Rejecting Retail Apps Lacks Vision

Feb. 8, 2016, 5:30 a.m.

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Much like iBeacons, I have seen a lot lately on the “failure” retail apps, and how retailers should avoid them because their customers will not use them. Personally, I think this is both naïve and lacks vision on the retailer’s part. Everyone wants to do omnichannel now, so what makes you different?  It is how you engage customers through their smartphones that will differentiate your offering, not just the installation of beacons, Wi-Fi or a mobile app/web presence. A retailer who dismisses outright the possibility of a mobile app, doesn’t have the vision to see how smartphones and in-store retail technology can mark them out from their competitors.

An App reality check

So okay, now that we are over the initial hype of retail apps, reality is setting in, and yes, 90% of your customer base is not going to download and use a standard app that offers a shopping experience similar to online.  

There are two reasons why:

  • Given the friction of pps, it is unrealistic to expect anyone beyond loyal customer to download and use a standard app. And even when utility is built into apps, it is still unlikely that the majority of customers will use it- how man of your customers use your website regularly? how many are on your loyalty program? Retailers must get realistic on what they can achieve with apps, and then they can make educated decisions on the best route to take on mobile. Longer term, as smartphones become an integral part of many in-store experiences (5-10 years), people will wonder why this was even a debate. 
  • The single biggest problem with most retail apps today is the lack of real utility. Most apps simply replicate the online experience, taking no advantage of context and whether you are in the store or not. In comparison look at something like Target’s app, which has is a great user experience, has built in utility in terms of finding what you are looking for, and as a result has millions of users. You can coax downloads with one-off offers, but repeat usage will only come will apps that bring utility and new experiences to customers and streamlining of the shopping process. Retailers did the same thing with the internet. They created basic pages online, that didn’t really enable you to do anything, and guess what? The internet retailer was born.The move to omnichanel requires a strong mobile presence.

Of course apps aren’t the only way to engage with a customer via their smartphone. There are third party apps, the mobile web, the physical web, mobile wallets, etc. retailers should be looking and supporting all of these because smartphones in retail are going to be big. Irrespective of the approach, the first and most basic step will be a good experience that enables people to buy via their mobile. But what will make someone chose your mobile presence over another is the utility and the experiences it brings.  

Engaging customers on a smartphone

When we look at how to get customers using a smartphone in-store, apps are the best way to do this today, and there is a huge opportunity to really innovate and drive customers to your store through an app given what is on offer from others. To give a very simple example, some QSRs are looking at using their app and location technology to support pre-ordering, so when it is paired with proximity and mobile payment, the customer walks in the door to a freshly made coffee/burger/etc and walks out again, avoiding queues, etc. Starbuck's had over 1 million users of its order and pay service in December 2015, as well as the cache of having "invented" a service that brings joy to (and brand advocacy from) its customers. 

Maximizing beacon deployments

Beacons and apps go hand in hand and so the same point is relevant when talking about deploying these technologies. If you as a retailer are expecting to just put them in and watch the advertising dollars roll in you are in for a terrible shock. A fundamental (and extremely limiting) element of iBeacons is the need for an app to be open on the handset. If customers have no reason to have it/use it, your beacons are largely redundant. Furthermore, if all they get for their efforts is ads, they will quickly delete.

Advertising on mobile needs to change, it can’t just look and feel like a digital coupon, or at least not for everybody. It needs to look and feel like an experience, a reward, become integrated into the app. A great example is Point Inside’s shopping app for grocery. This enables customers to locate items they are looking for in-store. If the consumer types in ketchup, they will might get 3 different brands to choose from. This is advertising that brands will pay for, bt it is also intuitive to the utility of the app, and thus doesn’t feel like advertising at all.

Evolution path for apps 

Retailers also need to be aware of potentially game-changing technologies like the Physical Web, Project Tango and VLC becoming available in 2016/17. Now these are technologies that when used correctly can really shock and awe a customer and create unique experiences, while also removing the frictions of apps. But it is of no use to a retailer, if they don’t have a platform to really take advantage of it. Retailers should be looking to deploy apps now, learning from the experience, so they have everything in place when this market really clicks into place.