Actionable Insights From APT's Retail Practice

Mobile apps and your business this holiday season

November 14th, 2011 | Posted by Hking in Uncategorized

Imagine this scenario: a shopper with a half-filled basket perusing the aisles of your store stops for a moment to inspect an item. She pauses, pulls out her smartphone, and, using one of many apps available for this purpose, scans the barcode pulling up a price comparison that spans both your nearby brick-and-mortar competitors, as well as online retailers.

Depending on what she saw, she may opt to buy out the stock, or, at the other extreme, walk out of the store, leaving her basket behind. Likely, she will simply not buy that item if the price differential is too high and her desire for immediacy too low.

While some shoppers have always compared prices, with nearly 70 million U.S. consumers armed with smartphones and a plethora apps, never has the barrier to price comparison been so low. As of July 2011, smartphone penetration hit 40% of the mobile market, while RedLaser, a popular barcode scanning app, has been downloaded an estimated 12 million times.

Retailers might ask themselves how this will impact their pricing decisions. Competitive pressures have always been a factor in the pricing decision, but, until the advent of online retail, shoppers were poorly equipped for the task. By bringing the price comparison into the store, smartphones and price checking apps represent a new level of pricing pressure. How should a retailer respond?

A solution may be another app.

Imagine that same shopper, perusing your aisles suddenly stopping to look at her smartphone – not a call or a text – but a push notification about a special promotion. Retailers have already started testing such apps that push offers to smartphone equipped shoppers hoping to drive sales. This past year, Best Buy partnered with ShopKick to test their location-based promotion system, where Best Buy customers with the ShopKick app are sent rewards and offered deals for visiting stores and perusing the aisles.

More recently, retailers have begun developing their own apps that allow shoppers to track shopping lists and scan barcodes to pull up reviews, recommendations, coupons, and more. For instance, Wal-Mart just announced that it has launched a mobile app to take advantage of the mobile trend.

With mobile retail traffic expected to double this holiday season, many retailers are wondering how to ride the mobile wave. But with mobile traffic currently accounting for only 9.6% of online sales as of October 2011, the opportunity may still be limited. While retailers are hopeful that mobile will be a boon, the economics are still unclear. For many retailers, developing your own app may not be an option, and deploying location-based promotion systems to your entire network may not make the hurdle (especially in areas with low mobile penetration). As always, testing out these options in a sub-set of your network if possible can help reduce the risk of such investments.

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