Retail MobilityWelcoming the consumer on mobile

Retail Mobility- Welcome the consumer on mobile / 2

The Seismic Shift

The retail industry has witnessed a massive change in the recent years. While the internet revolution of the last decade enabled shopping anytime, anywhere; the mobile revolution led by smartphones and applications propelled on-the-go shopping and made a radical shift in the way brands, consumers and retailers interact with each other. As consumers use mobile devices and apps to research, browse, compare and shop, mobility solutions are poised to become a significant business channel in retail. Retailers too are realizing this and hence are adopting mobile, quite enthusiastically, resulting in Tablet catalogs, mobile billings, mCoupons, mobile apps and much more. The growing surge in mobility usage, both at the consumer and the retailer’s end makes for a riveting case study. Our cover story, this month, focuses on retail mobile solutions and endeavors to decipher the reasons behind retailers taking the mobile plunge, the seismic shift in the consumer behavior, the growth engines behind retail mobility, opportunities, challenges and advantages for various stakeholders and a look into the days ahead.

Walk into a store, search for the product, compare between various brand choices, pay the bill and walk-out with the desired item in your bag. A few years back, it used to be the only way to shop. The advent of e-commerce made a major shift in the way people shop; allowing consumers to shop from anywhere, sitting in-front of their computer and without leaving their work or home, dismantling all the boundaries and giving them access to a global marketplace. Online retailers, armed with a new, low-cost business model created a competitive marketplace giving a run-for- money to their brick and mortar counterparts. The arrival of mobile devices, the transformation from feature phones to smartphones, the arrival of Tablets and a galore of applications simply changed the order. Starting with SMS advertising to mobile

Which enterprise segment will mobile impact the most?

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Retail

Health

Field Force

Sales

Privacy

Education

Others

Energy

source : www.chetansharma.com

Retail Mobility- Welcome the consumer on mobile / 3

websites and then to exclusive apps for branding and retailing, m-commerce brought a sea-change to the consumer shopping, in-sync with the new mobile lifestyle. Today, using advanced mobile applications, retailers have a direct communication channel to interact with their target audience, inform and convince them about products and influence their decision making.

Research shows that mobility is slowly gaining traction in retail. In United States, mobile commerce is predicted to generate more than $31 billion (from $3 billion in 2010) in sales making for over 7 percent (from just 1% in 2010) of all e-commerce sales in 2016. The mobile retail channel is swiftly moving from being an alternate communication channel to being a primary channel for interaction with consumers.

Mobile Commerce Sales (in billions)

Source : Forrester Research Mobile Commerce Forecast,2011 to 2016(US)Note : eCommerce includes moble media and content, retail, travel, coupons/deals and services.Does not inlcude mobile ringtones, mobile gaming or mobile video

2010 2011 2012 2013 2014 2015 2016

$3

$6

$10

$14

$19

$25

$31

1% 2% 3% 4% 5% 6% 7%% of eCommerce

US$(billions)

Retail Mobility- Welcome the consumer on mobile / 4

The Engines

Several factors are at play to drive the mobile retail boom. Mobile devices (smartphones and later-on Tablets) and applications have become part of a shopper’s life. With today’s shoppers embracing mobility as a way of life, retailers have no choice but to sync their strategy with the changing mindset. Mobile apps allow retailers to make their interactions with the consumers, engaging and responsive, creating an appealing brand impression and occupying mind space of the prospective buyers. Moreover, retailers are

Global Smartphone SalesMillions of Units

Source : Mobile Services : Global Outlook2009 Parks Associates

2008 2009 2010 2011 2012 2013

Mill

ions

of U

nits

0

200

400

Consumers prefer to shop on Tablets when possible

Source : Forrester/Bizrate Insights Q2 2011 Tablet CommerceFlash Online Survey

65%72%

67%51%

60%62%

57%42%

73%70%

64%48%

I use my iPad/tablet more than my smartphone for shopping related activities

It is easy to visit and/or buy from retail sites on my iPad/Tablet as it is on my computer

I would buy/have bought from a retail website using my iPad/tablet

Inferences

iPad > Smartphone

iPad ≥ PC

Interest in + actual iPad shopping

Base: 2,511 Tablet owners(percent agreeing)

Gen Y Gen X Boomers Seniors

Retail Mobility- Welcome the consumer on mobile / 5

Opportunities for Retailers

adapting to mobility solutions buoyed by other business factors as well. The competitive retail marketplace and recent economic downturn has compelled retailers to look for low-cost, agile and innovative solutions that provide them with broader and faster reach-to-the market. Mobility solutions, when integrated with the existing ecosystem, can also play a big role in accentuating the shopping experience. A product demonstration on a tablet or price-comparison with a scan of the product not only helps to shorten the buying cycle but also helps the consumers take informed decisions.

Today, mobility in retail has not only become a vital channel for branding and advertising but also is an enabler that can act as a force multiplier, in near and long-term future, to the overall operations in a retail organization. Retail mobility solutions are making processes leaner and swifter not only with their own capacity but by also complementing other technologies. In short, mobility is creating new possibilities for retailers to manage their stores and make shopping effortless and pleasurable. From helping their consumer locate their nearest stores, to browsing catalogues on-the-go to read reviews of products and compare prices, retail mobility solutions have the power to integrate various components of the buying cycle into a seamless and fun exercise.

Opportunitiesfor Retailers

CouponsPrice

ComparisonsExtended

Packaging

ShoppingLists

Store Locators

ScanningCheck-outs

Payment

Advertising &

PromotionsM-commerce

LoyaltyPrograms

In-storeNavigation

Billing

Retail Mobility- Welcome the consumer on mobile / 6

The Big Gains

Enterprise Mobility Investment Bene�ts in Retail Setting

Source : VDC Research Group-Mobility in Retail, 2011

28%

27%

26%

24%

19%

19%

Improved Customer Loyalty & Repeat Business

Increased Mobile Worker Productivity

Increased Sales/Revenues

Reduced Asset Failures

Reduced Operating Costs

Improve Real Time Decision Making

0% 10% 20% 30%

One of the key factors behind the huge enthusiasm within retailers to adopt mobility is the game-changing business benefits it brings to them. Studies show that mobile applications not only play a huge influencing role in creating positive brand image outside the organization but also boosts worker productivity within the enterprise, thus decreasing asset failures, reducing operational costs and improving real-time decision making to help organizations improve their processes and potential. Research also shows that by adopting retail mobility solutions, business can get a major lift in their various activities and make it more effective, culminating to significant financial benefits. A CISCO IBSG survey in 2011 shows that mobility adoption could bring as high as 10% boost to net margins for retailers.

Retail Mobility- Welcome the consumer on mobile / 7

Challenges & Advantages

• Shrinking profit margins• High operation costs• Multiple points of sale• Market saturation• Rising consumer expectations and

diminishing customer loyalty• Enhance visibility of products• Reach to customers

• Low TCO and High ROI• Alternate Channel of Sales• Superior consumer shopping experience• Direct access to customer• Enhanced brand value• Better customer engagement via loyalty

programs, targeted advertising• Analytics to understand consumer

behavior• Boost emloyee productivity

Concerns Mobility Advantages

Mobile Advertising

CurrentMargin

CurrentMargin

+Potential

Upside

Mobile Couponing

IncreaseBasket Size

Labour CostReduction

Labour CostReduction

MutichannelExtended

Range

ShopperServices

Mobile Marketing MobilePayments

Mobile StoreOperations

Typical Retailer with $20B of Revenue per Year

Net

Mar

gin

($M

/Per

cent

age

Incr

ease

d)

Source : Cisco IBSG,2011

2% lift

$6MValue

$6MValue

$6MValue

$20MValue

$20MValue

}$661M

$61M 10%$600M

$3MValue

1% lift 1%reduction

0.5% lift

1% reduction

Retail Mobility- Welcome the consumer on mobile / 8

While there are many exciting reasons for retailers to adopt mobility, the path however is not so smooth. There are several critical challenges facing the retailers as they move on to leverage mobility in their business. Device diversity- with the availability of varied devices- and platform fragmentation- with multiple mobile platforms- brings up the challenge to look for solutions that can fit all. Internet connectivity and bandwidth concern can be a huge block in reaching to a vast audience in certain geographic markets. Privacy of customer is also a growing concern that has to be adequately addressed. It is also important for retailers to keep an eye on the reliability and scalability of their mobile infrastructure as the usage grows (in peak shopping seasons and times). And, above all, there is a huge challenge in rising and meeting up-to the consumer demands and making shopping via mobile a hassle-free and engaging activity.

“I would use the mobile internet on my cell/mobile phone to purchase products....”

Source : North American Technographics Retail Online Survey, Q1 2011(US)

45%

44%

36%

35%

33%

32%

If my mobile phone number would be kept private

If mobile payment services were more secure

If sites on the mobile internet had all of the same content,features and functionality as

on the standard website

If the mobile internet was faster

If sites on the mobile internet looked more like they do the computer

If my phone had a larger screen

Base: 4,306 US online consumers with mobile phones

Retail Mobility- Welcome the consumer on mobile / 9

The future for retail mobility looks very exciting. As mobile devices evolve further, new technologies emerge and adoption grows and a lot of such innovation in the ways mobile technology will be leveraged in the retail businesses will be seen. Already there are talks of virtual shopping malls owned and managed by multiple retailers. Other key innovations that are most talked about and are gaining traction in recent times are the Near Field Communications (NFC) and Augmented Reality (AR).

Looking Ahead…

Info Source : Big Mouth Media

NFC enabled Smartphone

User sees nice product in magazine.Places phone on the image.

Looks for product info, size and location.Brings out a map to locateStores.

Logs onto the store and reserves product.

User swipes phone while entering the store.Retailer knows the customer is in store.

User Recieves a personalized message.Earns loyalty points and shares theproduct images on social media.User swithches to phone to pay.

Recieves reciept on phone.

PRADAAHello Rachelle,

Your new Stilletoesare ready to be triedon.

400 Loyalty Points

PAID

NFC will allow shoppers to simply wave their phone to a tagged item in a store shelf, and get all the information about the product like prices, reviews, availability and even download discount coupons. NFC will also allow them to make payments via their mobile and also redeem reward cards.

Near Field Communications

Retail Mobility- Welcome the consumer on mobile / 10

AR is another technology, in use in its introductory phase, which when further evolved will change the shopping experience. AR will enable consumers get live view of a particular product, say how a particular garment will look on them or how painting a particular color will affect the ambience. In the days ahead, as retail mobility matures, there will be countless possibilities for its use.

Augmented Reality

Retail Mobility- Welcome the consumer on mobile / 11

Retailers have to explore and adopt solutions that can help them reach their target audience, inform and influence their buying-decision process. Shoppers, on the other hand, would want the retailers to provide them with tools and solutions that play a role in their shopping decisions. Retail mobility solutions have emerged as an effective answer to myriad challenges facing retailers and will empower them to respond swiftly to the changing market dynamics and consumer lifestyle. However, right solutions beget expected results when employed at the right time.. The time is ripe to go mobile. A revisit to the recent history exemplifies how early movers in e-commerce benefitted while laggards were found catching-up. A new model of retailing is emerging. It’s time to embrace it with full hands!

• Embracemobility.Retail mobility is the future. And offers tremendous value to both, retailers and shoppers. • Engagewithyourcustomers. Mobility brings tremendous opportunities to engage and be responsive to consumer needs.• Focusonconsumerexperience. Create a smooth, user-friendly and enjoyable mobile shopping environment. Allow consumers to interact with your brands using techniques like Gamification etc.• Picktherightplatform.Diversity in screen sizes, functionalities and operating system necessitates businesses to adopt a multi-platform approach.• Keepaneyeonanalytics.Monitor consumer behaviour. Customer intelligence will be the guide for future.• Laydownthegroundwork.Emerging technologies like Augmented Reality, NFC, RFID etc., promises more opportunities. Be ready to seize them.

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Final Thoughts

[x]cube is the premier mobile solution partner for companies and individuals creating the next generation of digital applications. [x]cube develops custom solutions for the iPhone, iPad, Android and Windows Mobile platforms.[x]cube is a division of PurpleTalk, Inc.

www.xcubeLABS.com | 1-800-805-5783 | connect@xcubeLABS.com

[x]cube LABS is one of the leading mobile app development and consulting firm, headquartered in Dallas, U.S and with offices in New York and Hyderabad, India. With expertise across all the major mobile platforms, [x]cube has delivered over 500 apps till date and has an enviable client list comprising of some of the biggest brands like GE, Intel, Texas Instruments, Hasbro, Mattel and 24 Hour Fitness. [x]cube’s understanding of the mobile space and technology, complimented by its rich experience across all the major industry verticals and the capability to deliver end-to-end solutions, make [x]cube the perfect mobile consultant of choice.

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