays with recipes and ingredients.
In these pilot projects, the retailers saw an average incremental increase of 19.2% for units sold across the displays, including an increase of 28.8% for dairy items.
Without any outside advertising, the retailers also saw a 20.5% average incremental increase in dollar sales across the displayed items, with a 29.8% increase for dairy products.
Rebecca MacKay, vice president of strategy, insights and planning at the Innovation Center, said creating meal displays is about more than just cross-merchandising.
“It really is creating solution centers, and even more so than that, it’s centering or positioning the retailer as a solutions provider rather than just a seller of products.”
Starting with consumer research from the NPD Group, MacKay said the project quickly narrowed its focus to provide meal ideas for snacks, breakfast and dinner.
The pilot snacking stations offered items like cut fruit, granola bars, yogurt and string cheese.
“Foodservice, especially quick-serve restaurants, have recently introduced a huge amount of menu innovation as it relates to the snacking space, so the retailers on our panel were very interested in understanding what shoppers were looking for as they’re purchasing snacks,” she said.
A breakfast-centered display at Food City featured easy-to-prepare, healthful meal ideas.
“We did a breakfast concept that was formulated around how you can make a combination breakfast, where we had eggs, milk, yogurt, [and] we tried some pineapple,” said Scott Poole, vice president of center store sales at Food City, in a written statement. “It gives the customer a variety and takes away some of their thinking.”
While customers might not mind eating the same breakfast each day, the Innovation Center found that the dinner meal displays need to be changed frequently.
“You can really turn off a shopper if two weeks in a row it’s the same solution and she’s already made that one, and she’s looking for something else,” MacKay said.
For meal solution displays, simplicity is important for shopper acceptance, the report noted. Displays don’t need to include pantry stable items like olive oil or spices, MacKay said.
In addition to keeping displays clutter-free, MacKay pointed out that meal solution stations work better as long-term initiatives than as short-term promotions. With ongoing displays, retailers are positioned as a trusted resource for meal ideas.
Placement is important, too. During the pilots, retailers made sure to position the meal solution center early in the typical flow of shopper traffic.
“If you put these meal solutions too late in that trip, then the basket is already full,” MacKay said.
Implementing a meal solution display in-store is not without challenges. Displays need to be refrigerated, and incorporating items from different departments in the displays can create a territory war, MacKay said.
“It’s difficult for the store operations to understand who is responsible for stocking it — who gets the credit for the revenue. So those are all things that really need to be addressed on the front end.”
The complete “Dairy Meal Solutions: Merchandising Works” report is available for free on http://www.usdairy.com.