Clouds Reign Profit For Brick & Click Retailers!

Peter Weedfald, President of Gen One Ventures

We are at the cusp, the early dawn of re-seeding and re-accelerating brick and mortar retail greatness. From recent retail merchant meetings across the country, I assure you that brick and mortar retailers are developing and enlisting pithy mobile apps at record speeds, designed to attract, convert and retain shoppers throughout their home, mobile and business lives.

What is the goal of retail’s new mobile app focus? To scale traffic rapidly, effectively and profitably across brick and mortar retailers’ mighty “quad-four” business model:

1. physical store
2. e-commerce engine
3.1-800 sales
4. human capital in the store aisle to serve and to support

This ambient sales and support foundation for brick and mortar retailers is their flinty weapon of choice, designed to out-market, out-distance and out-perform e-commerce-only competitors.

Savvy brick and mortar retailers are finally, smartly and aggressively on the digital offense. They are tired of the nettlesome negative editorial quotes promulgating the demise or death of brick and mortar retailers. They are smartly powering up their quad-four assets designed to meet consumer preference, while simultaneously driving physical store traffic–the lifeblood for any brick and mortar retailer.

Retailers are aggressively focused on incorporating the power of apps to drive fastidious, dauntless and profitable store traffic. Retailers recognize from their vast CRM data that consumer needs vary by product, by brand, by geo-demographics, by pocketbook and by shopping trip. Customization and deployment of mobile apps is essential for retailers to ensure when the sale is made; it is made within their brand, within one of their quad-four store locations.

Consumers are now trained, stimulated and prompted via smartphone offers
before, during and after traveling to a retail store. The same smart connection evolves, pings and ignites while the shopper is in the decision-making retail aisle. Instant offers, stimulating promotions and loyalty rewards, drive period discounts and basket quantity discounts, all in congress with the dignity of instant product knowledge, is the new physical norm in the retail aisle. Mobile retail software apps are not designed or deployed to be passive in nature, but rather competitively and relevantly aggressive to garner the sale, upgrade the basket and build fast and valuable loyalty. Retailers well know the most effective cloud apps are recognized and appreciated by shoppers when they are tailored to individual needs and desires, when they are relevant to the purpose and scope of a consumer’s shopping experience and expectations. When mobile is enabled and delivered into our physical retail aisles, our industry will enjoy increased shopper foot traffic, refreshed and protracted margin pools through our shopper’s baskets, and greater brand loyalty with same store sales with advantaged market share growth.

Why all the energy and focus on mobile apps to drive brick retail sales? Because past results auger future opportunity! A whopping $24.66 billion dollars was spent in 2012 by shoppers utilizing their smart phones, mobile devices and tablets. As amazing, is the mammoth 81% year over year growth in mobile shopping, up from $13.63 billion in 2011. Imagine,11% of all U.S. e-commerce sales are now initiated from mobile devices. Imagine eMarketer, the source of this data, reports a 2013 growth expectation of 55.7%, which is $38.40 billion over 2012. Compare this colossal and assiduous mobile sales climb to retail brick and mortar. When is the last time we viewed double digit brick and mortar revenue growth? Comparing this historic revenue growth to brick and mortar retailers, Dealerscope reported in March of 2012 in their Top 101 CE retailers in the USA and Canada a healthy 2011 growth to $228.03 billion, up 11.46% versus the previous year. Without dialing into each and every retailer’s actual year-over-year result, there was only one physical CE store retailer that delivered 50.68% YOY growth, Apple.

If we include all online retailers with shoppers purchasing on any type of internet device, we realize a 13.7% increase in e-commerce sales just in November and December of 2012. This growth, according to comScore represents a substantial market share gain versus brick and mortar store competitors. Total brick and mortar retail sales growth for the same period increased 4.1% to $738.7 billion dollars according to the U.S. Commerce Department (excluding automotive sales). Retailers, strapped with mammoth 18 to 25% SG&A’s to support store operations should be applauded for how quickly and smartly they are addressing mobile and e-commerce sales opportunities sometimes quietly, sometimes loudly, always very smartly, very competitively astute.

Brick and mortar retailers view smartphones and mobile devices as their “holy grail” towards establishing new levels of in-store traffic. Unlike shoppers sitting sedentary behind a desktop PC or notebook and surfing across the net, mobile shoppers are on the move and can easily steer their car, their feet and their wallets into a physical retail store. The real battle and opportunity for both cloud and physical retailers is evidenced through best-of-breed software deployment and application engagements enlisted through shoppers’ home, business and mobile lives. Application software for brick and mortar retailers can super fuel in-store traffic, speed up sluggish inventory, create new profit pools and build valuable manufacturer relationships, while simultaneously connecting their cloud, their 1-800 and in-store operations, 24 hours a day. Of course all while muscling up competitive advantage against cloud-only e-retailers with the power of real sales and support people in the physical store, with the ability for consumers to purchase and carry home their new product joys immediately.

The hard hitting retail battle between e-commerce only and quad-four retailers towards gaining competitive traffic and market share is not just about offering the lowest price (Target, hhgregg, Walmart, Best Buy and others announced solid price match guarantees) for the same sku’s. The battle for profitable shoppers includes limited size of in-store assortments versus endless cloud aisles, includes valuable product and consumer research for each product in the cloud versus simple lackluster placards in the aisle, price and product comparisons in the cloud versus none in the aisle.

Of course, brick and mortar retailers also have endless shopping aisles, product research and consumer sentiments on each and every product in their own formidable retail clouds. Information can be highly accessible in the cloud through smartphones, tablets and varying mobile devices while standing in-store. Shoppers feel very special, very cared about in the cloud and want the same feeling and experience in a physical retail environment. Brick and mortar retailers are rhapsodizing personalization, relevancy, instant redemptions and rewards, endless product aisles, product reviews and comparisons, through software apps loaded onto mobile phones and devices. Retailers are also incorporating cloud and back office digital consumer shopping transaction records to study, understand, reward and embrace shoppers, as is done so perfectly and profitably in the cloud.

Here are just 10 of the hundreds of smart software app tools
designed to revolutionize, provide advantage and profit quad-four retailers as well as benefit and profit their shoppers. As you review each software application realize how the mobile app revolution and evolution is recreating retail brick opportunity in highly advantaged ways, for decades to come:

1. shopkick: Automatically recognizes when a shopper walks into a participating retail store. The application delivers in-store opportunities for instant reward points termed “kickbucks” to be redeemed towards immediate purchases. Retailers are moving swiftly to enhance and muscle up sales opportunity through apps like shopkick, which are beginning to measure more profitably than dinosaur snail mail, promotional direct e-mail and even Sunday circulars.

2. RedLaser: This bar code scanner can benefit both consumers and retailers through integrating in-store listings as well as all product listings to be compared to across the Internet. Since all consumers strap a cell phone to their person, retailers are quickly recognizing and capitalizing on the fact that purchase decision making is made on shoppers’ phones, while in the aisle. Red Laser’s smart app can benefit retailers who are set up for boomerang selling practices in-store.

3. PayPal: Yes, PayPal is smartly no longer just for e-commerce transactions. They announced an in-store app for mobile and POS (Point Of Sale systems) that are being tested by several national retailers. Rumors are the Pay Pal foundation will include special in-store, in the moment offers, payment options and flexibility choices on mobile shopper devices. Shoppers enlisted with PayPal will also have real-time inventory access, receive instant promotions and store advertising for special items, special discounts.

4. AisleBuyer: Combines mobile self-checkout with intelligent shopper functionality such as product barcode scanning that returns information, customer reviews and recommendations. AisleBuyer uses a consumer’s shopping history to deliver individual coupons, offers, and discounts, and it also stores a user’s receipts and shopper loyalty cards.

5. Google Shopper: Enables shoppers to use their smartphone cameras to locate product information. The app is capable of recognizing books, CDs, DVDs, and video game packaging and can also scan product barcodes to access Google’s product database. This app also has voice recognition, allowing shoppers to speak the name of the product they’re looking for — and shopper bonus: Google’s Shopper app captures your shopper history directly on your phone so product and price information are always available even on your flight out of town.

6. Point Inside: Enables shoppers to find what they want with indoor maps and exact product locations. Shoppers are engaged through personalized offers and product suggestions designed to improve your in-store sales through deep and smart customer insights. Point Inside provides indoor destination maps for major malls, retailers and airports across the United States and Canada. Point Inside’s maps deliver shoppers a quickly to stores, gates, kiosks, restrooms, elevators, escalators and other rewards-based guest services.

7. Wrapp: Wrapp is a fun, smart and easy way to give free and paid gift cards to Facebook friends and neighbors, especially those connected to retailer Facebook pages. Wrapp is all about enhancing and capitalizing on the vast social engineered and networked consumer traffic. Wrapp allows social gift “cards” to spread like wildfire across the cloud to be redeemed, if focused, right into retail stores. Wrapp drives much needed foot traffic based upon a socially charged consumer world.

8. CardSpring: CardSpring is a simple API that lets developers add web and mobile applications like coupons, loyalty programs and digital receipts to payment cards. Smart retailers are creating traffic driving programs with the CardSpring application which delivers loyalty and reward reimbursements and benefits through the actual usage of your credit card. Shoppers will be trained over time to know which brick and mortar retailer offers the greatest rewards when paying by credit card. CardSpringrives store traffic, loyalty and market share opportunities for retailers.

9. Kony: Retailers seeking to create an exceptional mobile experience for shoppers can turn to Kony Mobile Retail. The app is easily customizable to enable shoppers to browse, find stores, shop, and create wish lists and registries all from their mobile devices. Retailers are hunting for ways to improve sales, increase visibility and build brand loyalty with this mobile and tablet application.

10. Placecast: Is changing the paradigm of marketing, delivering profitability on both sides of the cash register with location-based mobile offers that consumers really want. It is an opt-in, location-based mobile marketing solution that delivers targeted information customized for each user, based on their location, time, and user preferences. Placecast’s services help retailers by expanding their reach and increasing local foot traffic to physical stores. ShopAlerts is offered as a white-label mobile marketing solution that allows retailers to create custom-branded apps that connect with their customers via SMS messages and through social networks such as Facebook and Twitter. Once a user’s ShopAlerts is activated, the service automatically alerts customers about a brand’s local sales, special events, or other relevant information based on their location.

As brick and mortar retailers energize and mature their trenchant quad-four assets over time, it will be e-commerce only retailers that may find themselves in a bulwark competitive posture. How can they possibly compete with the instant gratification delivered to mobile shoppers 20 steps from the shopping mall, three steps into the physical retail aisle? How can they possibly compete with consumers walking and talking inside a retailer’s physical store with a mobile device in hand tuned to the store’s own endless aisles, editorial and consumer product reviews? With a juxtaposition of products and pricing coupled with the physical ability to touch, feel and taste products real time? For now, enjoy the return of physical retail shopping. No, not the old way, but rather the new quad-four way designed to envelop your home, mobile and business lives, 24 hours a day.

Perhaps our old friend Mark Twain who reigned brilliantly in prose and shopped often for his own home goods said it best, and perhaps Mr. Twain was referring to himself as well as to brick and mortar retailers when he said, “The reports of my death are greatly exaggerated!”

Related story: Brand Socialization Fuels Brand Infatuation

Peter Weedfald is President of Gen One Ventures, a sales, marketing and brand-product consulting company. He has served as SVP, Chief Marketing Officer of Circuit City, SVP of Sales and Marketing in North America for Samsung, and SVP of global marketing and EEVP, GM & Chief Marketing Officer for ViewSonic.
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  • Jack Kolter

    Absoultely right! Retail has changed forever yet only the smartest retailers are taking early move advantage by incorporating mobile applications into their consumers lives. First mover advantage means first retailer advantage. Let the retailer to cloud profit war begin!

  • Steve M

    There needs to be a mammoth declaration that retail has changed forever. There should be actual and formidable courses in colleges to advantage new retail students coming into the market. Well said and I am sending to a couple of Professors.

  • Paul benjou

    Great observations, Peter. Look to Costco as an example of smart operational management and smarter app development.

  • FrancisAnn

    Finally, very specific recommendations for retaail apps to compete for greater store traffic versus the rest. Thank you very much!

  • Dave Klein

    Agree with all. Amazes me and my colleagues that retailers have not hyper-advanced the in-store, out of store app development to draw in there supposed onmni-directional retailing. Very obvious, very must do, must have in order to thrive or survive.