Mobile – Changing the Way Consumers Shop

20.06.12

The rapid growth of mobile technology, combined with changes in consumer and retail trends, is having a major impact on our shopping habits.  Whether using them to compare price, reserve a product in store or research reviews online, mobiles are affecting the way we shop.

Today's consumer is technologically smart and price savvy.  When it comes to shopping, he (or she) expects speed, ease and convenience, innovation and service excellence.  With computer functionality in the palm of his hand, if he doesn't get what he wants from one retailer, in just a few moments he can find what he is looking for elsewhere.

The challenge then for retailers is to provide what today's consumer is looking for by blending mobile technology with a seamless, inspirational multichannel retail offering.  We are already seeing moves in this direction, but in terms of the bigger retail picture we are still only skirting the edges of what is truly possible.

Mobile technology in retail: QR Codes

One of the biggest developments in recent years to link mobile technology with retail is the use of QR codes, two dimensional barcodes originally invented for the automotive industry.  Using a mobile, customers can scan QR codes to find product information, obtain shopping discounts (mobile couponing), interact with the brand or purchase products.

For example, in 2011, the Lacoste store in Westfield implemented a marketing strategy incorporating a large QR code displayed in their store window.  Customers were invited to scan the code and take part in a computer generated bat and ball game, at the end of which players were eligible to register for a 15% discount on Lacoste goods.        

And for Valentine's Day 2012, PayPal implemented a ‘Shop and pay on-the-go' pilot, allowing commuters in Singapore's tube stations to shop for a Valentine's gift from a display board of images.  Commuters simply scanned the relevant QR code to place and pay for their order which they could then collect or have delivered - much more convenient than driving to a petrol station for a bunch of flowers! 

QR codes offer retailers real potential in terms of sales and marketing but among consumers the use of QR codes is low, partly because most phones are not yet supplied with built-in code readers and there is not enough incentive for consumers to download the necessary app.  According to multichannel retail expert and former Chief Operating Officer at White Stuff, Andrew Webb, this puts the long term potential of QR codes at risk.

"At the present time, there is a very real danger that QR codes may become little more than a fad," said Andrew.  "However, by linking QR codes with other mobile technology, such as augmented reality, and by incorporating code readers into mobiles as standard, we should start to see QR codes more widely used in retail."

Mobile technology in retail: Augmented reality

Augmented reality (AR) provides a real world, real time view augmented by digital elements such as sound or graphics.  Coffee company, Starbucks, combined QR code technology with augmented reality in its ‘Cup Magic', which enables customers to interact with characters printed onto the side of the cup using their mobile phone.  You can see a demonstration of Cup Magic here

Supermarket giant, Tesco, has also combined QR codes with augmented reality in several of its UK stores to allow customers to view 3D, manoeuvrable images of products on their mobile.  While this of course has the benefit of promoting the product to the customer and increasing sales, it also enables the store to optimise its available shelf space and sell a greater range of products.

However, these innovations are the exception rather than the rule.  Take up of AR technology in retail is still fairly low, though the possibilities are enormous.  Consumers love the ‘wow' factor and augmented reality provides retailers with the opportunity to provide an innovative customer experience that responds to individual needs - boosting sales in the process. 

Mobile technology in retail: geolocation

Another technological development offering retailers enormous potential in terms of engaging with customers and increasing profits is geolocation.  In 2009, Stella Artois combined augmented reality with geolocation technology in its Le Bar mobile phone app, allowing consumers to find bars in the vicinity selling Stella; the geolocation technology pinpointed the consumer's location while augmented reality presented a live image of the consumer's surroundings, overlaid with digital images of arrows and individual bar profiles.  It was something of a novelty at the time but the use of geolocation for retail marketing is increasing.  Retailers are now using the technology to pinpoint the location of their customers, both in store and within a defined geographical area, in order to advertise current in store promotions or new products relevant to a customer's particular purchasing history.  It's an innovative, modern day marketing opportunity for retailers which, when used well, forms a key new element of today's customer shopping journey. 

Mobile technology in retail: an integrated brand experience

For retailers to make best use of geolocation, augmented reality and QR codes, the key is to integrate the technology within the overall brand experience, blending the technology with the whole multichannel retail offering rather than using it as a marketing ploy or novelty PR exercise.  The problem here, as Andrew sees it, is that retailers have a major hurdle to overcome in terms of the divided management of the brand's sales channels, which can hinder the development of a truly integrated multichannel retail strategy.

"A big constraint is that retailers presently run each channel as a separate entity with one director responsible for the bricks and mortar store, and therefore more naturally focused on people elements, and with a second director responsible for e-commerce, who is more focused on technology.  Retailers need to find people with the skills and understanding to straddle both areas and bring everything together."

Mobile technology in retail: mobile payments

Taking things a step further, ‘mobile payments' are set to alter the way we transact - forever. Although here in the UK we have been a little slow on the uptake, things are changing, more noticeably at this stage with younger customers who may not shop via their PC. 

Mobile payments offer the consumer maximum convenience - the ability to pay for goods and services without cash, using what is arguably the consumer's most constant ‘companion'.  Various companies have already introduced apps which allow the customer to complete his purchase using his mobile phone, but this in itself presents a problem; not all mobile apps are recognised by all retailers, meaning that the system is presently far from streamlined.

In terms of the technology, many are backing near field communication (NFC) as the future for mobile payments, a system already incorporated in apps such as Google Wallet and Orange's Quick Tap.  The system works when a mobile phone containing an NFC chip is brought into close proximity with the in-store NFC-enabled device, so that the two can ‘communicate' with each other and transfer of money can take place. 

However, most phones are not yet NFC ready (although can be fitted with sim cards or chips retrospectively), prompting moves by others, such as PayPal InStore, to use an on-screen barcode system which circumvents the need for NFC-ready phones and enables them to operate in retail environments not using an NFC system.

Similarly, Starbucks has introduced its own mobile payments scheme in combination with its loyalty card, which enables store staff to scan a code on the customer's phone which links to the customer's pre-loaded Starbucks card.  In little over a year, Starbucks has processed 42 million mobile payments in this way.

In the US, the Card Case app goes a step further by incorporating geolocation technology which enables the user both to find Card Case retailers in the vicinity and to add products to an in-store ‘tab', purely by giving his name to the assistant - the phone doesn't even need to leave his pocket.

Of course, the system relies on people owning a phone capable of downloading apps; presently, there are a larger percentage of people with phones unable to download apps than those with a phone that can.  However, many believe that mobile payments will become the primary method of payment within the next decade; the stage has been set.

Multichannel retail: the new customer journey

The traditional customer journey takes the shopper on a journey that leads from the high street towards the shop window and through the store.  The new, multichannel shopping journey is less ‘linear' and more organic; a living, breathing retail experience that is constantly changing and evolving.  The result is greater choice and more power for the shopper but a level of unpredictability for retailers; retailers are losing their influence over a customer's behaviour as shoppers become more able to choose where, when and how they shop. 

Boundaries have also become more blurred as shoppers combine the various retail channels to suit their needs.  They may reserve products on their mobile for delivery in-store; order in store for delivery to a location of their choosing; or test products in-store, price check against competitors on their mobile and then return home to order via the web.

Customer shopping missions can be more easily changed on the spot.  Mobile marketing provides real time information to consumers about promotions or new products, increasing impulse purchases with a knock-on effect on profit.  And while generation X were willing to trust brands implicitly, generation Y is heavily influenced by the opinions of others, which they can seek out immediately via social media and online reviews.  With two thirds of shopping decisions expected to be influenced by the web by 2013, the impact of online word of mouth marketing is an important consideration for retailers.

Mobile technology and multichannel retail: moving forward

Moving forward, retailers need to innovate and provide what customers are looking for more quickly and more conveniently, both in terms of service provision and product offering.  In the past, price was one of the key competing elements for brands.  Now that consumers can very easily price check, competing on price is difficult, particularly when selling branded products. 

Andrew suggests that retailers should start to develop their own innovative products in response and compete more successfully by developing their multichannel retail offering.  Online, offline and mobile channels must all work together as one, enhancing the customer experience and encouraging customer loyalty.  With 75% of retailers not yet offering compatible iPad transactional sites, optimising websites for mobile must be a priority and retailers need to take the time to stand back and identify what their bricks and mortar store is about in order to provide the in-store experience consumers want. 

"In this fast moving retail environment and with customer attention spans getting shorter, retailers must find strategies to accurately measure the success of multichannel retail activities and be prepared to refocus their energies quickly if something isn't working," said Andrew.

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