Store Experience1
INTRODUCTION
Over the past twenty years, e-commerce has established itself as a popular, convenient,
attractive, and sophisticated means of connecting consumers and goods. As technology has
advanced, it is now commonplace for retailers to complement their brick-and-mortar institutions
with user-friendly e-commerce channels. For quite some time now, with the click of a button, a
customer has been able to visit Gap.com and purchase the same pair of jeans she’d previously
been able to find only in store. As e-commerce booms though, what are the implications for
brick-and-mortar retailers? Will there come a point when our Gap shopper no longer has any
need for her Main Street store? Doubtful.
While the web is sometimes viewed as a cannibalizing force for brick-and-mortar retailers, the
savviest stores are those actively using the internet, particularly mobile technologies, to their
advantage. These retailers have recognized that the web presents a unique opportunity to both
drive new foot traffic and enhance the shopping experience within their four walls. Such stores
are pushing mobile platforms that bridge the gap between brick-and-mortar and e-commerce,
rather than bifurcate it, and smartphone applications are paving the way for this new blended,
tech-forward shopping experience.
Precisely how retailers are accomplishing this is the topic we investigate in this paper. What
follows is an in-depth exploration of emerging trends in smartphone and mobile technologies as
they relate to shaping the shopper’s evolving in-store experience. The goal is to shed light on
retailers that are encouraging and enabling use of smartphones as a shopping tool for a host of
novel purposes, including payment, entertainment, and loyalty rewards, just to name a few. In
the brick-and-mortar world, the reality is that mobile presents a disruptive technology. Those
stores which choose to resist it risk becoming left behind in the footsteps of those choosing to
embrace it.
1 This report was written by Neil Davis T’11 and Kathryn Malinick T’11 under the direction of Professor M. Eric
Johnson of the Tuck School of Business at Dartmouth. It was written as a basis for discussion and not to illustrate
effective or ineffective management practices. Version: April 1, 2011.
© 2011 Trustees of Dartmouth College. All rights reserved. For permission to reprint, contact the Center for Digital
Strategies at 603‐646‐0899.
2
THE MOBILE MARKET
The market for smartphones is growing at a staggering rate. According to comScore, in 2010,
over 45 million U.S. consumers owned smartphones, which represent the fastest-growing
segment of the mobile phone market.2
In-Stat projects that by 2012, more than half of U.S.
handset shipments will be smartphones.3
What does all this mean for retailers? First, smartphones present a relatively new opportunity for
stores to connect with customers, through means of a dedicated mobile-enhanced website,
mobile applications, or various other forms of mobile marketing. According to research,
smartphones are already a significant store traffic generator; “5-7% of total visitors [to brickand-mortar
stores] are [driven] by mobile, and 3-5% of revenue” in stores is driven by
smartphones in either an app-based or alternative mobile marketing manner.4
With increasingly
fast speeds, robust browsers, refined keypads, dazzling multimedia features, and technologies
like augmented reality and social couponing, smartphones deliver retailers a powerful
opportunity to engage with shoppers inside of the store environment. The combination of rising
smartphone usage, a growing range of mobile retail apps, and location-based capabilities is
setting the stage for continued growth of mobile as a marketing channel.
The implications for customers are important as well. According to Forrester Research, U.S.
adults are now as likely to own a mobile phone as they are to own a PC.5
While customers can
certainly expect to be inundated soon with highly-targeted retailer advertising via their phones,
they should have some recourse in the fact that with smartphones in hand, shoppers are more
empowered now than ever before. The mobile phone serves as a potent comparison shopping
tool, offering customers a plethora of barcode scanners and mobile websites for efficient access
to price comparisons and product review information in real time while they roam the aisles.
The objective, unfiltered nature of this new information available 24/7 through mobile phones
puts branded in-store computer kiosks and price scanners to shame and more control in the hands
(or fingers) of the shopper.
With that said, a very wide variety exists in mobile devices. While there are 82 million mobile
devices currently used in the U.S.6
, not all are smartphones. And, while smartphones are the
fastest-growing segment of the mobile phone market, they still represent only half overall. As
such, retailers must tailor their efforts not only to highly-powerful smartphone devices (e.g.,
iPhone, Droid models) but also to simpler mobile handsets.
Questions remain. Despite the hype, will this finally be the year that mobile technology makes a
significant impact in not just online buying but in driving store traffic? Leading retail
executives, including Walmart CEO Mike Duke, certainly think so. According to Duke, during
the 2011 holiday season, the company noticed “a more dramatic involvement” of new
MOBILE PLATFORMS
Today’s most sophisticated smartphones are like miniature computers. In the same manner that
PCs run on specific operating systems (e.g., Windows, Mac OS, etc.), smartphones, depending
on their various make, model, and wireless service provider, also operate on mobile operating
systems, or “platforms.” A smartphone’s platform dictates much of its mobile functionality with
respect to applications. Currently, the leading mobile platforms are as follows:
iOS: Known as iPhone OS prior to 2010, iOS is Apple’s proprietary mobile
operating system. In addition to supporting the iPhone, iOS now powers iPad,
Apple TV, and iPod Touch. As of May 2010, iOS accounted for ~54% of
mobile web consumption (excluding iPad) in North America.8
iOS users
enjoy access to the widest variety of mobile applications (i.e., ~350,000
dedicated iPhone apps, a mix of both free and fee-based.)9
Android: From Google, Android is an open-source operating system that is
rapidly gaining market share in North America. Based on estimates,
7 “Wal Mart: Retailing At Technological Inflection Point.” Barron’s Blog. January 27, 2011.
http://blogs.barrons.com/stockstowatchtoday/2011/01/27/davos-wal-mart-retailing-at-technological-inflection-point/ 8 AdMob (Owned by Google) Mobile Metrics. May 2010. AdMob serves ads for more than 23,000 mobile Websites
and applications around the world. Statistics for market share vary depending on source – iOS is considered the
market leader with market share estimates ranging from 54-60%. 9
Mills, E. “Android App Market Growing Faster than iPhone Apps.” 16 February 2011
http://reviews.cnet.com/8301-13970_7-20032228-78.html
10 AdMob Mobile Metrics 11 “Android Steals Market Share from iPhone.” June 14, 2010.
http://www.readwriteweb.com/archives/android_steals_market_share_from_iphone.php 12 Wikipedia. “Android Operating System.” http://en.wikipedia.org/wiki/Android_(operating_system) 13 “Android Steals Market Share…” has the RIM OS market share as 10.4%. AdMob states the market share as 7%. 14 Information Week. “Air Pressure: Why IT Must Sort out App Mobilization Challenges.” December 2009.
4
Windows Mobile OS: Developed by Microsoft, the Windows Mobile
operating system is the third most popular smartphone platform for U.S.
business use (after RIM OS and iOS), with a 24% share among enterprise
users.15 As of February 2010, Windows Phone 7 OS began replacing the
Windows Mobile OS in an effort by Microsoft to capture more of the
consumer market.
MOBILE TECHNOLOGIES
Retailers are still experimenting with various mobile marketing technologies, including short
message services (SMS) (i.e., texts) and multimedia message services (MMS). However,
despite some moderate early success, poor consumer experience, high costs, and limited
availability of mobile location technologies has hindered consumer adoption up until only
recently.16 However, with the proliferation of smartphones and new mobile technologies,
including location-based advertising, interactive ads, augmented reality, and highly-targeted
messaging, mobile marketing has a much brighter future.
The following is an overview of some leading mobile technologies, available on smartphones
and tablet computers that retailers are currently using to drive traffic to brick-and-mortar stores:
Location-Aware
Location-based advertising (LBA) uses location-tracking GPS technology in mobile networks to
target consumers with site-specific advertising on their mobile devices.17 In other words, when a
smartphone user enters a designated physical zone, s/he then receives a targeted promotion
pushed straight to her smartphone. Major retailers including The North Face, Target, and Urban
Outfitters presently utilize this form of advertising, as do independent deal and shopping sites
like Daily Candy. (Exhibit 3)
In February 2011, wireless carrier AT&T began sending promotional messages to registered
customers in the vicinity of specific retail/brand partner stores and locations. Currently available
only in New York, Los Angeles, Chicago, and San Francisco, AT&T customers who have opted
into receiving mobile messages, now receive such notifications based on their locations.18
Through location-aware technology, AT&T creates what it calls a geo-fence—that is, “a wireless
perimeter around a retail location, event, or any geographic area.”19 AT&T then delivers
relevant, location-specific messages to any opt-in customers that enter the boundaries of the geofence.
Early brands that have signed up for AT&T’s service include Kmart, SC Johnson, and
JetBlue.
15 Information Week. Ibid. 16 Forrester Research. “Location-Based Commerce: An Evolution in Mobile Shopping.” February 2011. Peter
Sheldon.
17 Wikipedia. “Location Based Advertising.” http://en.wikipedia.org/wiki/Location-based_advertising. 18 Internet Retailer. AT&T dials in to location-based mobile marketing March 2011.
http://www.internetretailer.com/2011/03/01/t-dials-location-based-mobile-marketing 19 Ibid
5
AT&T’s new LBA technology uses text messages, as opposed to email, to deliver its
promotions. The wireless carrier realizes that despite the great creative marketing potential of
feature-rich smartphones, many customers own older models with still-limited technological
prowess. As such, basic text messaging enables brands to connect with consumers across a
wider variety of phones.
LBA gives retailers the opportunity to reach customers (both actual and potential) in an
extremely targeted manner. First, this method necessitates that consumers voluntarily opt into
the service, thus already ensuring that marketers are starting with a somewhat receptive
foundational target group for their LBA message. Further, because the technology relies on the
user’s exact location, it is already confirmed then that the target is in a physical position to
redeem the offer, thus bolstering the odds that LBA target consumers will, in fact, follow through
marketing communications, driving in-store traffic via coupons, discounts, and other promotions.
Forrester Research describes LBA as a “disruptive technology that has the potential to change
the way that eBusiness executives at retail firms sell and market to their customers.”20 Industry
predictions for LBA adoption by marketers are extreme. ABI Research projects that businesses
will spend $1.8 billion on location-specific campaigns in 2015 as part of their overall mobile
marketing budgets.21 Statistics from JiWire’s Mobile Audience Insights Report seem to back
these estimates. According to the report, 20% of the on-the-go audience reported having visited
a physical store location in response to seeing a location-specific advertisement. Additionally,
77% of the audience indicated having taken some sort of action in response to seeing a locationspecific
message within an ad.22 (Exhibit 4) For the basis of simple comparison, a website
banner ad is far less targeted and thus sees considerably lower levels of “redemption.”
Registering just a 2% click-though rate (CTR) is considered fairly successful by website
standards, with most banner ad campaigns averaging just 0.2-0.3% CTRs.23
Examples of location-aware mobile smartphone apps span two primary purposes: checking in
and receiving rewards. Apps like Loopt, Gowalla, and Foursquare in addition to Facebook’s
new mobile “Places” tab allow smartphone users to publicly check in when they visit certain
locations. The check-in process lets the user “self-identify” his current location, publishing the
check-in information to friends and other app users in a public forum. Shopkick (discussed in
depth later on) is one example of a reward-based location-aware mobile app, through which
shoppers receive loyalty credits for physically entering certain stores and scanning products.
Still, for all the hoopla overall interest in receiving location-based offers remains low.
According to Forrester, only 6% of U.S. adults say they have interest in receiving location-based
retail offers on their mobile phones, and only 4% have interest in receiving time-sensitive
promotions such as daily specials.24 (Exhibit 5) Further, privacy concerns could curtail LBA
efforts.
20 Forrester Research. “Evolution” 21 ABI Research. Location-Based Services (LBS) Markets: Carrier Vs. Application Store. Q4 2010. 22 JiWire Mobile Audience Insights Report. Q4 2010.
http://www.jiwire.com/downloads/pdf/JiWire_MobileAudienceInsightsReport_Q42010.pdf 23 ReadWriteWeb. “Location Based Ads a Goldmine.” April 2010. http://www.readwriteweb.com/archives/locationbased_ads_a_goldmine_says_survey_-_50_of.php
24 Ibid
6
Short Messaging Services
SMS is the text component of mobile phones.25 SMS text messaging is currently the most
widely-used data application in the world, with 2.4 billion active users, or 74% of all mobile
phone subscribers worldwide.26 As such, one advantage for retailers in communicating via SMS
is that customers are already accustomed to sending and receiving messages in this basic format.
This advantage lends itself to retailer opportunity in pushing out occasional messages and trafficdriving
promotions to its customer base. Even though simple text messages lack the GPStargeting
sophistication of LBA and are rarely contextual or personalized, 70% of consumers
who receive commercial SMS messages open them, and of that group, 24% open and sometimes
or always respond.27
Despite the promise of newer technologies such as augmented reality and location-based
advertising, today’s mobile marketing campaigns are still dominated by text messaging.
According to comScore, 67% of U.S. mobile subscribers used text messaging on their mobile
device.28 (Exhibit 6) As such, spending on SMS-related advertising programs is approximately
$1 billion per year.29 The recipients of this funding include direct advertisers like the
aforementioned AT&T and independent publishers.
Multimedia Message Services
MMS is a standard way to send messages that include multimedia content to mobile phones.30 It
builds on the functionality of SMS, allowing for users to send and receive messages that are both
longer and larger in size, often containing embedded multimedia content. In the U.S., 34.5
billion MMS messages were sent/received in 2009, compared to 14.9 billion in 2008, according
to CTIA-The Wireless Association.31 The opportunities for creative brand messaging via MMS
increase exponentially in comparison to SMS. Retailers and brands can deliver much richer
campaigns by combining both text and graphic creative elements. (Exhibit 7)
Augmented Reality
Augmented reality technology represents a live direct or indirect view of a physical, real-world
environment whose elements are enhanced by computer-generated sensory input, such as sound
or graphics.32 In terms of mobile devices, it refers specifically to the overlay of visuals on realworld
views seen through a mobile phone's camera viewfinder.33 Augmented reality remains a
fairly new and unproven technology, but one that has been widely discussed for years. It is still
yet to be seen whether augmented reality will continue to reside largely in the dazzling
25 Wikipedia. “Short Message Services.” http://en.wikipedia.org/wiki/Short_Message_Services 26 Ibid 27 Forrester. “Evolution.”
28 comScore September 2010 U.S. Mobile Subscriber Market Share. November 2010. 29 eMarketer. “Mobile Message Marketing.” November 2007.
30 Wikipedia. “Multi-Media Messaging.” http://en.wikipedia.org/wiki/Multimedia_Messaging_Service
31 Wireless Week. “MMS to Prosper as Mobile Marketing Becomes Mainstream.” January 2011.
Prosper-Mobile-Marketing-Mainstream-Business/ 32 Wikipedia. “Augmented Reality”. http://en.wikipedia.org/wiki/Augmented_reality 33 eWeek. “Google, Apple to Spar in Mobile Augmented Reality.” February 21, 2011. Taken from ABI Research
Report. http://www.eweek.com/c/a/Mobile-and-Wireless/Google-Apple-to-Spar-in-Mobile-Augmented-Reality-
534060/
7
“technology-of-the-future” category or if it is indeed poised for wider consumer acceptance in
the short term. According to ABI Research, 2010 total revenue associated with augmented
reality amounted to only $21 million, with projections that the total could explode to an
incredible $3 billion by 2016. Questions remain regarding the scalability and maturity of the
technology.34
Native Mobile Applications
Native mobile application is a broad term used to describe internet applications that run
exclusively on smartphones and other mobile devices.35 Smartphone users download mobile
apps through their phone platform’s designated marketplace. App content runs the gamut from
games, social media, sports, weather, and reference tools to shopping, among many others.
Mobile shopping apps are generally created by independent developers—some of it generated
specifically for brands and retailers (e.g., Target’s branded mobile app) and most often available
as a free download. Others are largely unassociated with major companies, developed instead
for specific use as a shopping tool across any cross-section of retail environments, be them
online or in-store. This second type of app can be either free or for-purchase, and typical
features include barcode scanning for price comparisons and apps that push daily coupons to
consumers. Some examples of these independent (non-store/product-branded) apps include
Google Shopper, RedLaser, and TheFind. (Exhibit 8)
MOBILE RETAIL CASES
In our research we found that there is presently no single mobile shopping offering that truly
“does it all” yet. Nonetheless, the cases that follow are intended to serve as noteworthy
examples of retailers and app developers that are paving the way for an entirely new mobile
shopping experience. These companies are setting the bar for using smartphones as in-store
tools and experimenting heavily in this new arena with positive sales results and general
customer and industry acclaim. Each of the following companies has recently launched an
innovative mobile effort, designed carefully to engage and delight shoppers within the confines
of the retail environment. Each company’s mobile product has a set of very specific objectives
in line with its shopper base and brand, whether that be customer loyalty, price promotions,
convenience, or brand engagement.
Starbucks
As usual, Starbucks is at the forefront of the mobile shopping trend, with the retailer’s efforts
channeled largely into its two proprietary apps that serve related but different functions:
myStarbucks and Starbucks Card. A perennial pioneer in customer loyalty, convenience, and
“connectedness,” the company’s mobile experimentation has been largely well-received by its
tech-savvy customer base. Who better to target with a mobile app than a caffeinated laptop user
already taking advantage of Starbucks’ free wifi?
myStarbucks represents the company’s more mainstream mobile retail effort and serves largely
as an information conduit. Launched in 2009, the free iOS app download enables users to locate
34 “Mobile Augmented Reality”. Forrester Research. January 4, 2011.
35 Webopedia. “mobile application” entry.
8
and find directions to nearby stores (via Google Maps), create virtual drink orders which can be
shared with friends, learn more about Starbucks coffees, and browse other available food items
and nutrition facts. (Exhibit 9)
The retailer’s newer Starbucks Card app, however, represents a far more innovative mobile foray
that is not only driving traffic into stores but transforming the way its customers complete
transactions at the point of sale. Positioned as a time-saver and a convenient central location for
storing reward program information, the Starbucks Card app lets customers use their mobile
device to pay for drink orders, view balance information and re-load money on their registered
Starbucks Cards, and monitor their myStarbucks loyalty reward stars (redeemable for a free
beverage). (Exhibit 10) Consolidating these features on a single app is intended to help
customers “create a little extra time in [their] day.”36 The Starbucks Card app is currently
available on both iPhone and Blackberry and can be used for payment in approximately 6,800
dedicated Starbucks locations and all U.S. Target stores.
The app “is currently the largest mobile-payment initiative in the [country,]” and it is challenging
the way that customers think about their retail transactions.37 A Starbucks Card app user can
simply enter her physical Starbucks Card number into her phone, and the phone then effectively
becomes her card. At checkout, she can pull up her Card barcode on the phone screen, which is
in turn scanned by the barista. The total amount is then debited from her account, and money
can be added to the app via credit card or PayPal.
Urban Outfitters
If the future of retail truly is mobile, as many analysts predict, then Urban Outfitters (UO)38 is
leading the charge in its use of mobile to streamline the store purchasing experience in a manner
slightly different from that of Starbucks.
As part of its strategy, UO focuses on utilizing the mobile device to increase customer crosschannel
interactions. According to CEO Glenn Senk in his keynote speech from Fall 2010’s
Shop.org Conference, “Mobile may ultimately impact the in-store experience more than it
impacts the online experience. Consumers will be able to walk in store, scan a product, read
reviews, share via their social networks, and walk out with the product in hand and it
automatically gets charged to their mobile device. Gone is the check-out line, which is
amazing.”39 While commerce via mobile web or applications is growing, UO is stretching
beyond that to optimize the in-store experience.
UO utilizes mobile in multiple ways; however, at the heart of its mobile effort is using the device
to learn more about the customer as she moves across channels. UO studies how, why, and when
customers switch between channels in order to tailor and enhance the retail experiences
36 Starbucks Mobile Apps Page.
37 Brennan, B. & Schafer, L., Branded! How Retailers Engage Consumers with Social Media and Mobility. (New
Jersey: John Wiley & Sons, 2010) 71.
38 Urban Outfitters, Inc. is a lifestyle specialty retail company that operates under the Urban Outfitters,
Anthropologie, Free People and Terrain brands with a $6.1B market cap as of February 2011
39 Mobile Commerce Daily. “Urban Outfitters exec shares vision for in-store mobile commerce.” September 29,
2010.
accordingly. From its own research, UO has found that multichannel shoppers spend two to
three times more than single-channel shoppers,40 and consumers that engage with the brand
across three or more channels spend six times more than the average customer.41
UO believes that there is tremendous synergy between mobile and brick-and-mortar.
Consequently, the retailer has implemented mobile search ads, push notifications, special offers,
and location-based couponing, directing the user to the nearest brick-and-mortar store. UO’s
most differentiated mobile offering, however, is its implementation of a mobile POS system to
alleviate long queues that form in stores during peak holiday shopping seasons. Based on iPod
Touch hardware and similar to devices used in Apple stores, UO arms additional employees with
mobile checkout tools to decrease average customer wait times. Quite simply, this technology
enables store associates to ring up customers in other places than the register. (Exhibit 11)
Additionally, the mobile devices provide associates with access to the store inventory database,
empowering them to better answer customers’ questions regarding availability of merchandise.42
The technology has afforded UO new options to interact with customers. Once NFC/RFID43
technology becomes more commonplace in handsets and at the point of sale, the mobile channel
will offer fantastic opportunities to not only expedite the retail check-out experience, but also to
improve customer and store associate morale.44 UO hopes that by utilizing a unique POS
system, it is delivering the customer a uniquely positive shopping experience.
Wet Seal
The retailers that stand poised to win big with early introduction of mobile shopping
technologies are the ones that already enjoy a significant base of mobile-savvy and sociallyengaged
customers. Wet Seal, a “fast fashion” mall store apparel chain targeted at junior girls, is
a prime example of this. One of the earliest retailers to plunge headfirst into the mobile shopping
arena, Wet Seal launched its first mobile effort in 2009 with the free iPhone app, iRunway. At
the time of iRunway’s launch, Wet Seal was already heavily invested in social media and
continues to be now, offering customers access to a vast online fashion community via the
brand’s dedicated website. (The retailer currently boasts over 1.3 million fans on its Facebook
fan page.)
Visitors to Wet Seal’s regular website are invited to join The Runway, which serves as a virtual
boutique and design studio for budding fashionistas. Juniors can register there for an account as
a “stylist” on The Runway and then build full outfits with Wet Seal apparel currently available
for purchase online. “Stylists” then post their unique outfit creations to The Runway for other
community members to vote on the outfits they like best and (ideally) purchase them in their
entirety. (Exhibit 12) Top “stylists” earn points for well-reviewed designs and enjoy celebrated
status within the cybercommunity.
40 Under the Radar Blog. “The Future of Retail is Mobile.” September 30, 2010.
http://www.undertheradarblog.com/blog/retailers-must-use-mobile-strategy-to-keep-current/ 41 Ibid
42 Fashionably Marketing. “Urban Outfitters to Bring Mobile POS to stores.” June 2010.
http://fashionablymarketing.me/2010/06/urban-outfitters-to-bring-mobile-pos-technology-in-stores/ 43 Near Field Communication and Radio-frequency identification 44 Oracle. “Mobile Phones Redefine the Retail Experience”. October 2010.
http://www.oracle.com/us/corporate/profit/opinion/101210-dorf-177119.html
10
Part of the success of Wet Seal’s social media concept hinges on the fact that its fashion content
builds on store offerings, but the outfits are truly created by customers for customers. While
typical e-commerce apparel sites feature individual garments and occasionally offer outfit
recommendations, a single Wet Seal skirt, for example, can be featured in numerous “stylist”-
generated outfits. A Wet Seal product page provides information not only on available sizes,
colors, fabric, and additional views, it also links to every “stylist” outfit that incorporates that
specific item. (Exhibits 13 & 14)
Wet Seal’s brick-and-mortar strategy is to capitalize on this strong sense of community in its
online world by incorporating it into the store experience. The first step of this strategy was
installing in-store kiosks, where customers could scan a specific item barcode and then
immediately pull up and browse the highest-rated “stylist”-generated outfits featuring said item
on The Runway. iRunway, Wet Seal’s free iPhone app, was the next natural progression—
taking the technology mobile and enabling the shopper to scour the store with peer-approved
outfit suggestions in hand. Using the app’s bar code scanner, store visitors can scan an item bar
code and link it to top outfit suggestions found on The Runway. They can then use the app as an
outfit template, finding the other pieces in store that complete the preferred ensemble and trying
on the full creation. (Exhibit 15) The customer’s knowledge that The Runway outfits are
already pre-approved by peers provides a confidence boost that what she’s buying is, in fact, on
trend. Wet Seal CIO and vice president Jon Kubo explains: “Social media is engaging, and
mobile allows you to bring your online experience to the store.”45
Wet Seal’s mobile effort is not merely a gimmick intended to amuse or distract its customers; it
is a veritable selling tool, intended both to enhance the in-store experience by engaging the
customer in fashion and to sell more product by steering purchases away from single garments
and toward full ensembles. According to former CEO Ed Thomas, “[Wet Seal’s] conversion
rates [from browsing to buying] are over 40% higher for customers who have viewed a usergenerated
outfit, and the average dollar sales are over 20% higher.”46 Given the fact that 90% of
Wet Seal shoppers continue to purchase in stores, taking this technology mobile and enabling it
in the retail environment just makes sense.47 Kubo notes, “We want the customer in the store,
and we want to make the experience better. With iRunway, we are trying to make the best crosschannel
strategy by engaging the customer in the store by taking the best of mobile.”48 “As more
people use mobile tools in the store, we’re going to see larger average order sales.”49 Although
currently found exclusively on iPhone and iPad, Wet Seal has plans to enter the Android
platform in the near future.
Shopkick
For retailers that are slower or more wary to invest in the technology of creating their own
branded geo-locational apps, numerous third-party developers are emerging on the scene to host
45 Thau, B. “Wet Seal of Approval.” Stores. 20 October 2010. 46 Brennan, B. & Schafer, L., Branded! How Retailers Engage Consumers with Social Media and Mobility. (New
Jersey: John Wiley & Sons, 2010) 114.
47 Thau, B. “Wet Seal of Approval.” Stores. 20 October 2010. 48 Brennan, B. & Schafer, L., Branded! How Retailers Engage Consumers with Social Media and Mobility. (New
Jersey: John Wiley & Sons, 2010) 113 .
49 Thau, B. “Wet Seal of Approval.” Stores. 20 October 2010.
11
shoppers’s mobile engagement experiences within the brick-and-mortar walls of their retail
partners. Perhaps the most promising and thus far successful of these new players is Shopkick,
an app launched in the summer of 2010 that rewards shoppers for actual store visits and product
barcode scans. Cyriac Roeding, Shopkick’s co-founder and CEO, explains that the object of the
app is “not just to drive foot traffic, but to turn offline stores into interactive worlds.”50 The
company asks: “Why does no one reward you for visiting their stores, only for buying
something? Why does nobody make shopping more individual?”51
At this still relatively early stage, Shopkick already boasts an impressive and steadily-growing
roster of retail partners participating in its platform, including: American Eagle Outfitters, Best
Buy, Crate & Barrel, Macy’s, Simon Malls, Sports Authority, Target, and Wet Seal. The
cheerful app (available on both iPhone and Android) uses GPS technology to identify stores
(partner and non-partner alike) nearby the user’s current location and deliver participating users
loyalty rewards, which accumulate in the form of “Kickbucks.”
Once activated on the user’s mobile device, Shopkick then lists stores located close nearby,
offering for most a nominal number of Kickbucks in exchange for a virtual check-in (no physical
store visit required, just a swipe of the mobile phone touchpad). That said, actual visits to the
aforementioned retail partner brick-and-mortar stores generate much greater Kickbuck value for
the user.
As the customer enters the retailer, an electronic box mounted near the door emits a unique,
identifying high-pitched noise, imperceptible to humans but recognized by the mobile device.52
(Exhibit 16) Upon the sound’s detection by the phone, the customer’s Shopkick account banks a
set number of kickbucks as a reward just for walking in (Exhibit 17). Once in the door, the app
pushes targeted promotions directly to the mobile user for redemption at the retailer.
As users accumulate more and more Kickbucks, their status “level” within the app world
increases, and they can eventually redeem the virtual currency for real-world rewards, including
instant gift cards at partner retailers, and gift certificates on iTunes and Restaurant.com, among
other prizes. Socially-conscious shopkickers can even redeem their Kickbucks as donations to
charitable causes like carbon offsetting and cancer research. While Kickbucks are available
daily, Shopkick and its retail partners also work to deliver shoppers special holiday-themed
promotions like Target, Best Buy, and Macy’s (among others’) participation in the app’s “12
Days of Kickmas” daily sweepstakes campaign this past Christmas.53
It’s not just the retailers that are engaging in this mobile revolution either. CPGs like Kraft,
Procter & Gamble, Unilever, and HP are also on board.54 A second app functionality promts the
customer (once inside the store) to scan barcodes for specific products to amass even more
50 Fowler, J. A. “Retailers Reach Out on Cell Phones.” The Wall Street Journal. 21 April 2010. 51 Shopkick “About” Page. http://www.shopkick.com/about.html
52 Schuman, E. “Check-In Cheating: Shopkick Retail Mobile System Easily Faked.” www.storefrontbacktalk.com.
24 February 2011.
53 Kats, R. “Target, Best Buy, Reward Consumers During Holiday Season Via Mobile App.”
www.mobilecommercedaily.com 24 November 2010.
54 Batista, A. F. “750,000 Shoppers Scan More Than 3 Million Products Using shopkick Location-Based App.”
Kickbucks. (Exhibit 18) After receiving rewards for merely entering the building, the customer
can continue to rack up credits by making a directed product “scavenger hunt” within the store.
For CPG partners, this encourages increased exposure to both new and old products, infusing a
sense of novelty and discovery into what might otherwise be fairly mundane product categories
(e.g., stuffing mix, peanuts, and pasta sauce).
Given Shopkick’s strong showing of early support from such dominant players in retail and
manufacturing, the app’s popularity is quickly growing. After launching in August 2010, the app
has already been downloaded 750,000 times. Over three million products have been scanned
through its interface, and an estimated 10%+ of Shopkick downloaders use the app on a daily
basis.55 As the Shopkick’s retail and CPG partner roster expands further and its proprietary
sound-emitting devices continue to roll out in U.S. stores, potential and momentum for this
consolidated mobile loyalty program swells.
GoldRun
GoldRun is another new independent app that is beginning to shape the way customers think
about and engage with branded products and brick-and-mortar stores. Early high-profile
alliances with H&M and Barnes & Noble stores have generated considerable buzz for the app,
which blends geo-locational identification with augmented reality features to catapult its users
into a third world of virtual products and promotions.
Launched in November of 2011 and available now only on iPhone systems but with an Android
launch set for March, GoldRun “places” virtual objects on behalf of its retail and brand partners
in various pinpointed locations throughout the country. Depending on the retailer/brand, these
“objects” run the gamut from celebrities and cartoon characters to actual products available for
purchase. Their locations span a wide range too, from city sidewalks to shop windows and
brick-and-mortar retail interiors.
When a GoldRun user pulls up the app, she can choose to go on a “Run,” which is essentially a
real-time branded scavenger hunt through the real world in search of virtual items. The app
directs the user where to physically walk in order to locate nearby virtual objects through the
viewfinder on her smartphone. Only through the viewfinder can she actually see these virtual
items, and as app users move closer to their virtual targets, GoldRun provides feedback that they
are getting “warmer” in their search.56 Once the user has successfully navigated and “found” the
virtual object, she then views it through her mobile phone as superimposed on the real world and
can even take snapshots for posting to Facebook or Twitter and emailing to friends.
A recent GoldRun-enabled promotion co-branded by Barnes & Noble and Esquire Magazine
perhaps best illustrates the app’s potential as a conversation starter and, more importantly, a store
traffic driver. The brands’ “Find Brooklyn Decker” Run was designed with the objectives of
drawing attention to Esquire’s February cover and generating magazine section visits and
Esquire purchases. To accomplish this, the magazine worked with GoldRun to “place” a virtual
version of its February cover girl and newly-crowned “sexiest woman alive,” supermodel/actress
55 Batista, A. F. “750,000 Shoppers Scan More Than 3 Million Products Using shopkick Location-Based App.”
www.retailtouchpoints.com 14 February 2011.
56 GoldRun iTunes Review Page.
Brooklyn Decker, inside the real-world magazine sections of over 700 Barnes & Noble stores.57
(Exhibit 19).
Participating GoldRunners were then directed to visit these local store sections where they could
find their virtual Brooklyn Decker and pose with her avatar for a variety of photos. (Exhibit 20)
GoldRun uses geotagging technology to localize placement of its targets in specific
longitude/latitudes, engaging in zones as small as 150 square feet in diameter (e.g., a magazine
section) up to 500. David Granger, Esquire’s editor in chief, explained: “We’re hoping [the
promotion] will drive traffic to [Barnes & Noble] stores and it will benefit both of us…To my
mind, it’s a really cool technology to make use of, but I hope the end result is that people buy the
print magazine.”58
As mobile augmented reality adoption remains fairly nascent, GoldRun promotional materials
generally require highly explicit step-by-step explanations of how the app and its various
promotional campaigns actually work from the user’s perspective. (E.g., Follow the “Find
Brooklyn Decker” Run; Head to the Magazine Section of the nearest Barnes & Noble book
store; Activate GoldRun, and hold up your phone.
59) Still, with adoption projected to surge and
with increased partnerships with big-name retailers and brands, it seems promising that GoldRun
will enhance its offering, and pursuit of Runs on the app will become a more intuitive activity.
After all, initially, mobile phone users “consumed content” only by holding phones up to their
ears. Eventually, they progressed to consuming on the screen, but we are still not yet at a point
where consumers view holding up mobile phones “to interact with their environment as a totally
natural gesture.”60 In addition to Esquire, GoldRun currently has partnerships (and associated
Runs) in place with H&M and brands like A&E, Sorel, and Harajuku Lovers.
THE MOBILE FUTURE
Is 2011 the year when mobile will emerge as a viable and widespread marketing opportunity, one
that will hit mainstream status in driving store foot traffic?
As Fortune 500 companies such as Target, Starbucks, Walmart, and JCPenney adopt mobile
marketing, the fact remains that consumer adoption of location-based services is still quite small.
Even though 50% of all mobile phone users are mobile shoppers, it is only a small subset of
those users accounting for most of the mobile shopping volume. According to research by Arc
Worldwide, just 10%, of mobile shoppers currently drive the majority of mobile shopping
activity.61 (Exhibit 21)
Companies continue to struggle around this channel. Reports show that only ~8% of CMOs are
responsible for driving their firms’ approach to mobile.62 Further, companies continue to believe
58 Newman, A. A., “Appearing Virtually at a Store Near You…” The New York Times. 18 January 2011. 59 Esquire promotional materials. http://creativity-online.com/work/esquire-brooklyn-decker-on-goldrun-app/22206 60 Husson, T, “Mobile Augmented Reality.” Forrester. 17 December 2010. 61 In-Store Marketing Institute. “Upward Mobility: Developing an Effective Mobile Shopper Marketing Strategy.”
2011
62 Kemp, M. B., “Mobile Adds New Appeal to your Brand Experience.” Forrester. October 2010.
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that mobile marketing is merely an extension of the internet, rather than its own unique channel,
deserving of increased funding and marketing focus. As mobile is still an emerging technology,
there is limited expertise, and many companies are unable to determine where such marketing
roles belong within the greater organization. As demonstrated in the technology discussion
above, potential mobile marketers face a highly-fragmented marketplace.
While mobile marketing has the chance both to drive traffic into stores and enable online
purchases, many barriers still exist. They include: mobile network speed, wireless connectivity,
smartphone adoption, corporate adoption of mobile advertising strategies, buildup of mobile
apps/websites, and the increasing complexities of the mobile web. Forrester’s consumer data has
shown the same thing year after year: everywhere around the world, mobile phone users find ads
sent to their phones to be annoying, or they simply refuse to opt into receiving advertising
messages. Therein lies the opportunity for retailers to accomplish what our case examples have
already done—namely, creating a mobile app/experience that exceeds customers’ expectations
and goes well beyond trite, targeted messaging. Rather, retailers like Starbucks and Wet Seal are
delivering apps that make their customers actually want to hear from and connect with the brand
on a much deeper level. One key to success for mobile marketers is targeting the correct
audience. Young, early-adopting customers who are already comfortable using their
smartphones are more likely to embrace location-based commerce.
For all the barriers and lack of financial investments, major companies continue to believe in the
future potential of mobile in-store marketing. Macy’s CMO, Peter Sache, makes a clear case for
the importance of mobile technology:
“If you don’t enable your store, the millennial [demographic group] won’t
walk into stores.” “We have to have connectivity in stores. We are also
actively engaged in social media. There’s no question consumers want a
two-way conversation. It’s going to explode.”63
63 Taken from nicheretail website. “Retailers tap tech potential to get personal”. January 26, 2011.
Exhibit 1: Worldwide Mobile Operating System Share and Operating Share by Region
AdMob
Exhibit 2: OS Share of Mobile Web Consumption in North America
Quantcast, May 2010
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The graph clearly indicates the trend in Mobile Web Consumption in North America. Android, with a
plethora of mobile devices, is quickly gaining market share. iOS remains the dominant operating system
in the market but is found only on iPhone devices, thus limiting expansion possibilities.
Exhibit 3: DailyCandy example of location-based advertising:
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Exhibit 4: What is most likely to get you to visit a retail location?
JiWire Mobile Audience Insights Report
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