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Jul 13, 2016

A Brave (Mobile) New World for Retail

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The smartphone has fundamentally changed our lives, and how we interact with each other. It allows us to stay in contact while out-and-about through more than just voice calls; and it enables us to ignore the people right in front of us when we choose. Sure, it’s a mixed bag of good and bad behaviors, but with 70 percent of U.S. consumers carrying a smartphone (and some carting more than one) we take for granted many conveniences that caused major headaches before the smartphone.

Take, for example, the art of navigation. I remember buying my first car, and immediately rushing to the bookstore to pick up a Thomas Guide. Thomas Guide was the pre-GPS, street-level map that we all tried to navigate across California with, flipping pages as you moved along the route, and trying to make sure that you really were where you thought you were. It was part art, part science (at least for me) and added a sense of adventure to the trip. There was no navigation system to tell you exactly where you were, or when you would arrive. “Are we nearly there?” from backseat passengers couldn’t be answered exactly, as you probably weren’t quite sure how much farther you had to travel or what upcoming traffic would be like. Nowadays, the Thomas Guide seems like a quaint throwback (although it is still available) and even the thought of going to a bookstore seems odd to the many e-book readers among us. Instead, at least from a navigation perspective, more than half of smartphone owners use a navigation application such as Google Maps or Apple Maps on a regular basis.

And as for the bookstore, and retail shopping in general, the smartphone has had just as significant an impact. On the positive side, with navigation systems in our pockets, we can at least find the nearest mall while on a road trip. But we’re probably less inclined to make the detour when we can just buy everything from our smartphones and receive deliveries the next day (or even within the hour in some locations).

Pre-smartphone, the purchase involved an adventure with a balance between store visits and online price checking, all done with a team of two (my wife stayed home to price check while I visited stores). Of course, those were the days when you could choose to buy from a wide array of electronics retailers including Best Buy, Circuit City, CompUSA, Fry’s and Good Guys. Having so many purchase options was invaluable for consumers; retailers were forced to price match against a large number of competitors, which meant aggressive discounts.

Fast forward to the present and many of the above retailers have disappeared. More importantly, the market has moved increasing online, and has become far more mobile. According to NPD Connected Intelligence’s SmartMeter, the percentage of U.S. smartphone owners using the Amazon app doubled from 21 percent in the first quarter of 2015 to 42 percent in the same quarter of 2016. And Amazon is not the only retailer to see a growth in app usage: Walmart sees 20 percent use, followed by eBay (15 percent) and Target (10 percent) apps. Further, there’s a significant base of users who jump to the retailer’s website via the smartphone, as they haven’t yet committed to downloading the app.

This is somewhat of a challenge for the retailers, as they want to remain top-of-mind to the smartphone-toting consumer, which means having the app firmly on the smartphone, not just hoping for the occasional website visit. With an app retailers can send notifications, and there is the potential to update consumers on flash sales and other would-be bargains. To do this, the app needs to be more than just a sales-front for the products. Take, for example, grocery store apps. Many of them don’t include the ability to create a shared shopping list. This makes some sense as shopping lists typically reduce impulse purchases, the very thing that grocery stores hope for. But at the same time, the lack of a logical family-oriented list means there’s less chance that consumers will use the app on a regular basis.

Looking back at how the navigation world changed with smartphones, another logical addition to most retail apps would be more detailed in-store maps, allowing the consumer to find the product they want without too much aimless wandering. But again, this means changing the focus from encouraging shopper “drifting” in the hopes of impulse purchases to a more focused in-and-buy approach.

This means that many retailers need to change their mindset in this increasingly mobile world if they want to remain successful. Many are currently trying to embrace mobile without fully embracing mobile - they still want to protect the older model and are not quite ready to put it all on the table. It’s a smart short-term approach… until suddenly it’s not, and someone else has changed the model that the game is based on.


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