A new age of identification technologies has arrived, giving physical stores an opportunity to level the playing field with online retailers.

And identification technologies, such as biometrics in retail, can create deeper customer engagement more in line with an e-commerce experience.

A recent Walker study found that by 2020, customer experience will overtake price and product as the key brand differentiator. Today’s customers will expect companies to know their individual needs and to personalise the experience to meet those needs. Equally significant: 86 per cent of these consumers are willing to pay more for it.

Simply put, customer experience is now the new battleground, and every retailer should think about how to jump on the bandwagon sooner rather than later.

E-commerce has traditionally held an edge over brick-and-mortar stores, with its ability to provide quality digital customer service and personal experience through the use of algorithms.

An algorithm can easily detect a shopper who prefers white over black, or jeans over skirt, through past browsing and purchasing history. The next time he/she visits the online store, more personalised recommendations can be made accordingly.

Now, the same function can be replicated across physical stores, and it doesn’t involve the use of any loyalty programs, membership cards or vouchers.

To start, imagine entering one of your favourite stores and getting a new pair of jeans. If the store can identify you at the point of sale, through biometrics for example, this can then be the gateway to a data and analytics engine. It will enable the store to recall your purchase history and generate predictive analytics on your consumption habits and preferences.

The store can recommend new stock which has arrived, like a shirt that would go perfectly with the pair of jeans you bought. And it is in black, your favourite colour. As a loyal customer, you receive a personalised recommendation or offer via an email newsletter, prompting you to visit the store again.

In traditional cash or card payments, that data would be lost. With more sophisticated identification at the point of transaction, all a customer has to do is to sign up and register their credit cards. When they next transact with that store, restaurant or hotel, the data can be used to create bespoke experiences for that customer. Patterns of behaviour can be identified and digital marketing tactics developed around those insights.

To top it off, customer-loyalty program entitlements are also applied automatically at every interaction and the customer is notified of the loyalty benefits or credit card promotional offers.

This eliminates the need for an additional membership card or voucher, making the shopping experience fast, convenient and seamless.

Biometrics will take the lead

The next issue is which kind of identification technology will become the norm in the future? In my view, biometric payment systems are a good choice as they can be highly secure if applied correctly. Of those, using fingerprints for payments is by far the least intrusive.

A recent Visa survey found that 96 per cent of consumers in Singapore would like to use biometrics for making payments, and 41 per cent said it is more secure compared to passwords and personal identification numbers. For a region where cash and credit cards dominate payments, the payment ecosystem remains inconsistent and inefficient. Customers are increasingly concerned with security and privacy issues.

Biometric authentication systems can provide a more efficient and secure alternative that is completely unique to the shopper. This narrows the chances of false identification to less than one in 1 trillion, removing common transaction risks such as credit card fraud.

As with any transition, the take-up rate will vary from market to market and from person to person. However, identification technologies give brick-and-mortar stores the best chance to play the e-commerce giants at their own game – enhancing personalised experience through the use of data.

As we begin to see the widespread adoption of biometrics in retail and through smartphones, it might not be long before identification technologies become the gateway to a new level of engagement with customers.