Opening up a mobile ‘branch’
The British high street is remarkably resilient. Battered and bruised by the recent recession it may be, but it has survived worse over the years.
The rise of supermarkets, retail parks, chain stores, out-of-town megamalls in the 80s and 90s, and even the internet have hurt the high street. But it has recovered.
The latest threat to the high street, though, could be harder to overcome. The mobile phone, once described by Nokia executives as a “pocket computer”, is now also a pocket superstore. Consumers can, and do, buy almost anything using a smartphone, from cars to cruises, groceries to glamorous fashion.
Much of the early market for m-commerce was for either games, entertainment or “digital jewellery” such as ring tones, says Andrew Bud, chairman of industry trade body MEF. That market, once worth $20 billion a year, has now largely disappeared, at least in Europe and the United States. But other, potentially more durable, forms of commerce have taken its place.
Retailers, both on the high street and in megamalls, fear the latest shopping phenomenon – showrooming. This is when customers, armed with smartphones, try out goods on the shop floor, but then tap in the product information, or even scan in its barcode, to search the whole internet for a better price. If there is a deal, buying is just a click away.
But businesses can equally turn the showrooming phenomenon to their advantage, argues Ian Geddes, head of retail for Deloitte, the consulting and accounting firm. Retailers that turn to m-commerce see a significant boost to their sales.
“Mobile is used throughout the shopping journey,” he says. “Some people write mobile off as fairly peripheral, as it accounts for £5 billion of the UK retail market. But it influences £18 billion of sales, whether that is comparing prices, checking stock or paying. It’s quite a critical influence.”
Banks, travel agents, hoteliers and even business-to-business suppliers are finding that adding a mobile ‘branch’ boosts their sales
Some retailers have embraced showrooming to the point where their shops are little more than glorified displays. Apple, for example, lets customers browse its online catalogue in-store and customers even pay by swiping their credit cards into a specially adapted iPhone. But Apple’s attention to detail ensures the right degree of retail “theatre”, even down to the goods arriving from the storeroom, ready packed in its trademarked bags.
Apple is, of course, a brand that attracts the technically savvy. But mobile commerce has also grown up in the last few years, says Dan Hartveld, technical director of Red Ant, a consultancy that works with brands such as Top Shop owner Arcadia.
This means that customers have to be able to complete their purchases on the phone. “We always advise clients not to move into this space unless their app allows consumers to fulfil the primary purpose of buying the product,” he says. The shopper may not choose to complete the purchase that way, but the important point is that they have the choice.
Mr Hartveld cautions that making that happen in practice is not easy. Shops have to tie together sales, stock, distribution, delivery and ordering to make mobile commerce glitch free. The retailer’s app, if that’s the approach they take, has to fit the brand values. And m-commerce still does not suit all shoppers.
This is why, Mr Hartveld says, in-store applications used on a tablet or smartphone by a sales assistant are at least as important as apps designed directly for the consumer.
These shop-floor programmes can give sales assistants much more information on a product than any point-of-sale display, allow them to call up rivals’ offers, cross-sell additional services, such as delivery or installation, and even personalise the sale to the customer.
As Deloitte’s Mr Geddes points out, technology that records shoppers’ locations and even buying habits automatically, based on their phone’s signal exists, although retailers must tread warily to balance a personalised service with privacy concerns. And they also need to use technology in a way that attracts, rather than frustrates or repels customers. The best apps “engage customers because it is fun”, he says.
But it is by no means only high street retailers who are turning to m-commerce. Banks, travel agents, hoteliers and even business-to-business suppliers are finding that adding a mobile “branch” boosts their sales.
Even where consumers shy away from making big-ticket purchases on a smartphone, there is plenty of scope for businesses to sell what MEF’s Mr Budd describes as “ancillary” services around the item itself.
“The mobile is not just being used for consumption, but for discovery and additional services,” he says.
In this way, a consumer, who buys a car face-to-face from a dealership, might still be happy to book and pay for a winter service on their smartphone, or a business traveller, a flight or room upgrade. “Modern consumers are used to taking control through screens and may prefer messaging to speaking to someone.”
And there is valuable information that retailers, brand owners and services companies can gain from m-commerce. Where are customers when they choose a product, what else do they look at and when do they buy? Increasingly, this is also information that smartphones can supply, says Robert Hasson, managing director responsible for m-commerce at consultants Accenture.
“Mobile is a channel for providing a lot more data and insights into the shopper experience,” he says. “And omni-channel retailing is an opportunity to open a dialogue with the customer.”
For Mark Fells, director of digital at Whitbread’s Premier Inns, mobile commerce is the new normal.
Hotel beds are not like books or music, which can be reduced to digital downloads. But almost all the services around a hotel stay, from booking to checkout, can be converted to a digital, mobile-friendly form.
Much of this focuses on convenience and this means Premier Inns now develop their applications for smartphones first and then scale up to desktop PCs. “We think mobile first,” he says.
“We build a mobile experience so, when guests arrive at the hotel, they have a great stay and technology takes care of the rest. Whether you enjoy it or dislike it, mobile technology allows much more richness for people in terms of transactions and sharing information, and makes things that were difficult, easy and painless.”
And, whether it is a business traveller needing a room because a meeting has run over, or a couple booking a spontaneous weekend away, he believes the time when most people book by mobile is not far off.