BrainTrust Query: Mobile Is a Distraction
Through a special arrangement,
presented here for discussion is a summary of a current article from the Retail
Doctor blog.
Before any technology fans begin labeling me a Luddite, let’s
look at the facts:
- “Seventy percent of brand selections are made in the store and 68
percent of all purchases are, to some degree, impulse driven.” — Doug
Knudsen, president of retail sales for ConAgra at the National Retail Federation’s
Big Show 2011.
- “With 87 percent of surveyed retail associates noting that shoppers
can easily find a better deal, offering the best customer experience is more
important than ever.” – Frank Riso, senior director of retail solutions,
Motorola Solutions.
- “E-commerce sales will represent eight percent of all retail sales
in the U.S. by 2014, up from six percent in 2009.” — Erick Schonfeld
at Techcrunch.com, using forecasts put out by Forrester.
Numbers. Statistics. Just the facts. What does it all mean? It’s relative.
In the same way you can look at a glass as half-full or half-empty, you can look
at certain data and see reason to celebrate both m-commerce and e-commerce sales
and their steady increase.
Or you can see evidence that online sales are a supporting
block in the foundation of brick & mortar sales figures, one among many.
Let’s
look at some of the numbers again:Â
- E-commerce sales will represent eight percent of all retail sales in the
U.S. by 2014, up from six percent in 2009.
That huge market of online consumers? It still represents a fraction of total
retail sales.
Sure, having online customers is great. But they want to purchase
items in the real world. While they are doing all their own research right
now, customers still want that face-to-face element. And that socialization
that comes from being in the real world.
Yet, retailers are increasingly concerned
with taking them out of their stores, linking them to this app or shopping
guide and encouraging them to finish their purchase online. All the while they’re
abandoning the store experience that built those brands — people. It
shows in whom they put on the floor, how those employees are selected, trained,
valued and scheduled.
Is the race to mobile a distraction from how miserable
a shopping experience is today? Do retailers have to pay customers to endure
their store experience by offering endless promotions? And what kind of world
are bricks and mortar stores headed for if we continue to look the other way?
That’s
why I researched and wrote this manifesto: Bricks and Mortar
Retailing At Risk In The Digital Age: From Silicon Valley to Main Street.
Discussion Questions
Discussion Questions: Is the fixation on mobile and e-commerce for many retailers coming at the expense of proper attention to brick & mortar operations? Is mobile technology a fad, the wave of the future or something in between?
Mobile is the wave of the future, but that has very little to do with retailers’ core dilemma–“What the heck is the 21st century store supposed to look like, and how do we keep it relevant?”
We just spent a decade cutting payroll to sales ratios, convincing ourselves that self-service was a proxy for customer service, and presuming the customer would “buy that.”
Now, with mobile, the price game is over, and we really do have to put our service money where our mouths are. Home Depot is ascending because management has recognized it needs to put employees back in the store. Best Buy is in decline because it took them out and rode on its laurels for a few years. Macy’s–the jury is still out, but at least the company recognizes the problem.
My company believes we are about to cross the Rubicon as an industry and the customer has already passed it. People are social creatures and would prefer to have places to go and things to do, but not when it’s inconvenient and a quick price scan reveals they’re being charged more than if they bought online.
Having taken all that payroll OUT of the stores, we’re just going to have to put it back in. Otherwise, I predict the channel is in SERIOUS trouble. Even a few sales points lost will make stores unprofitable and create a real problem.
It’s hard to take a slice of life and use it for planning purposes when life as we know it is changing rapidly. Which day do you choose? Which target audience is most representative? How do you account for the technology factors?
Indeed, the challenges are greater today than ever before. Retailers and marketers must be flexible and holistic in their approach. No crystal ball is good enough when the dynamics are constantly shifting. Keen observation and formalized monitoring can help and are mandatory.
Mobile technology is still evolving. Usage will vary by gender, age and type of application. But the time is now to move forward in lock step with consumers.
Knowing where your company is positioned in the landscape among the users and applications is key to identifying opportunities. But marketers and retailers must be nimble to leverage the options short term while planning for the long term (which may change as technology and usage evolves).
This is a good time for observing and learning from what others are doing in more rapidly changing and heavy usage categories such as media, e.g., ESPN.
Mobile tech is the wave of the future and wave of the present. The trick is not to treat mobile as a separate channel, but to fully integrate it with e-commerce and brick-and-mortar operations. Or more precisely, to rethink the retail enterprise as a way to touch the customer wherever they are with a consistent experience. Does anyone really think everyone is going to suddenly stop using smartphones next year?
Much to agree and disagree with in this post Bob (which is precisely what makes it a great post!).
Broad strokes first. Mobile is not a distraction. Mobile is the future of computing and indeed of society, a ubiquitous mobile computing society. Mobile is changing our habits and lifestyle and transforming society; it really is. I say this because the reach of mobile goes well beyond retail and retailers should be mindful that they are part of something broader. Hedge your bets yes but be late to the party at your own risk….
Second, 8% is a small percentage on paper but I don’t know any retailers who would forgo 8% of sales, particularly when that 8% is part of a grander societal change (see point above).
Now, thanks for calling out m-commerce’s true scale. It is, and will remain, a minor sales channel for the foreseeable future. In fact, research shows that highly connected individuals actually prefer in-store experiences. Even basement-dwelling nerds (like myself) need to get out sometime. 😉
If the music industry had invested half the effort they put into suing Napster into evolving their business model, Apple wouldn’t be the leader in music sales. If Yellow pages had stopped trying to justify a paper catalog that no one read in favor of appreciating and respecting consumers needs for better solutions to finding and learning about businesses, Facebook Places, Yelp and others wouldn’t be eating their lunch.
I think we have to stop these either or types of debates. They simply won’t help retailers make any meaningful change. There’s no reason whatsoever that mobile technology can’t co-exist and in fact enhance in-store experiences.
I would encourage all retailers to invest time, energy in resources in being curious about mobile and how it can work for them rather than trying to deny it’s potential.
PS: Here’s a great presentation on another company that failed to acknowledge the future…Smith Corona.
Mobile is just another tool for retailers to use to connect with their customers. Whether it is a useful tool depends on the product and the customer. Before jumping into any program that impacts how customers interact with their brand, retailers should do their homework and make sure that they are giving customers access to their brands and their products they way they want it. The smart retailer offers a menu of access, so to speak, that makes information and product available when and where their customers want it. Most people connect and interact with a particular brand in a variety of ways based on their need and location. But as Bob points out and the statistics support, for the retailer with a brick and mortar presence, the store is where the action is.
Making the leap that Mobile is the be all and end all for the future of retail is ridiculous. Brick and mortar retailers must invest in their in-store experience to be successful, and that means people. Don’t believe me? The biggest winner of holiday 2010 was Limited Brands at a plus 24% comp, with Victoria’s Secret posting an astonishing plus 35% comp! They did that with a well oiled in-store experience that is supported–not driven–by technology.
Mobile apps and e-commerce are another important aspect of an increasingly competitive landscape. Any retailer that ignores them does so at their peril. No doubt there will be other technologies coming that will supplant these and we’ll be having this conversation about them before long.
That said, Bob’s central point is absolutely spot on. If retailers look at mobile as some kind of “silver bullet” that, once implemented will offset inferior assortments, indifferent and/or missing service, poor in-stock, or a lousy shopping environment, they’re delusional. Ultimately, it’s the entire experience, not the “gee whiz” technology.
There’s a great corollary in the advertising world: “Nothing sinks a bad product faster than effective advertising.” The same goes for mobile technology.
A good retailer keeps his eye on numerous aspects of the business at the same time. That includes juggling in-store and online. Customer service should not be sacrificed for bettering technology. Whether online or offline, there is no excuse for poor customer service.
The endgame is that there is no need for a retail store. Mobile is not a distraction, but an intermediary step for an evolution over the next 20 to 30 years of the disappearance of retailing that we know today.
One can have the best store experience in the world. One can have the best service. But, none of that trumps the ability to get whatever you want without leaving your home or desk. That in the end is the best service.
Doug Stephens’s analogy to the record business is right on the money. Why did Apple make CDs obsolete? Because the record companies were clinging to the old way (which happened to be the current way). The word is “clinging” and that is what retailers who ignore the power of online are doing.
The brick and mortar retailers have to keep asking themselves “why does anyone NEED to go to a store?” And they have to be brutally honest. Every day those reasons become fewer and fewer.
Bob, I loved the manifesto…it made the rounds at my organization like hotcakes.
But I certainly disagree with your provocative “mobile is a distraction” headline, and the implication that “mobile” is exclusively (or even mostly) about out of store transactions.
Frankly, I’m sick of talking about channels, e-this and digital-that, etc…. All of these various marketing tools (websites, e-mail, mobile devices, retail shelves, sales people, etc..) are merely consumer touch points. The shopper will encounter many of them on their path to purchase, and the ultimate purchase decision will be influenced by all of them.
The 70% of all purchase decisions are made in-store statistics (that I have used as much as anyone) probably weren’t true when they were first used and are even less true now. Because purchase decisions aren’t made at a single discrete point, they are cumulative effect of an immeasurable number of influences. Can anyone tell me the single trigger that cause them to love their spouse? Deciding that the fact tag in the Kroger caused me to choose Coke over Pepsi is equally unlikely.
More and more often, the active shopping process has started before the shopper ever enters the store. Did it start when she read about a new product on Facebook? Did she start imagining a purchase when she got a 20% off coupon from Bed Bath and Beyond? 40% of the people that conduct a transaction at a Best Buy’s POS started out at BestBuy.com at home. For many shoppers, mobile will simply be a more convenient flavor of the pre-tailing behavior seen by Best Buy.
But what makes me convinced that Mobile isn’t a distraction, is when I watch shoppers using their phone in a Target store. Mobile’s greatest influence is likely to be as an in-store and on-the-way-to-the-store shopping tool. Today no one thinks anything of jumping on a smartphone to find the nearest Starbucks (a shopping experience that would have been unimaginable a few years ago). Tomorrow it will be equally common that you’ll expect your phone to tell you what retailers have an item in-stock nearby and at what price. When you visit that retailer, the employees will be holding their own mobile devices which they will use to deliver excellent customer service.
I had a chance to sit down with Blake Nordstrom this week. He told me that all Nordstrom salespeople will have mobile devices to help provide product information and customer service before the end of this year. He certainly doesn’t see mobile as a distraction, but he also doesn’t believe it’s about shoppers choosing self-service over great sales assistance. Transparent access to price, availability, product info, and peer advice about every product is going to dramatically change customer expectations, and that’s hardly a “distraction.” Great merchants are going to raise their game to meet and exceed those heightened expectations, and I’m betting that mobile will be one of the tools that will help them do it.
It’s a channel that does excite a certain segment of the market. This “segment” crosses demographics and format. Companies that fall in this segment should investigate this to see if being on the cutting edge of m-commerce is of interest to their customers and advantageous to their brand. Tween-, technology-, college-focused stores (others that fall into this segment) should determine if the cost of enabling m-commerce is to their benefit. Will these early adopter customers of m-commerce provide all retailers with a reason to invest? No. But it is certainly worth investigation for a number of retailers.
Mobile commerce isn’t a replacement for existing retail, it’s a pervasive technique that will permeate existing practice and cause it to change. This a remarkable parallel to e-commerce a dozen years ago, with one key difference: it’s evolving ten times faster.
Personal media are about much more than transactions, of course. They are a window into product information; a customer-experience intermediary; a great leveler of service standards.
Remember my first law of Retailativity: “A customer service standard that is experienced anywhere is expected everywhere.” No phenomenon contributes more to this reality than the rise of personal mobile devices.
If we focus narrowly on manipulating mobile commerce without considering its role within the larger retailing ecosystem, then yes, personal media are a dangerous distraction from our core businesses. If we consider mobile’s capacity to displace and re-frame our existing practices, then we have a chance to turn even this fast-moving phenomenon to our and our customers’ advantage.
“The future is here; it just isn’t widely distributed yet.” William Gibson.
Wait a few years to see the point of inflection with mobile but even so, it is not a replacement. I just heard the CEO of Foursquare say something profound yesterday, “we wanted to change the way people experience the physical world.”
In contrast, Second Life and now Facebook are probably about living life in digital environments. I think the Foursquare guy’s comment was brilliant and it shows how digital, mobile, and social will become essential parts of a larger physical experience that will include the physical environmental factors of shopping.
I like and appreciate Bob’s efforts to bring rationality to the discussion on e-commerce (which, based on some of the over-the-top comments offered here is much needed). But there’s a problem with generalized statements like “only 8% of sales” and “67% to some degree.” Businesses are affected to radically different degrees: compare, say, Chevron with Blockbuster; and there’s also a problem with lumping all e-commerce together: I can see practically all movie ticket sales being made on mobile devices one day (assuming of course movies still exist in 2121) but I doubt many sofa bed sales will be.
Thank you Bob for your piece. I find myself thinking these same thoughts, and I can assure you I’m not a Luddite either.
I have several thoughts from reading the comments here. First, I think Gene’s premise that retail stores will disappear in 20-30 years is completely off-base. Certain categories may largely disappear from retail, like music and video, but even a category like books will still exist at retail, it seems to me. Gene’s premise seems to be that all retail is rational and utilitarian, but we all know that’s simply not true. Retailing is also highly personal, social, and impulsive. Consumers like shopping!
That said, I don’t disagree that mobile has the potential to be transformative, but I don’t see it replacing retail any more than the emergence of the internet and e-commerce replaced retail. I think Jason is spot-on when he talks about all of these technologies as marketing tools for creating retail touch points. These are tools, not a business model.
I interpret Bob’s point to be that all the noise about mobile over the past year or so clouds the fact that a successful retail strategy is not about the marketing tools, but core retail fundamentals. Those include distinctive stores, compelling assortments, skillful merchandise management, exceptional execution, and informed, engaged and passionate sales associates. And, yes, effective marketing communications across all channels. Cumulatively, those things add up to a memorable customer experience. It’s either that, or we keep cutting prices and margins and race ourselves to the bottom.
It’s important to recognize that we’re all focused on the leading edge, and mobile certainly is where that edge is at the moment. We’re the early adopters. There’s no question that mobile will be a marketing channel of ever increasing importance. But don’t mistake the medium for the message. The consumer has a way to go down the adoption curve before they catch up with us. Until then, and well beyond, retailers need to focus on the fundamentals to make their stores as distinctive and profitable as possible.
We continue to link mobile technology to the buying public as their choice in where and what to purchase. Is that a fad? No, it is not; nor is it the wave. It is where we are today as we continue to develop newer and more powerful buying methodology. Where will we end? To be determined. The brick and mortar will change. Customer service will improve and become more of a focus to the retailer. The customer will change. Technology will allow them to know more about what is available and where to locate it. (There is technology being used by the Retail Facilities Repair vendors allowing them to locate parts and prices instantly and from the customers store.)
I do not see technology being used to negotiate lower prices from the one marked on the tag. I do see technology used to tell me where to find what I want. That does not eliminate the impulse purchase of that great looking shirt and tie I did not know I wanted until I saw it.
Interesting position: Is mobile a distraction? No it is not. It’s only a distraction if retailers do not understand how it fits with their current and future customer base and needs. There is no doubting that mobile is becoming more important to customers, but balance is the important word here, the actual shopping experience is still the number one driver and the mobile experience needs to compliment that, it’s another weapon in the arsenal of customer loyalty drivers–not the only weapon.
Mobile is, as Jamie points out, evolving 10 times faster than the desktop e-commerce wave. Is it the “wave of the future” as the question above asks? What’s the killer app?
Mobile succeeds for shoppers when it is more convenient than alternatives. Consider accessing product information, wayfinding and offers, and it often beats other platforms. It is more accessible than a PC, more self-aware than a map, and less likely to be forgotten than paper coupons.
But it is only moderately suited for trip planning and, as Paula reports, not a replacement for service. Functions are limited, it only returns as much as a user can search, and it doesn’t empathize with lost or frustrated shoppers.
What is the killer app? Price comparisons? Geo-location? How about transactions.
Mobile will find a catalyst with contactless payment. Starbucks is only the beginning. There’s AT&T/Verizon/T-mobile, the iPhone 5, Google Nexus S, Barclaycard/Visa and others pushing Near-Field-Communication (NFC). The forces are gathering for completely new payment networks for retailers if, as RSR notes, they can agree on standards.
Mobile commerce and e-commerce are not the same thing. Failures, weaknesses, disappointments, and disillusionments with mobile commerce have very little to do with e-commerce. Don’t tar them with the same brush. E-commerce was motoring along just fine before all the misplaced, superannuated, anticipatory hoo-haw about mobile retailing. Mark Twain never wrote or said “The reports of my death are premature,” which is an amalgam of several letters he wrote about an illness he endured. But if he had written or said that, I would be tempted to co-opt his meaning to write, “The reports of the success of mobile retailing are waaay premature, Dude.” (Are you thinking of Abe Lincoln in “Bill & Ted’s Excellent Adventure” when he said, “Party on, Dudes”?. I am.)
Mobile is indeed a distraction. Give it some time, water, and fertilizer, and it will grow. But it’s not ready for prime time. Not yet.
Someone doesn’t get it!
Mobile is not about how many people will buy online from their phones. Mobile is about how many people will use mobile technology to help make their decisions while standing in a retail store; through peer recommendation, price comparison, online reviews, and group buying opportunities.
Without a mobile strategy in place, retailers will be toast!
Is there a place for Mobile technology? Probably, but if it doesn’t find better ways to serve a much broader group of consumers than it does today it will be little more than another niche technology. While the Internet has continued to grow fairly slowly over the last few years, it has not put brick and mortar retailing out of business with a few exceptions. Yes, the book business and the music CD business saw drastic changes with technology. I was in a Sorts Authority store yesterday and they were doing plenty of business even though the company operates a very good web site.