Mobile is altering the retail landscape. It’s changing the way retailers do business, and proving to be a daunting transformation for them to manage. Mobile devices may be hands-on, but the technology that runs mobile is imbued with complexities.
In STORES’ second Mobile in Retail Special Report we explore some of the most dynamic segments of this emerging channel: the shopping experience; the buying process; the role of mobile in store operations; and how these devices are reinventing in-store relationships. We examine what retailers have accomplished thus far and where they’re headed in the short term. And, no discussion of mobile is complete without research to put it all in context.
Put your smartphone on mute and get set for an engaging read.
A year ago STORES described mobile technology as game-changing. Today, experts are more apt to use idioms such as “galvanizing force,” “disruptive technology” or “a Gutenberg moment.” Underlying each phrase is the obdurate sense that retail is being revolutionized by new technology and innovation — and mobile is at the center.
Consumer adoption of smartphones has outpaced predictions and continues to defy long-standing buying curves. One in every three Americans age 13 and older – approximately 82 million — owns a smartphone, and that figure is expected to double by 2015. According to analytics firm Flurry, the average user spends 81 minutes a day using mobile apps.
Tablet ownership is also soaring: Apple’s iPad is reported to account for 97 percent of all tablet-originating web traffic, according to comScore. Research conducted by Ipsos finds that tablet usage increases the frequency of mobile shopping, and suggests that tablet users buy almost twice as much from their mobile devices as smartphone shoppers.
Hoping to cash in on this mobile revolution, retailers are experimenting with everything from mobile selling, marketing and clienteling to mobile POS, task management and security monitoring. Over the last year, retailers have tested devices used for guided selling, mobile payments, task management and more. In fact, experts surmise that the number of mobile pilots is dwarfed only by the incalculable amount of mobile vendor “specialists” who have emerged on the scene.
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‘More buzz than business’
This month, holiday shoppers are expected to hit stores with smartphones in hand, and a recent Accenture survey finds that 54 percent of consumers will use their mobile phones to compare prices as they shop. PayPal and Ipsos are predicting that 46 percent of smartphone users 18 and older will make holiday purchases using a mobile device. And they’re not talking about discount denizens: Research finds that 40 percent of mobile users would be comfortable spending more than $50 per transaction, and nearly a quarter of those polled had spent more than $100 on their last mobile purchase.
In June, Forrester Research forecasted that mobile commerce will reach $31 billion by 2016. The figure represents a compounded annual growth rate of 39 percent from 2011 to 2016, and is expected to amount to 7 percent of overall e-commerce sales in five years.
Still, while progress is undeniable, RSR’s September “Keeping Up with the Mobile Consumer” benchmark report reveals that retailers are grappling with critical business challenges, including “difficulty coordinating the mobile experience with other channels” and a consumer technology landscape that is “evolving too quickly.”
RSR also identifies roadblocks that include having the “necessary resources to manage all of the available e-commerce and mobile opportunities, overall budgetary restraints and difficulty in quantifying overall ROI.”
“So far there is more buzz than business,” says Steve Rowen, managing partner at RSR, “but there’s no question that it’s an exciting and evolving time. We’re seeing more creativity in mobile than we’ve seen in some time, and we’re encouraging retailers to keep moving forward. Customers will reward retailers for trying — you don’t have to have the coolest mobile
site, but you need to get the basics right.”
Rowen insists there is far more to the mobile revolution than developing apps. “Retailers need a business strategy that takes into account mobile’s capabilities across the enterprise [and must] realize that a cut-and-paste version of their e-commerce site is not a viable mobile strategy.”
Mobile’s incursion into retail “is not going to happen overnight,” he says, “but it is going to happen faster than many are anticipating because it’s becoming a preferred way shoppers choose to interact.”
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R SR’s data reveals wide-ranging optimism about mobile. Just over half of retail respondents expect their mobile sales to grow “significantly” in the next three years, and another 42 percent expect at least some growth. The findings suggest that the prevailing benefit of using mobile to connect with consumers — deeper customer engagement that fosters loyalty and drives sales — is now paramount in retailers’ minds.
Sucharita Mulpuru, vice president and principal analyst at Forrester Research, says 57 percent of online retailers have already developed a mobile commerce strategy, and 48 percent already have a mobile-optimized m-commerce site. Still, she indicates that many traditional retailers continue to grapple with a number of issues, including “how many devices to bet on, whether to partner with a third party, whether to develop an app, how to integrate mobile into store operations and how to value the impact of mobile on overall sales.”
Mulpuru says the influence of mobile “is understated both by latent demand not met by un-optimized websites and by the
tremendous amount of mobile ‘pre-shopping’ that drives transactions in other channels.” Her recommendations: ensure that your site is optimized for various browsers; outsource where possible; develop a mobile search strategy; and develop and incorporate multi-channel ROI metrics.
L eslie Hand, research director for IDC Retail Insights, identifies two factors that continue to hang retailers up. One is the confusion over whether to launch an app or to create a mobile website, but the bigger stumbling block is determining the capital investment required to integrate mobile into the enterprise. While some smaller and mid-tier retailers have announced plans to buy a substantial number of mobile devices, most companies remain on the sidelines, voicing concerns about everything from security to whether the devices are retail-hardened and provide enough capabilities.
“Retailers need more choices to feel comfortable with enterprise-scale deployments,” Hand says. “They’re accustomed to having devices that can be supported for a number of years. That may be less of a concern for smaller chains, but for larger retailers the prospect of issuing thousands of tablets and having to replace them frequently and upgrade them yearly is not feasible.”
A number of industry analysts and observers believe the ET1 tablet introduced last month by Motorola Solutions could be retailers’ device du jour in 2012. The 7-inch touchscreen tablet is built on the Android 2.3 OS and has a 1 GHz processor, 8GB of memory (expandable to 32GB), a rugged design, and long-life batteries that can be swapped out on the fly.
The price tag for the ET1 is roughly twice that of an iPad, but Motorola director of global product marketing Sheldon Safir insists that businesses will need to buy 40 percent fewer ET1s because of the way they’re built. The most compelling feature for retailers is likely to be the built-in RhoElements development platform that allows any existing applications running on Windows Mobile or Windows CE on Motorola Solutions mobile computers to migrate to the Android platform.
Real business value
W hat’s ahead for 2012? Ethan Whitehill, CEO of strategic design, branding and marketing services firm Two West, expects to see the hype give way to real business value.
“There are still a lot of questions to be answered, but there’s no refuting the fact that mobile now needs to be an integral part of the brand experience,” he says.
“The days of segmenting the business by stores, e-commerce, catalog and mobile are over. The consumer looks at your brand and sees
one retailer. If a retailer’s mindset is not in sync with the consumer, their days are numbered.”
To this point consumers have been relatively forgiving as they, too, familiarize themselves with the capabilities smartphones afford. But nearly all signs indicate that 2012 will mark the official end of mobile amnesty.