Apple's Next Reinvention: Shopping at IKEA

The basic idea is that Apple will enable shoppers to conduct roving transactions throughout retail stores by scanning physical goods with their iPhones, paying on the spot via iTunes then going on their way.
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We in the tech analyst corps are always making predictions, and sometimes they come true. Mobile ad revenue forecasts and Apple's move into mobile ads (iAd) are a few things I was proud to call correctly in the past couple years.

This week another one popped up: Tim Cook's earnings call comments combined with some WSJ digging painted a familiar picture. The same vision was outlined in these very pages two years ago when the iPhone had just turned four and Steve Jobs was among us.

The basic idea is that Apple will enable shoppers to conduct roving transactions throughout retail stores by scanning physical goods with their iPhones, paying on the spot via iTunes then going on their way. No checkout aisles, no NFC, no gum-snapping shop girl.

Invoking this now is less about back patting than revisiting the model with new variables (like TouchID). Apple's escalating ownership of the user touch point (375 million iPhones) and payment processing (600 million iTunes accounts), make it as likely as ever.

The dirty little secret is that Apple has employed this model in its own retail stores for a few years. Now it's clearer that it will push that model to third party retailers as we predicted. The plot thickens with Touch ID for authentication and iBeacon for in-store networking.

Many analyst predictions focused instead on NFC in iPhones for "tap to pay" transactions. That misses Apple's entire persona: thinking different. Rather than disrupt the point of sale (POS) so marginally like everyone is doing, Apple wants to tear it down altogether.

This creates a world where the shopper's iPhone is the POS. Looking again at moves in its own stores, Apple tossed out checkout aisles from the start, in favor of roving transactions by store associates. The next step is to take the guy in the blue shirt out of the equation.

Anyone who's shopped at IKEA can imagine how this plays out: Scan items to pay on the spot, then grab them from the warehouse shelf and be gone. Meanwhile iBeacon leads you through the cavernous IKEA interior -- maybe it even lets you order some meatballs.

For big boxes, this likewise has cool implications for store layouts. ARPU (basket size) will grow by getting rid of the bottleneck that is the check out aisle. This makes it much easier for shoppers to pay for things throughout the store (impulse buyers beware).

Meanwhile the store clerk doesn't go away. Analogous to industrial and computing revolutions, he or she will evolve into a more productive and efficient role. The busywork inherent in current retail systems could give way to a sort of shopping consultant role.

And for Apple, the big gain is offline transaction data, where 93 percent of U.S. retail spending happens. That will power mobile ads (iAd), and Apple's other "local" acquisitions, to position the iPhone -- via iTunes -- to take a crack at the $5 trillion U.S. retail market.

We're one step closer to that vision with this week's developments. All the signs are there: iPhone penetration, iTunes customer volume and Apple's knack for upending entrenched industries in need of a good shakeup. That might pass the "think different" test.

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