In the last few months, smartphone ownership in the UK ticked over the 50% mark and is rising rapidly. In tech-savvy Singapore three quarters of consumers already have a smartphone and that figure is expected to reach 84% by the end of this year.
Smartphone devices will soon be ubiquitous but they are already affecting consumer behaviour with profound implications for retailers.
Smartphones play a central role in their owners’ shopping processes. A recent survey of US smartphone owners by Google found that 96% use their mobile to research products and prices. 32% said they had changed their mind about purchasing a product while standing in a store and conducting a smartphone search. The company have also found that 59% of smartphone owners in China have made a purchase on their device, the highest of all countries in the survey.
This smartphone usage is currently particularly prevalent in certain categories such as big-ticket electronics retailers where 73% read product reviews and 71% compared prices with other retail outlets. However, as smartphones increasingly become an accepted part of daily life, this change in customer behaviour isspreading across all categories. The sharp rise in supermarket apps recently led Apple to launch a dedicated Food & Drink category on its App Store.
Deloitte Consulting calculates that smartphones already influence 5.1% of all retailstore sales in the United States – equivalent to $159 billion in 2012. By 2016 it is estimated that mobile-influenced store sales will reach a staggering $752 billion a year. The crucial question is ‘how?’ Deloitte’s study suggests that the conversion rate in-store for shoppers who use a retailer’s dedicated app is 21% higher than those who don’t. But some retailers are understandably nervous of shoppers entering a store with their competition a few handy screen tapsaway.
There’s been much discussion of ‘showrooming’ where potential customers use physical stores to investigate a product and then buy more cheaply from online rivals. A recent survey by consulting group Capgemini in 16 different markets found that 73 per cent of respondents expect online prices to be lower than those in physicalstores. US electronics retailer Best Buy has responded by changing their barcodes to prevent price comparisons. We think that’s a poor strategy, which sets Best Buy against its own customers and destroys their trust and loyalty.
If retailers are to combat the messages of third parties and also want to convert in-store browsers into active purchasers then they must promote themselves via mobile applications as well. Earlier this summer Target enabled its customers to use the Shopkick app in its outlets across the US. Walking into a store earns sixty ‘kicks’ and the more items the shopper scans the higher the value of the Target gift card they can earn. At the same time shoppers are given the latest in-store deals and promotions.
US department store Nordstom has also embraced the new technology, adding Wi-Fi to its stores and providing an app that helps its customers check competitors prices and promises to match the cheapest price. This is a smarter response to the splintering of the shopper journey. It’s essential to work with the consumer’s changing expectations and provide a seamless retail experience capable of delivering value that beats the competition what ever their business model.
As smartphone ownership continues to increase sharply, the need for retailers to adapt isurgent, but introducing technology for technology‘s sake is not the answer. Instead it is forcing the role of the traditional store to be redefined, with a greater emphasis on education, entertainment and engagement, offering immersive brand experiences while also seamlessly integrating digital retail elements. In this way retailers can not only address customers’ increasing demand for instant and transparent access to products and information, but can also continue to provide a motivation for consumers to engage and shop.