Going Mobile

It doesn’t take a rocket scientist to figure out what the media thinks is the “next big thing” in our industry. It seems like everywhere I look, there’s another article about new mobile shopping initiatives and retail-related smartphone apps.

To some extent, I understand the excitement. The growing number of mobile apps and mobile device-related retail opportunities are definitely an intriguing development. From promotional to informational and transactional, there are a lot of benefits for both retailers and shoppers. Whether a consumer is reading about a new product online, comparing prices between stores, accessing a special mobile-only coupon or simply purchasing a product online, the flexibility, immediacy, ability to customize and convenience of the mobile channel highlights the fact that this is an area with a ton of potential.

But here’s the thing, it’s mostly still just that: potential. I find the field as fascinating as anyone, but when you look at the actual number of shoppers making purchases from their smartphones, it’s not particularly impressive. Despite the fact that retailers and commercial developers are putting a lot of money into mobile apps, they still account for a remarkably small percentage of overall revenue. I came across a recent survey conducted by the technology research firm Gartner, Inc., and it showed that retailers are predicting that sales through mobile channel will still be less than 2% of their overall sales by 2016. Obviously, mobile apps are going to continue to play a bigger role in our retail lives, and mobile device retailing/ “m-commerce” is going to continue to grow, but right now, it seems consumers are more interested in using their smartphones for price comparison shopping than actual shopping.

It definitely makes me wonder if perhaps, from the perspective of retailers, the enormous resources and expenditures being funneled into mobile apps right now is somewhat disproportionate when compared to the potential returns. The counter-argument of course, is to point to the prominent casualties of the e-commerce tidal wave — fallen retail giants like Borders and tottering brands like Best Buy — to demonstrate that preparing for the future is important (and that failing to think long-term with respect to technological advances can be fatal). While it’s a good point, I don’t know if it’s entirely persuasive; the parallels between the Amazon vs. Borders example and other retail segments are not exact. Fundamentally, e-books are not books, they are a different product entirely, and there are a large number of goods and services — apparel and grocery, for example — that don’t translate particularly well into the mobile arena.

I think an even more interesting question is less about how much to invest in new mobile concepts, and more about how they will actually be used by consumers. I see the underlying question of usage: How do shoppers want to use mobile apps and technology? Are they going to continue to use mobile access and information primarily as a “fact-finding” resource, where they continue to go to the store (showcasing)? Will they want to use mobile as a way to get special deals or discounts? What we are starting to see more of is retailers finding new ways to leverage the mobile channel into providing personalized point-of-sale offers and other in-store functionality. It’s a “we’ve got them in the stores, let’s keep them in the stores” mentality. Which, in my mind, is the precise right use, right now. Mobile is also very age- and product-dependent. Any significant structural changes to the retail landscape will subsequently be fairly age-dependent as well. Mobile might not fully take off until the current generation who grew up with it starts to accumulate more buying power.

For now, I think the bottom line is this: Shopping in brick-and-mortar stores is still popular with consumers, and will be for the foreseeable future. Despite the hype, I think mobile retail is a long way away from realizing its potential. And while retailers should certainly be open and even proactive with regard to promising new mobile concepts, there is certainly no need to bet the farm on them just yet.

What do you think? How do you use mobile apps for shopping? Do you think retailers are spending too much in this area? Please make a public comment below or feel free to e-mail me privately at jeff@jeffgreenpartners.com.


Click here for past columns by Jeff Green.

 

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