Discussing trends in mobile retail and multichannel shopping.
The future of retail is an “omni-channel” experience, which means selling to consumers on all channels –online, mobile and in-store – simultaneously.
Retailers of all categories are trying to understand the massive transformation in shopper behavior brought about by the mobile internet, none more than the electronic retailers like Best Buy. The author of this article, Christopher Krywilak, expertly puts it that retailers need to sell to the shopper in all the different channels they offer, simultaneously. It is no longer a viable strategy to assume that shoppers won't have every piece of information about a product or service in the palm of their hand. Retailers must embrace showrooming and devise new strategies that leverage the shoppers ability to conduct all the research they need, right there in the aisle of the store.
One interesting concept is how to turn showrooming behavior into a financial reward for the brick-and-mortar retailer. At the end of the day, the intent of manufacturers is to sell their wares, independent of channel. Retailers play a critical role in allowing consumers to touch, trial, and feel products before they make a purchase decision. If a retailer can prove their role in a sale, manufacturers will be willing to compensate them. We see this today with retailers charging for shelf space, in-store signage, etc. There is no reason Best Buy shouldn't be able to report the number of units of products they sell direct to the shopper and the number of units they were part of that sales process. With the appropriate in-store technology, the Best Buy's of the world will be able to report on their value in selling to the consumer.
Analytics has become one of the major driving forces behind retail over the last few years. Retailers have learned that the more they understand about their customers, the better they can service them and more likely they can create valuable repeat and loyal shoppers. Along with this trend of gaining better insights, shoppers have also increased the amount of due diligence they perform before buying products, and mobile technologies are a key enabler.
This last Monday, at the NRF show in New York City, we announced the availability of a captive portal solution that brings a new slant to traditional retail analytics. With over 40% of the population carrying smartphone devices (and growing), retailers are deploying guest WiFi networks that improve the overall shopping experience in their store. With these new networks comes an amazing opportunity for the retailer to even further understand their customer. In his blog post Andrew von Nagy stated:
Analytics are the un-sung driver behind retail Wi-Fi hotspots. As I have previously written in 5 Retail Trends Driving Wi-Fi, retailers want to know who their customers are in order to tailor the in-store shopping experience which helps drive customer satisfaction and ultimately increased sales and profit. Consumers are increasingly using and relying on digital communications while in the store to perform product research, price comparison, and to make purchases. Retailers want the same reporting available from physical stores that they already get from their websites. The ability to tap into this information by offering free Wi-Fi to shoppers and report on usage is one of the main reasons retailers are offering hotspots in increasing numbers since late 2010.
Use of mobile devices in the store brings together the best of the online and offline shopping experience. Shoppers want to seamlessly navigate between these channels and retailers want to be able to understand how these channels converge and how to provide the best experiences. With these new use cases, Nearbuy provides a window for the retailer to learn more about the shopper and where to focus their energies.
Amazon announced that December 10th is the day that their physical store competitors officially become show rooms for Amazon. Amazon is offering up to $5 off products if a shopper is willing to go into a brick-and-mortar store, look at a product, then buy it on Amazon. Amazon has long represented a threat to the traditional retail sector, but for the most part it was only a direct threat to those retailers' online channel. As shoppers have adopted smartphone technology, Amazon is capitalizing on the blurring of these retail channels and now can attack retailers where it hurts the most, within their stores.
I have written a bit about how online is growing rapidly but still only represents a small percentage of any retailers overall sales volume. The soft underbelly for most retailers has been that store environment, where the lions share of any annual sales takes place. With smartphone technology Amazon has found a very interesting way to disrupt the physical store channel and potentially attack a market that is 10x the online business they pursue today.
So how will retailers respond?
Our first recommendation is that they better get a handle on how big of an impact this is making today. Most retailers understand that their store business is being cannibalized today by shoppers purchasing items on their smartphones from within their stores, but no one knows how to measure this. Does it happen once a day or once a second? Retailers need to figure out in a hurry how often this is happening and measure this trend over time. Nearbuy has some specific ideas on how to accomplish this through guest WiFi networks - helping retailers understand exactly how online content is impacting the store experience (i.e. what content is of the most interest, what are shoppers searching for, etc.). These analytics will allow retailers to truly quantify the impact of Amazon and other online content sources on the store shopping environment, and can help power them to defend such tactics. With knowledge comes great power...
Second, retailers better figure out how to offer a mobile in-store solution that provides an even better experience than the Amazon apps. Price transparency is the tip of the iceberg here, table stakes for a converged multichannel experience. So retailers need to play off their strengths and leverage the fact that they have the shopper in their store. Any mobile offering they role out needs to integrate store staff, local inventory, and the fact the shopper can get immediate gratification from buying the product from the store.
2012 is going to be a very exciting year for retail and as shoppers we will see fundamentally new and exciting ways to shop that leverage the best of the offline and online channels. Retailers who plan on being successful are going to have to take this new mobile fight to heart.
The NRF recently released a post with their top 10 trends for the holiday shopping season. With most retailers expecting a disproportionate amount of annual sales in the Nov - Jan timeframe, these trends exemplify the strategies of most major retail chains. Many of these trends focus on what is happening within the macro-economic sphere (GDP is up, jobless rate is slightly down) and how that impacts shopper sentiment. What I found to be really exciting were the areas where new technologies (versus market conditions) are starting to impact and change consumer behavior and how these are making their way into retail trends.
1st nugget of gold:
Today’s consumer has high expectations – they already assume retailers will be offering low prices or strong promotions, and they want to know what they’re going to get on top of that. This “price plus” shopping mentality is all part of the value equation, which incorporates price with other elements like quality, convenience and service.
Shoppers expect more. Even as times get tough and people look for the best deal, service and overall value of the shopping experience rises to the top. Online retailers have such a cost advantage over brick-and-mortar stores yet the vast majority of commerce still happens in the real world. This lead is shrinking at a double digit rate for the physical store, but the cause is much more than just cost. The "experience" matters and retailers must find new and innovative ways to delight their customer.
2nd nugget of gold:
Half of Americans with smartphones will use their devices for holiday shopping this year, according to our survey – primarily to research products or compare prices but also to find retailers’ information like store hours and locations. Consumers will also use phones while shopping in stores to read reviews or redeem coupons – while a smaller number (16%) will actually use their phone to make purchases. So when you think of smartphones, think mobile. These devices are carried everywhere.
Mobile is everywhere and the ability to bring the internet into the store has forever changed the shopping landscape. Google has created an entire initiative to help business improve their mobile web sites. As the look and feel of content on the mobile web improves, usage will only increase. Retailers are in the infancy of embracing the mobile web and probably won't put major initiatives in place to impact holiday 2011, but it is coming and is going to be coming fast.