Going mobile is the way ahead

Rapid growth in the use of smart­phones and tablets for inter­net shop­ping, oth­er­wise known as m‑commerce, is hard­ly sur­pris­ing con­sid­er­ing UK con­sumers have already estab­lished them­selves as the world’s most vora­cious online shop­pers.

UK cus­tomers spent more online as a per­cent­age of total retail sales last year com­pared to any oth­er coun­try. That amount­ed to an esti­mat­ed £62.4 bil­lion, accord­ing to the e‑Retail Sales Index com­piled by Capgem­i­ni and UK e‑retail trade organ­i­sa­tion IMRG. Ana­lysts Martec Inter­na­tion­al say this rep­re­sents 16 per cent year-on-year growth as a pro­por­tion of total retail sales. Martec polled the UK’s top 150 retail­ers by rev­enue, rep­re­sent­ing 71 per cent of retail sales, which revealed over­all retail sales growth last year was only 1.5 per cent.

Fran Rise­ley, Martec Inter­na­tion­al deputy man­ag­ing direc­tor, says inter­est among retail­ers in m‑commerce is grow­ing, because it is putting oth­er online retail gains in the shade. IMRG con­firms this: last year pur­chas­es made using mobile devices, includ­ing tablets, were up 304 per cent on 2011. As smart­phones and tablets proved pop­u­lar gifts last Christ­mas, it seems like­ly that this strong growth will con­tin­ue through 2013, mak­ing it a trend retail­ers will find hard to ignore.

Pur­chas­es made using mobile devices, includ­ing tablets, were last year up 304 per cent on 2011

“Even though mobile tech­nol­o­gy is chang­ing so fast and retail­ers are hav­ing to update their e‑commerce sys­tems more fre­quent­ly, they seem to be see­ing ROI [return on invest­ment] from mobile,” says Ms Rise­ley. “Whether that’s in terms of pro­tect­ing their store and e‑commerce invest­ments from can­ni­bal­i­sa­tion or the com­pe­ti­tion, or dri­ving new rev­enue, with the likes of Asos [online fash­ion retail­er] gain­ing 26 per cent sales through mobiles, you could say it’s an indi­ca­tor of how slick a retail­er is.”

Imran Choud­hary, con­sumer insight direc­tor at mar­ket researcher Kan­tar World­pan­el, points out that more than 60 per cent of the UK pop­u­la­tion now owns a smart­phone. More­over, research pub­lished for the first time by  Racon­teur in The Times, com­mis­sioned by IMRG and car­ried out by eDig­i­tal­Re­search, con­firms that almost two-thirds of these smart­phone own­ers already use their device to make pur­chas­es. The research also found that 41 per cent also owned at least one tablet device, like an Apple iPad or Ama­zon Kin­dle, which is high­er than the nation­al aver­age of 30 per cent. “What the con­sumer stands to gain from m‑commerce is con­ve­nience because mobiles are the one type of device they always have with them,” Mr Choud­hary adds.

“Hav­ing that poten­tial lev­el of con­tact with cus­tomers is some­thing retail­ers have nev­er had before. And, as bar­ri­ers to adop­tion erode, with smart­phone sales increas­ing and more free wi-fi on offer, as well as 4G com­ing on board, retail­ers will not only lose out on sales if they don’t invest, but they’ll also lose cus­tomers to  com­peti­tors, who do m‑commerce and do it well.”

In addi­tion, Mr Choud­hary says, the wealth of cus­tomer infor­ma­tion, such as loca­tion and brows­ing data, could help retail­ers refine their propo­si­tions to meet rapid­ly evolv­ing cus­tomer demand.

Mar­tin But­ler, IBM UK vice pres­i­dent and retail indus­try lead, agreed the val­ue of m‑commerce data is also dri­ving retail invest­ment. He points to “show­room­ing” as the biggest m‑commerce trend to emerge, where shop­pers use their mobiles in-store to research prod­uct infor­ma­tion, read reviews, com­pare prices and even use social media to solic­it advice on a poten­tial pur­chase. “Our recent glob­al sur­vey of over 26,000 con­sumers showed the UK pub­lic real­ly likes pro­mo­tions and dis­counts,” he says.

“Offer­ing free wi-fi in the store with a mobile-opti­mised site or app allows retail­ers to attract and retain these cus­tomers. It also gives the retail­er a huge wealth of data to tap into so they can offer a tru­ly inte­grat­ed shop­ping expe­ri­ence, regard­less of the cus­tomer touch­point, and push bet­ter rec­om­men­da­tions or pro­mo­tions to those cus­tomers while they are both in and out­side the store.”

How­ev­er, he cau­tions: “Our sur­vey also found peo­ple were will­ing to invest in bet­ter shop­ping expe­ri­ences by shar­ing per­son­al infor­ma­tion with a retail­er, but only once [and assum­ing their secu­ri­ty con­cerns had been addressed].”

Mr But­ler also points to how m‑commerce added to the “big data” del­uge that retail­ers already col­lect about their cus­tomers’ off and online activ­i­ties. “The ques­tion is how do you mine all that unstruc­tured data?” he asks. “We do that gen­er­al­ly by build­ing data­bas­es which allow the data to be analysed and man­aged. We’re even look­ing at build­ing replen­ish­ment sys­tems that take into account social media.” Sys­tems like these, which include mobile data, could enable more respon­sive and per­son­alised shop­ping expe­ri­ences, he says.

Sean O’Connor, head of online deliv­ery and cus­tomer expe­ri­ence at John Lewis, con­firms that its free in-store wi-fi, intro­duced last Octo­ber with BT, had proved very pop­u­lar with cus­tomers and increased dwell time with­in its cater­ing facil­i­ties. Feed­back on its mobile site indi­cates wi-fi is help­ing cus­tomers to shop.

“We have also insti­gat­ed a tri­al in our Exeter branch where we have a num­ber of iPads acces­si­ble to cus­tomers,” says Mr O’Connor. “Mobile and tablet shop­ping con­tin­ues to exhib­it triple-dig­it growth, both in terms of traf­fic and rev­enue, and we haven’t yet seen mat­u­ra­tion of this trend,” he adds, con­firm­ing that mobile is now a fun­da­men­tal part of John Lewis’s online strat­e­gy.

The UK depart­ment store retail­er has also tri­alled Quick Response (QR) codes in its Exeter store, for cus­tomers using a QR scan­ning app to access fur­ther prod­uct infor­ma­tion and reviews direct­ly from the prod­uct dis­play.

By con­trast, the eDigitalResearch/IMRG sur­vey found almost half of those can­vassed felt retail­ers did not active­ly encour­age the use of mobile in-store with QR codes and oth­er inter­ac­tive pro­mo­tion­al mate­r­i­al. Indeed media agency Carat has dis­cov­ered it is online-only brands that are reap­ing the ben­e­fits of m‑commerce, with 54 per cent of con­sumers Carat sur­veyed vis­it­ing estab­lished e‑retailers eBay and Ama­zon via mobile the most. Mean­while, main­stream brands, which are not already exploit­ing mobile, risk miss­ing out on cus­tomer engage­ment oppor­tu­ni­ties, where they can gar­ner feed­back in real time.

Dan Hagen, head of plan­ning at Carat, says m‑commerce devel­op­ment is a sign that the dis­tance between the intro­duc­tion to a prod­uct and the abil­i­ty to buy it is becom­ing non-exis­tent. “We’re see­ing it with inter­ac­tive TVs,” he adds. “But a games con­sole, or even the iPad on your lap in con­cert with your aver­age TV, is already inter­ac­tive.” He also urges retail­ers to exploit mobile adver­tis­ing and apps to cap­i­talise on this devel­op­ment. His agency worked with Shop Direct Group’s Very.co.uk, Chan­nel 5 and Ende­mol ear­li­er this year to dress the Celebri­ty Big Broth­er house and con­tes­tants with the online shop­ping brand’s prod­ucts and cloth­ing.

Philip­pa Hey­wood, Very.co.uk head of brand and adver­tis­ing, com­ments: “We could not have been hap­pi­er with the out­come, not least in deliv­er­ing an inno­v­a­tive ‘click-to-buy’ microsite, which deliv­ered phe­nom­e­nal sales growth in a peri­od when the retail mar­ket was suf­fer­ing post-Christ­mas blues, but also in the upward move­ments in all tar­get­ed brand mea­sures: aware­ness, engage­ment, pur­chase intent and, crit­i­cal­ly, opin­ion of our brand.”

Andrew McClel­land, IMRG chief oper­a­tions and pol­i­cy offi­cer, con­cludes: “Retail­ers who are inte­grat­ed as a whole, but opti­mised for each cus­tomer touch­point, are those who will suc­ceed with m‑commerce.” In oth­er words, retail­ers who seize the oppor­tu­ni­ty to enter the main­stream now, not least before m‑payments tech­nol­o­gy devel­ops and mobiles replace cred­it cards, stand to ben­e­fit the most.