A roundtable discussion on the effect of mobile devices on shopping, with Michael Minasi of Safeway, Patrick McLean of Capital One, David VanderWaal of LG Electronics USA, Jeanne Danubio of Neilsen NA and Ken Barnett of Mars Advertising.
Is the effect of mobile devices on shopper behavior overstated?
Michael Minasi: If it’s overstated at all, it is only because marketers have a tendency to think beyond the current timeframe and structure of use and project where they think the future will be. But you can’t really overstate the fundamental change that mobile media will have on shopper behavior and how shoppers get information.
As it stands right now, we see Safeway shoppers using mobile primarily as a pre-shop planning tool, which may be to create or maintain a list or to search out and find digital coupons and so forth. The vast majority of use has to do with the utility of shopping and making shopping a bit easier and then saving money with digital coupons.
Patrick McLean: We are just at the beginning. Mobile is going to have an increasingly profound effect on people’s shopping behavior from three angles. First, it’s made ecommerce that much more convenient. People can shop from anywhere, and they can do it on impulse.
Mobile is also going to have a remarkable effect on behavior in the payments category, the way in which people interact with physical stores, and the way they think about the payment experience.
And then the third area is around providing experiences that make people aware of certain products or services and giving them spot opportunities to receive discounts and extract value from the shopping experience.
David VanderWaal: Mobile’s effect on shopping behavior is not overstated, but it’s not really understood. All the data show shoppers are using smartphones actively while they are in the store and in transit. Almost 50 percent of those who have smartphones are using them actively.
But what we really need to ask ourselves is not whether they are using smartphones, but how they are using them and what do they want them to do. I recently heard a retailer give a talk on mobile and he said if smartphones are used just as an alternate way to discount products, we aren’t really creating anything. We are just using it tactically to communicate and speak with shoppers about the same things that we’re doing anyway.
What it comes down to is using mobile to get the shoppers the help, convenience and information they need in ways they are currently aren’t getting.
Jeanne Danubio: Through a shopper lens, digital has changed the shopping experience in travel, books and electronics, but is just emerging in packaged goods. However, mobile is impacting how people shop everywhere.
Nielsen’s mobile panel shows that there is a clear use of mobile phones in terms of shopping activities. Nearly 80 percent of smartphone owners are using their phones for some type of shopping. Roughly 60 percent use smartphones for price checking, 50 percent research products or services and 40 percent read reviews. Researching products or services is in the 50s and reading reviews is in the 40s.
But the most common shopping activity is using mobiles as a store locator. So, lots of people are using their smartphones for shopping activities but the most common use is simply to find a store. Only about 29 percent of those using smartphones for shopping are using them for actually purchasing a product.
Ken Barnett: I think it’s an appropriate awakening. It’s not unlike the stock market, which tends to be a leading indicator of the marketplace. The current level of actual utilization is probably less than what most people are stating, but it will build.
Once Millennials turn 31 to 35, in the next two to five years, there will be a shift. By then, we won’t be talking about whether we are overstating mobile; we’ll be talking about the new devices that we haven’t yet seen and how they are impacting shopping and engagement behavior. The need to get in front of it and start to recognize what that is and how to engage with it is appropriate.
How much of mobile’s rise is a threat to physical stores versus an opportunity?
Minasi:At Safeway, we believe overwhelmingly that it’s an opportunity.
We think we can leverage mobile and digital to provide better utility and better tools to help shoppers’ lives be a little simpler. In particular, we believe there’s an opportunity with our “Just For U” platform to provide personalized value to shoppers in the pre-shop planning routine.
“Just for U” is both a mobile application and a traditional web environment where shoppers can get deals created specifically for them and their household based on their purchase history. So, rather than having to search through lots of different items to find the things on sale that they normally buy, we can optimize that environment and present just the items that are relevant to them.
McLean: I think mobile is an opportunity for stores. Physical stores can unlock the opportunity to engage with a customer on a personal level. They can link to previous purchase behavior and present an experience both on a mobile device and in-store that is relevant to the shopper. That can make the shopping experience in the physical store that much more powerful.
VanderWaal: Retailers have two pathways of opportunity to address any threat. One is bringing the convenience of online into the store, while the other is enhancing the experience to be truly different than what it is when you’re online.
We asked ourselves: What do people want in the store that they can’t get right now? What we found was that they wanted product reviews and detailed specs. In consumer electronics, typically all you have is the retailer fact card or the price tag, and those have very general bullet points and then a price.
So, we developed what we call the “mobile shopping assistant” from LG, which provides QR codes on every model that call up specs and reviews. We had 20,000 hits just in the first week, and now about 25 percent of our website hits come from these QR codes. The mobile shopping assistant is not only being used, but it’s also leading to purchases.
Danubio: While a “do nothing” or even a “wait and see attitude” is probably a dangerous approach for retailers, the rise of mobile is more of an opportunity for physical stores than a threat.
Mobile devices offer an unprecedented means of engaging shoppers in a just-in-time approach designed to influence the purchase decision. Those retailers who take advantage will benefit. What mobile offers that’s different, especially for
packaged-goods brands, is the ability to personalize the experience in a way that wasn’t possible before.
Barnett: Smart retailers are looking at ways of engaging with shoppers however they want to engage. Retailers need to look at those categories where touch-and-feel and the shopping experience is part of the journey, as opposed to those categories that are strictly about commodities.
The rise of a new retail format doesn’t necessarily mean the demise of a prior format. It might mean the demise of certain players who are not effective in that new world order, but there are still department stores and big-box stores that are doing just fine despite competition from Amazon, for example.
Clearly, Amazon is chasing commodities, and it’s to be expected that the digital world will continue to fill commodity goods more effectively than any other channel. However, the answer is omni-channel, not individual channel.
What can a great mobile experience do for the shopper?
Minasi: The mobile experience is really about two things: utility and personalization. It is certainly about comparing prices, but we think about shopping-list creators and synchronized lists between multiple members of the household. There are also opportunities like access to basic services such as prescription renewal.
Around the holidays last year, Safeway launched a “Chef Assistant” app with a proprietary two-hour turkey recipe that we developed with Sunset Magazine. The app provided the recipe, in detail, with video and visuals. It also had a timer and provided utility in terms of how to prepare and coordinate all the side dishes so that everything was ready at exactly the right time.
McLean:For Capital One, the big opportunity is that the device itself is the future form of payment. We can tie that to a history of your purchase behavior and enable you, through the device and that data, with more relevant information, offers and deals. We believe ultimately that the mobile promise is personalized payment and offer experiences for the customer.
VanderWaal:First and foremost, you have to understand shopper behavior. We now have the ability, via the smartphone, to know a lot about what the shopper is doing in the store and what they’re interested in. The shopper can answer a few quick questions right on their smartphone to lead them to a model recommendation, for example.
We’re in categories where it’s primarily assisted selling, so we’ve got a lot riding on making sure that retail sales associates fall in love with our products. However, they don’t work for LG. So, we are considering a way to give shoppers the opportunity to talk to an LG person live on the phone and not depend just on the retail sales person. It really comes down to figuring out what mobile can provide that a store can’t.
Danubio: Convenience and personalization are key benefits that mobile can offer the shopper, but much of the activity today is deal-centric. If mobile is just about deals, then nobody wins. Opportunities exist to optimize promotions and build a better shopping experience.
Safeway’s “Just for U” program is really a unique way of not only personalizing the shopper experience, but also not subsidizing deals for people indiscriminately. The platform of coupons, shopping lists and time-sensitive promotions are all effective ways that Safeway engages the shopper and offers more than just deals.
Barnett: There are so many robust applications for different kinds of goods. People are using mobile devices to shop with friends who might be in different cities. There are ratings and reviews and location-based apps: is there a place to buy this item nearby? Selection: I’m looking for different models than what is available in the store.
All of this provides a better-informed shopping experience that adds value. Digital is another tool that, harnessed properly, can help shoppers achieve their goals more quickly and easily.
What is the greatest obstacle to integrating mobile and in-store experiences?
Minasi: For Safeway, it’s really two things. The first is that because grocery shopping, for many people, is more of a task than something they enjoy, their tendency is to do it quickly. There may be some bias against using an app while shopping because it might slow down the trip. However, I think we can provide enough utility to overcome that pretty easily.
The other issue is the accessibility in stores. Not every one of our stores — or any one of any retailers’ stores — is fully covered with Wi-Fi, and 3G or 4G signals don’t always penetrate every part of the store. So, just the availability of the connection within 1,500 stores for us, and for many retailers of our scale, is an obstacle that we are going to have to address.
There was a fascination with QR codes for the past couple of years and a lot of point-of-sale had QR codes on it. The truth is that you have to think really carefully about how you utilize them. A QR code on-shelf to get more information about a product in our category may or may not be a good opportunity. A QR code in an ad that gets you to an optimized environment about a product or a service is something that we’ve had a little bit more success with.
McLean: The biggest obstacles are going to be legacy point-of-sale and display infrastructures. We are going to need to get to a place where retailers are confident in cloud-based point-of-sale and are able to make investments in a digital display type of experience in-store.
As customers come into the store, the retailer will know who they are and what their preferences are. They can build an experience for them around that. That’s an investment that needs to be made for this promise to truly be unlocked.
VanderWaal: The biggest obstacle is a lack of understanding of how shoppers want to use mobile while they’re in the store. Until we have an opportunity to leverage what mobile can be — both from brand and retailer perspectives — we’re missing some opportunities.
There’s no longer a traditional path-to-purchase that you can chart in a linear way. Mobile has completely thrown that out. You’ve really got to have an “anytime, anywhere, any-access” strategy.
Probably the number-one frustration of the in-store visit is when you go to the store and find out that the model that you researched, or even saw in an ad from the retailer, isn’t in that particular store.
We’re trying to figure out, working with one of our trade partners, whether we can use geo-location to point shoppers to a store that has the model they are interested in.
Danubio: Mobile alone is not strong enough to reach all shoppers. You still need a complimentary mix of mobile in combination with television, coupons and circulars to reach and influence shoppers.
Another obstacle is that retailers are not yet fully integrating mobile with their in-store environments. Most of the activity is not fully capitalizing on the potential, such as integrating loyalty data with mobile to get the full benefit of personalization.
Barnett: One obstacle is that retailers are not recognizing the omni-channel nature of the shopper. Do their dot-com and traditional stores both get credit for the acquisition of the same customer? The integration of the dot-com and the brick-and-motor financials is an important first step.
Another obstacle is providing shoppers with too much information. Sometimes shoppers are overwhelmed by the amount of information available and it paralyzes them. So, the ability to provide quality, concise, meaningful information is important.
A third obstacle is that some retailers are blocking transmission of signals in their stores so shoppers can’t comparison shop. That’s the opposite of the transparency that shoppers are demanding. Retailers have to understand this and not try to prevent people from exploring their options, because if they do they’re going to lose them.
Has the advent of mobile devices changed your behavior?
Minasi:Personally, it’s really about having access to information at any time leading up to and during a transaction, or during a shopping trip. That’s everything from finding a retail location to finding information about products while I’m shopping. It’s not unusual for me to go to a store looking for something, seeing a couple of alternatives, and then going directly via mobile phone to get more information.
As marketers, we should not make assumptions that the way we personally use mobile or social, or the way friends and family use them, is easily translatable into commerce. I always argue that social media is inherently social and not necessarily designed for commerce.
Marketers need to be really careful about how we utilize the social media opportunity because it’s not necessarily a place where users want to be interrupted with marketing messages. You have to be smart about how you do it.
McLean: For me it’s done a couple of things. First off, it has made me more of an impulse buyer. Maybe I’m sitting in my backyard and thinking, boy I’d like a new patio umbrella because this one is looking really ragged. I can actually execute an ecommerce experience sitting under my old patio umbrella.
I’m also researching and discovering more things because I can do it in more places. Again, it’s a seamless and frictionless experience now and that means more opportunity to research and more impulse-type behavior around purchasing through ecommerce.
I look forward to the day when instead of going to a shopping center and having to find everything on my own, that the mobile device becomes a vehicle for discovery. It will be pushing alerts to me as I’m in the shopping center, rather than me having to do so much work.
VanderWaal:It hasn’t changed my behavior, but my wife uses mobile for practically anything. She uses it to create her weekly grocery list all the way up to shopping for cars. I didn’t even know you could do some of the things that she is doing. I primarily use my mobile for convenience and location-based help, but not as much inside the store.
Danubio:I actually have not taken advantage of mobile, per se, for shopping, although I do shop online often. I buy a lot of my clothing and most of my Christmas gifts, online. I am a converted online shopper as the convenience and choice that it offers in certain categories is unmatched. I don’t yet use my phone for shopping. I just use it to communicate.
We’ve done a lot of research recently on consumer packaged-goods to understand the barriers to digital engagement and digital purchasing and to identify opportunities to overcome them. If you don’t deliver convenience, choice and value to consumers, then they are not going to change their shopping behavior.
Barnett: My engagement with mobile is pretty significant because I’m a student of marketing. Every time I see something that I think is going to represent a change I try to engage in it as deeply as I can to get some first-hand experience.
For the more considered purchases, or for those things that require an endless aisle, I use digital extensively. For those things that don’t provide a meaningful yield, I don’t engage with it at all.
What I’ve learned is that if conventional brick-and-mortar retailers don’t recognize the omni-channel need in the marketplace, then they are going to give Amazon a longer and longer runway to build relationships with their consumers. This will affect certain categories profoundly.
Retailers have to grab omni-channel retailing today because if they allow these relationships and shopper habits to develop over the next two to five years, breaking them is going to be extremely costly and difficult .