Discussing trends in mobile retail and multichannel shopping.
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.
Once again we will see retail take a leadership role in a new application of WiFi, this time it will be as an "amenity" feature. Retailers understand that smartphones and online commerce are playing a bigger and bigger role in the in-store shopping experience and that this new trend ultimately makes purchasing easier. At first most retailers feared that shoppers would use this new technology to price shop their products, but most have quickly realized that as long as their prices are somewhat close, the convenience, personal touch, and instant gratification that only they can offer will ultimately lead to more sales. Again, from Deloitte:
"Deloitte predicts that in 2011, 25 percent of North American big box and anchor tenant retailers will begin offering free in-store Wi-Fi access to shoppers. In 2012, the proportion should continue to rise in North America and start to spread around the world"
The convergence of smartphones, free high-speed internet, and the "daily deal" phenomenon is fundamentally changing the buying experience. For retailers there is an immediate need to embrace this new technology and provide an environment that enables the shopper every step along their buying process. The retailers who get this - which already includes leaders like Nordstrom, Staples, and The Home Depot who have free WiFi access in their stores - will have a competitive advantage as the demand for online access while in the store continues to grow.
"In-store Wi-Fi presents retailers with a number of minor challenges. Retailers will probably need to build more and better apps to enhance the in-store experience. They may also need to upgrade their Wi-Fi equipment and network connectivity to support additional connections. However, based on experiences from some early in-store deployments, the costs to address these challenges are not material to most large retailers."