Mobile has completely transformed how we shop. Or has it? While retailers struggle to win back the turf they have lost to price comparison apps and schemes that turned their shops into showrooms for rival retailers and Amazon, the 900-pound gorilla of mobile commerce, recent research shows the battle is far from lost. In fact, it’s just beginning, and retailers that arm themselves with insights into the new and complex customer segment known as the ‘mobile shopper’ can benefit hugely from this mobile behavior.
The advance of mobile has real-world retailers beating a retreat. Take the knee-jerk reaction of Target (via this article in the New York Times), the U.S. retail giant that recently decided to stop selling Amazon e-readers. Yes, the move is one way to retaliate against Amazon’s strategy of offering 5 percent items checked through it’s Price Check app. But is it effective?
The article also mentions Target’s communications with vendors and its requirement for solutions to beat ‘showrooming’ via mobile. Read between the lines, and retailers are overwhelmed and worried about the impact of mobile on their business. Should they forbid these devices or embrace the benefits? My new consumer research on mobile shopping behavior (which I also presented at Mobile Marketers Mcommerce Summit) draws from a survey of 1000 U.S. smartphone users to shed some important light on the problem — and the opportunity. (Slideshare of full presentation with commentary is here.)
Showrooming is nothing new
Roughly a third of smartphone owners told us they use apps while they are in a physical store to help them shop. Sure, this is a significant portion of the smartphone population, but it’s by no means an indication that a widespread, overwhelming majority of people are using apps in-store to help them shop.
But let’s not focus only on the absolute number of people in this group. Instead, let’s take a look at what makes this group especially interesting to retailers: their intent.
Folks that use mobile apps in-store are more likely to purchase products across all mediums (in-store, online, mobile website, mobile app, tablet website, tablet app) in an average week than consumers who own smartphones but do not use apps in-store. Put simply, they are tech savvy and flow across devices, platforms, and physical locations to get their shopping done.
In-store app users are also more likely to browse in a physical store and purchase in a digital (online, mobile, tablet) environment. In other words, in-store app users are die-hard ‘shoppers’. They enjoy the shopping experience regardless of how they choose to shop. Put simply, this customer segment has a completely different mindset from people who are not in-store app users.
The mindset, not the mobile device is the driver here. Folks who are using mobile in-store are people who just like to shop and — based on the preponderance of price comparison behaviors we found — love a bargain.
If they are doing price comparisons, they are just as likely to be comparing local store prices as online store prices. It’s not all about using a physical store as a showroom for an online product; it’s in the DNA to do what they can and harness the tools at their disposal (including mobile) to get the best deal.
To be clear, people do not develop new behaviors out of the blue. These same folks who are price-comparing in-store — a component of ‘showrooming’ — have been doing this for years. Only now — thanks to the advance of smartphones — they can do it better. Before smartphones, these folks would have gone into the store and left after a round of unsuccessful bargain-hunting.
This was in the days of analog, and the tools these folks used were written lists, printed store circulars and envelopes packed with paper coupons. Obviously, retailers didn’t see these people when they went home to compare prices online, or call five different local stores to inquire about the prices. It’s only now that retailers can actually see people using their smartphones in the store that they assume ‘showrooming’ is a new activity. It’s not.
Furthermore, the absolute number of people who fall into the ‘scan & scram’ category of behavior is small. In fact, only 6 percent of all mobile owners have done this, and the majority of people characterized by this behavior is concentrated in the New York Metropolitan area (article here).
As I have pointed out, in-store app users are shoppers are not a new phenomenon. They were doing ‘showrooming’ long before smartphones broke on the scene. So, how should retailers react? What can they do to ensure they get a piece of the action and a share of the revenues?
Well, in an age of ‘access’ closing your eyes (or your doors) to mobile won’t work. Trying to shut down price comparison and ‘showrooming’ activities by developing unique store-specific barcodes or products only opens up more options for the competition to eat your lunch. In other words, some industrious person will develop a workaround, such as an app that finds related products at all the different stores and still gives a price comparison, and laugh all the way to the bank.
To influence customer behavior retailers have to accept it first. Shoppers will be shoppers and retailers need to embrace this behavior. And it’s not about competing on price. Some shoppers want the best deal, but they also enjoy the internal satisfaction that comes when they have been successful at getting the best value too.
Retailers can leverage this internal satisfaction driver to their advantage by focusing more on ways to enhance the in-store store experience to make the customer segment enjoy the hunt even more than the bargain.
Kmart’s old strategy of Blue Light Specials provides a perfect blueprint for a mobile/in-store tie in. Build a location-aware component into your app and deliver a Blue Light Special time-sensitive notification to shoppers when they are in your store that drives them to an aisle and (to sweeten the offer) produces a coupon that can be used for a discount that day when the item is scanned on their phone.
Following this approach allows retailers to take advantage of an established behavior (scanning bar codes) and make shopping a convenient, compelling adventure. The customer is offered unexpected value (the Blue Light Special doesn’t happen every time they are in-store), and they are experiencing the internal satisfaction of getting a good deal (discount/coupon). This way retailers aren’t fighting the price comparison behavior; they are leveraging it to offer value (and embracing technology such as bar code scanning and mobile apps to make it fun, interactive and easy).
The paradox of mobile shopping
Turning our attention now to what happens on the mobile device, we find that mobile is more of a browsing medium than a purchasing medium (~75 percent browsing/25 percent purchasing).
However, if someone is purchasing products on mobile, their frequency of purchase mimics that of purchases made in a physical store. In other words, if people are buying on mobile, they are doing it as frequently in a week as they are buying from a physical store. Mobile inspires that all-important impulse buy? Maybe not…
Flipping our perspective a bit and focusing on those people who have not made a purchase on their mobile device, we see that this customer segment is nonetheless perusing products using their mobile device. Furthermore, they only have strong resistance to purchasing a few select categories of products (such as insurance, financial products, and oddly enough, groceries) using their mobile device.
The takeaway: these people could be mobile purchasers, provided brands and retailers give the right triggers.
Our findings show that mobile is a browsing medium and a frequent, planned purchase medium. But can we explain this paradox?
It’s simple once you see both of these behaviors as being different sides of the same coin. The mobile shopper has many sides, so it’s futile to focus on a single mobile shopper segment. There isn’t one.
In fact, our research identifies an array of profiles: the deal-hunters, the browsers, the taskers, the impulsives, the maybes, and the avoiders.
- Deal-hunters are on their devices frequently comparing prices, using coupons, and looking for offers; heavy shoppers in general
- Browsers are on their devices to look at products, maybe to find more information, but not focused on making a purchase on the device
- Taskers are on their devices to buy something now. They know what they want and they know who they will buy it from
- Impulsives could be Browsers or Taskers but they are making purchases on their device that they did not plan to make
- Maybes are Browsers who have not made a purchase on their device yet, but aren’t opposed to doing so in the future
- Avoiders are people that do not see the value in using their devices to help them shop and are less frequent shoppers in general
To complicate matters, these characteristics often overlap and co-exist in the same individual. Thus, it is essential to abandon generalities and embracing this multi-view perspective of mobile shoppers.
Are you experienced?
Developing strategies built from the ground up to serve shoppers (and all the behavioral states they experience) will allow retailers and marketers to take advantage of the full benefits of mobile.
Retailers need to integrate all their channels and use each platform to educate, engage and then drive people to purchase where (and how) they are most comfortable. Offering linked shopping carts based on login data, adding a “Save for Later” feature for online or in-store usage, or incorporating a live chat/customer service element will provide value throughout all channels, not just mobile.
And internalize the biggest lesson from the research: mobile is not an isolated channel and treating it as such is a flawed strategy doomed to failure. We’ve learned how important the online channel is to our businesses over the past 10 years and mobile is following that same path, albeit at a much faster pace. Taking advantage of mobile’s ability to provide a two-way conversation, either while people are in-store or while they are on their device, will more deeply engrain the retailers with the shoppers.