The Mobile Leap of Faith – Why Mobile is Not the Next RFID
It’s no secret that consumers are adopting mobile technology at a breakneck pace and integrating it into every part of their lives, including shopping. But while the retail industry generally understands that mobile technology CAN add significant value to both the customer experience and their own bottom line, it may not exactly know HOW or WHY this is the case.
A recent webinar co-hosted by RSR Research and UBM, organizers of the upcoming Mobile Commerce World conference, got me thinking about the essential leap of faith that is required for retailers to fully embrace mobile technology. As related by RSR Research analyst Steve Rowen, data collected from retailers in January 2013 indicates that while a majority of retailers recognize that mobile technology can provide value in getting customers to the store, more than half (52%) say that mobile technology influences less than 25% of sales.
Rowen correctly informed the audience that this estimate is unrealistically low. “Sales may not be consummated via mobile device, but along the path to purchase mobile is involved in more than 25% of sales.” This is where the leap of faith comes in.
Retailers need to trust in the fact that by the time the modern customer darkens the door of their store, most of their shopping is already done. Customers arrive at a store much more focused because they have already performed extensive product research — visiting retailer, manufacturer and brand sites and social network pages, independent review sites, consumer forums and blogs, etc. before they ever enter a store. They know what they want and who can provide it with the most convenience at the lowest price. Much of this research is performed on mobile device, and even in the store customers will use mobile devices for activities like “showrooming” (checking current prices at rival retailers before making an in-store purchase).
So where does the leap of faith come in? It comes in when retailers recognize all this mobile preparatory activity that occurs outside of their direct control and commit funds to turning it to their advantage. Most importantly, retailers need to provide a mobile-optimized customer experience tailored to the unique capabilities and confines of mobile devices. As Rowen pointed out, simply duplicating an e-commerce site in the mobile space is “overwhelming” for the consumer. Whether retailers use responsive design to optimize their digital offering for all platforms or create a separate mobile environment, a tailored mobile experience will draw in mobile consumers at all points along the path to purchase.
In addition, retailers need to take advantage of mobile’s location awareness capabilities. On an opt-in basis, retailers should send customers individually targeted promotions, advertisements and discounts when they are near or in a store. These marketing messages must be highly personalized and timely or they will provide little value.
Retailers also need to perform mobile “social listening,” so that for example if a customer tweets from a store that an item they want is out of stock, either a store associate or remote mobile customer service agent can immediately come to their aid and resolve the problem before the consumer starts browsing competitor websites. Mobile devices also allow retailers to place items on hold shortly before a customer enters the store or direct shoppers to another nearby location where an out-of-stock product is available, saving them the hassle and disappointment of entering the store and finding an empty shelf.
I’d like to conclude with a word about why mobile technology will not turn out like another technology that everyone knows can provide value but so far has not lived up to its potential value proposition – RFID. Obviously RFID has the capability to dramatically improve supply chain performance, but outside of efforts by a few global retail leaders RFID has not delivered anything close to the results that have been predicted for the past decade.
Retailers who took the leap of faith on RFID’s unique potential and got burned may be especially skittish about trusting in the potential of mobile. They shouldn’t be. The reasons that RFID has not yet lived up to expectations (and I’m not saying it never will) would take up another column, but suffice it to say the entire world is shifting to a mobile paradigm. Nobody ever suggested RFID would become a near-universal means for consumers to blend the physical and digital worlds. Mobile is already well on its way to achieving that status, and in places like South Korea has already done so. Adopting an aggressive mobile customer experience strategy now is not so much a leap of faith as a recognition of fact.
Starbucks beefs up leadership team
Starbucks chairman, president and CEO Howard Schultz announced changes to the company’s senior leadership team, aimed to further accelerate the company’s global growth plans.
John Culver has been promoted to group president, China and Asia Pacific (CAP), channel development and emerging brands. Culver has spent the last six years focused on building the talent, business model and infrastructure required for the aggressive growth of the company’s international business with record results, most recently as the head of the CAP region. In his new role, he will leverage his 10-plus years of retail and consumer packaged goods experience at Starbucks to lead the company’s global channel development and emerging brands portfolio while continuing to oversee the growth of the company’s CAP business. Culver will continue to report directly to Schultz.
Jeff Hansberry will be promoted to president of Starbucks China and Asia Pacific, and will report to Culver. In his three years with Starbucks, Hansberry has built what Schultz describes as a world-class channel development and emerging brands team. In his new role, Hansberry will be accountable for the region’s retail business and leading the effort to build a major channel presence in Asia and China, in particular, helping drive the integration of the total business in the company’s fastest growing region. He will be based in Hong Kong.
Cliff Burrows has been promoted to group president, Americas and U.S., Europe, Middle East and Africa and Teavana. Burrows’ 12 years with Starbucks started in EMEA, where he led both the UK market as well as the region overall. He moved to the U.S. in 2008 and has set a high bar of record performance for the Americas retail business and with his team leading the integration of Evolution Fresh, La Boulange, and soon Teavana into the company’s retail stores. Burrows will also be leading the expansion of Teavana retail stores in partnership with Teavana founder and CEO Andy Mack. He will continue to report to Schultz.
Michelle Gass will return to the U.S. this summer to work directly with Schultz, utilizing the skills she has acquired since putting the U.S. transformation agenda of 2008-09 into place as well as leading the EMEA region through its turnaround and growth efforts throughout the last two years. Through the leadership of the Renaissance Plan — including new, locally relevant customer initiatives, energizing Our Starbucks Mission and Values and refining the region’s business model — Gass leaves the EMEA region in significantly better health than when she arrived, with renewed business momentum and a roadmap for a strong trajectory of sustainable growth and profitability. Gass will continue to report to Schultz.
Kris Engskov will be promoted to SVP and president of EMEA. He will report to Burrows and continue the work of the EMEA Renaissance Plan. Notably, Engskov has led the transformation of the UK business — one of the world’s most competitive coffee markets. Burrows will begin a search for Engskov’s replacement as UK and Ireland managing director right away, while Engskov continues leading his current team during the transition.
Sharon Rothstein, global CMO, and Matt Ryan, global chief strategy officer, are joining Starbucks and the company’s senior leadership team, both reporting to Schultz. Rothstein, who has already begun her immersion, comes to Starbucks from Sephora and will serve as steward of the Starbucks brand experience while strengthening integration with newer emerging brands, creating the company’s brand narrative for retail and channel development, leading marketing initiatives, advertising and key business partnerships. Ryan will join Starbucks next week from the Walt Disney Company and be responsible for driving Starbucks long-term strategic planning while bringing enhanced customer insights and analytics to the company’s brand expression and customer experience.
The Perfect Match: Market and Center
As part of Von Maur’s march beyond its core Heartland markets, in 2008 it opened a 130,000-sq.-ft. anchor store at the 1.1 million-sq.-ft. The Greene Town Center, located in Beavercreek, Ohio, and owned by MPI. That store has become the fashion heartbeat of a vibrant mixed-use destination that was originally built by MPI in 2006, expanded in 2008, and slated to expand again in 2014 with another 40,000 sq. ft. of retail.
"Von Maur has been an outstanding merchant partner at The Greene," said MPI VP of Leasing Jim Davis. "As the only fashion department store that meets the demands of our higher end customers, Von Maur offers our customers an enjoyable and unique shopping experience."
That’s what Von Maur does best. Finds viable markets — in this case the Beavercreek/Dayton, Ohio MSA — that are untapped in terms of department-store fashion, and fills the void with unmatched product, service and atmosphere.
At The Greene, which features 760,000 sq. ft. of retail along with about 125,000 sq. ft. of office and 206 residential units, Von Maur is joined by other key tenants The Cheesecake Factory, McCormick & Schmick’s, Sephora, Banana Republic, Ann Taylor, Talbots, Old Navy and more — all set among park-like grounds that serve as a fitting backdrop to a retailer that is rapidly gaining national recognition in the department store arena.
The Greene is an excellent example of MPI’s urban town center strategy to design a unique mix of shopping, dining, entertainment and leisure experiences. And by adding residential units and office space, MPI brings a captive audience even closer to retail.
For more information on The Greene Town Center and other retail opportunities, visit MPI booth C1714 at RECon 2013. To schedule an appointment, contact Jim Davis, VP of Leasing, at 317.805.4854 or [email protected] www.mpi-re.com
MPI, Mall Properties Inc., is a privately owned real estate firm that has specialized in the development, acquisition and management of commercial real estate for more than 45 years. The close integration of investment and operating capabilities has given MPI a reputation as one of the leading private owners of commercial real estate in the country. The company is headquartered in New York City and owns and manages a diverse portfolio of Retail, Hotel, Office, and Residential properties in 11 states. www.mpi-re.com