If there is just one lesson retailers can take from the recent holiday season, it’s that mobile devices are now a core component of the retail shopping experience. Recent estimates and surveys show that more than 80 percent of device owners used their smartphone or tablets to help them shop during the holiday season, including more than 86 million US consumers (28 percent of the total population).
Indeed, anyone who stepped into a retail outlet over the holiday season will have found legions of shoppers peering – not at the merchandise on the store shelves – but rather into their devices to find price comparisons, download coupons, check inventories and get product information.
And while consumers’ growing reliance on mobile devices may not come as a big surprise for many retailers, this past holiday season demonstrated that innovative retailers are working hard to take advantage of the mobile channel to drive sales, increase loyalty and capture greater market share.
The strongest example of this has come from retailers’ response to ‘showrooming’ (where shoppers examine items in a bricks and mortar store, price compare on their mobile device, and then leave to purchase the item; often at a lower price and often somewhere else). IDC data shows that almost 50 million Americans will have ‘showroomed’ during the 2012 holiday season, a 134 percent increase over 2011, influencing almost USD2 billion in retail purchases.
A small (but growing) number of retailers have recognized the potential competitive advantage that can be achieved by leveraging this trend towards showrooming to make their customers more ‘sticky’. The reality is that mobile showroomers tend to be more serious about their purchase than those browsing the shelves: they have entered the store, they have researched their chosen products and are now simply examining the items before concluding their purchase.
The challenge for retailers, therefore, is how to ensure that the purchase happens within their store rather than online or – worse – with a competitor. In response, Barnes & Noble, a US-based book retailer, has developed a dynamic program aimed at converting showroomers into customers. The system identifies consumers that are using their proprietary e-reader (the Nook) to browse titles and then may offer a ‘special price’ if that book is downloaded while the consumer is still in the store. And, to ensure that sales staff and customer associates support the program, Barnes & Noble gives the sales credit to the store in which the download occurred.
This holiday season also saw some newer mobile solutions gaining ground in the retail environment. For example, a growing number of retailers experimented with location-based mobile applications like Foursquare and Shopkick (which offer users special rewards for ‘checking in’ at participating stores) to lure passing shoppers into their locations.
Other retailers moved their point-of-sale devices off of the counter and onto the floor. At some clothing retailers, associates were given mobile devices with dongles that can accept most forms of payment, allowing the associates to concentrate more of their time on customers. Apple* goes one step further by allowing customers to take a photo of the item and – after selecting from a few security and payment options – walk right out the door without even using a check-out counter.
While all of this may seem innovative enough, the real power of mobile for retailers does not rest in a single application but rather in how all of those applications work together with enterprise systems to create a differentiated, efficient and effective sales process. Take, for example, a retailer that can attract a passing customer into the store using location-based mobile services, pull up the customer’s transaction history from the database and send that information to a nearby sales associate, who can then use that data to make recommendations and – finally – help the customer scan the barcodes with their device and use mobile payment options to complete the transaction.
However, achieving this nirvana will require retailers to think differently about how mobile can be integrated into their operating models, their omni-channel sales environment and their technology infrastructure. It will demand significant change in the way they perceive, interact and sell to their customers. And it will take innovation on the sales floor, in the back office and in the boardroom.
So what should retailers have learned from this past holiday season? Mobile is here to stay: those that adapt will survive and thrive, those that don’t may well be left behind by the time the next holiday season comes around.
* Apple is a trademark of Apple Inc., registered in the U.S. and other countries.
By Bolette Andersen, KPMG in the US