Mobile Will Drive $689 Billion In Store Sales During 2016, Smith Micro Forecasts
Combining real-time location information with historical geo-data is the key to winning the battle over the likes of Amazon — and grabbing a chunk of the change.
While most the current retail buzz centers on holiday season shopping, the bigger picture is that brick-and-mortar businesses can’t afford to lose momentum as the New Year begins and customers continue to expect personalized mobile experiences year round.
Smith Micro, which provides retailers with software solutions designed to simplify the mobile experience, projects that building personal relationships through the device — and understanding how both past behavior and location inform shopping habits — is what brick-and-mortars need to “win out” over the likes of Amazon and convert showrooming into in-store purchases.
“Mobile isn’t simply a channel, but a way to build a hyper-personalized relationship with consumers and deliver the most relevant information at the right place and under the right circumstances,” said Carla Fitzgerald, CMO at Smith Micro, who was joined in a conversation by Sunil Marolia, the company’s VP Product Management. “Knowing your customers through their smartphones will prove instrumental in this battle.”
Betting on businesses’ adoption of a “clicks-to-bricks” digital ad sales model, Smith Micro is forecasting that the wider use of mobile as an engagement tool
will ultimately generate $689 billion next year.
GeoMarketing: Knowing how instrumental the personal mobile relationship is to in-store sales, what is Smith Micro’s outlook this holiday season and into 2016? How can retailers “know” their consumers through their smartphones?
Carla Fitzgerald: One of the things that I want to start with is the idea that, for us, success is predicated on understanding how each business wants to approach their customer. They need to understand the uniqueness about each customer. When we talk about engaging through mobile, we are promoting that mobile is really a relationship; it’s got to be a trusted relationship with the brand or the retailer. That means that in order for a retailer to pull people in and engage them through mobile — during the holidays or at any time, really — they have to be very sensitive to the way the consumer uses their mobile device.
That starts with listening and observing through enriched and advanced analytics on the device. It also means that, [even if] location is important, looking at the context in a much bigger picture than just location data — going beyond knowing that a shopper is within a mile of a certain mall and [incorporating past] behavioral data to paint a more complete picture.
So many customers are using their smartphones as an in-store shopping aid. If a retailer has used historical geo-data to understand that shopper, how are they translating that into communicating effectively during the in-store moment? And how does that, in turn, combat showrooming?
Let’s talk about two different types of retailers. First there’s the Walmart-style big box retailer who has a whole bunch of different products to promote. They have a pretty well established set of mobile apps but they’re, interestingly, still relying a lot on third-party digital advertising to serve up messaging to their consumers. It’s still rather immature in the types of contextual information that [the retailer] is gathering about consumers — although they’re starting to record that [historical data] about what consumers have registered as their purchases in the past.
Some retailer’s apps are recognizing locations through beacons within the store. But some — Walmart’s technology, for example — isn’t doing a lot relative dwell time in different areas and what that means, customizing based on other apps that users have installed on their phones that may indicate their preferences, intent, etc. There’s certainly a lot more that can be done.
On the other hand, we have other retailers that are much more focused on the service. They may be serving a higher-end demographic, maybe more brand name products. They really don’t want to push location-based deals and rewards at all through a mobile app. They are really looking at some strategies for creating more of a VIP experience for customers; instead of targeting users with messages like “let me try to push you an offer for the deal,” its, “let me keep you in my store and make you happy to shop here and make you want to look for your brand here.”
Sunil Marolia: Let’s talk about shoppers. I think we’re seeing more of a segmentation of shoppers. We talk about showrooming; those shoppers tend to be very, very price-sensitive. They’re looking at “what is my best price? What is my best deal?” and then making decisions off that. In those cases, it makes sense to push the real-time deal. In the second category of shoppers, as Carla mentioned, it’s more about facilitating an experience based on who they are.
On way retailers are trying to cater to this is with a lot of brick-and-mortars doing shop online, pick up in-store services. It brings together two worlds for those types of shoppers. They get a transaction done seamlessly online, and they get the instant gratification of that product. And it does two things; it builds that experience and relationship, and it combats showrooming — shoppers will buy directly from the retailer and not, say, Amazon if they have that immediate opportunity.
People love that, that ability to get their products very, very quickly — and I think that’s where brick-and-mortar retailers are right now, and they’re winning. You can see non-brick-and-mortar stores start to come in and try to play that. That’s why Amazon’s experimenting with 1-hour delivery; there is a fight for that segment of shoppers.
Online ordering and in-store pickup has definitely been a boon to business for a lot of brands, as you said. What are some other ways to differentiate the in-store experience, helping retailers “win” over the holidays — and into 2016?
Fitzgerald: I think it’s about having the in-store experience versus the out-of-store experience be very different.
It should be something that can be more dynamic. When I think about the type of help that customers want when they’re in the store, it’s very different from that same brand, that same retailer, than when they’re out of the store.
Just as an example, if a mobile app can change the content or messages it’s offering present to me the things that may be most relevant to me when I’m in the store — versus when I’m using the app out of the store — that would be a huge convenience. Sometimes that comes into play with product information, or even “help find a store associate” while shopping; I don’t know when I’m going to want help when I’m in the store, but when I want it, I want it really fast.
Are there other ways that mobile apps can promote in-store shopping?
Another example [of this utility] could be things that improve the experience after you’ve completed a purchase — so shoppers are more likely to come back. You could be immediately prompted, “Would you like to get this tailored? The wait time today for tailoring is 2 hours.” And that helps you make a decision about whether you’re going to wait for tailoring or come back another day. That’s useful.
To me, the excitement comes form when you can combine real-time information — such as where I am, how long I’ve been there, the fact that I just purchased something — with the data about what I did yesterday or last week, and dynamically change that whole mobile user interface to better suit me as an individual. I think that’s what’s really exciting about mobile engagement.