More Smartphones means shops won’t be shops anymore

Major changes in shopping have on the cards for a while, but it now seems that we’re close to tipping point where shops, as we know them, will no longer be shops. The internet started the trend, for sure. Consumers became better informed, comparing prices and product reviews. And it had an impact in many sectors. The music industry was decimated (with a bit of help from the iPod) to the point that CD shops became an anachronism. Although we still buy books (but maybe not for much longer), Amazon pretty much nailed the coffin shut on the book reseller. Electronics shops have become little more than show rooms to browse with most purchases being made online – something that Curry’s tried to cash in on in their advertising a few years ago.

These trends have shifted to mobile with the rise of the smartphone and mobile retail. Marks and Spencer are seeing close to £1 million of sales each month from their mobile site. 12% of Ocado’s orders come from mobile devices (mostly iPhones). It’s not just the UK, in France Monoprix’s excellent app has created a similar shift in purchasing habits. But mobile is different to PC. Very different. And it has the potential to shift the role of retail way beyond anything that the internet could manage. The reason is the very nature of mobile, it’s mobile-ness. As soon as you go away from a desk-bound, or lap-bound online experience, everything changes.

The Perfectly Informed Consumer

The internet saw a better informed consumer. No more hours spent flicking through camera magazines, reading reviews and looking for the cheapest price. Just search for it online and you can find it. With mobile that is happening in the store. It isn’t a case of a customer turning up with a few print outs, they can check prices or stock there and then. If they don’t like it in that store they will simply leave and go to the shop down the road that has the cheaper/better offer. Data from Google/IPSOS is that 72% of smartphone owners are using their handsets in-store and 28% are buying from them. It means that not only can they check your prices, but if it’s cheaper online they can (and do) buy there and then in the store. The same Google/IPSOS study found that 21% of smartphone users have changed their mind about a product in-store as a result of information gleaned on their phone.

Witness the trailer for a new Channel 4 documentary. A man’s in the shop, he scans the product’s barcode on his phone and it gives a price comparison for the item ‘It’s the cheapest, yup, I’ll buy it’ he says to the camera. He’s doing that for every product. What that means for retailers goes way beyond ‘the customer is always right’. As one blogger aptly put it on ‘the consumer owns the retailer’.

Shops as Showrooms

In short, the shop will become little more than a showroom, or place to collect goods. Most of the sales journey will be happening on their mobile device. How shops respond to this will be interesting. The right way will of course be to embrace this empowerment and support it. One of Monoprix’s competitors in France is Casino. They also have a great app with all the usual store finders and online ordering. As with any shopping app you can add your list. But what they have done is to allow you to go to the store and the app will create the perfect route around that store for you to find everything you need. Brilliant. For many, grocery shopping is a chore, so they just made the thing so much easier. Marks and Spencer also know that retail is changing. They are implementing a whole range of in-store media that taps into smartphones – from giant screens to point of sale displays.

Who needs a shop anymore?

John Lewis does a Tesco Homeplus in Brighton

The thing that retailers are beginning to realise is that there may be no need for a shop at all. With so many consumers armed with smartphones, you can give them a retail experience almost anywhere. Tesco Homeplus Korean shop is every media guy’s favourite case study at the moment. And so it should be. (Just in case you’ve been in a cave for the last few months, you can read about it here). Whilst many see it as a clever use of QR codes, that’s not the interesting bit. What Tesco Korea did is to show how brands don’t even need a shop to any more. But that’s Koreans who are very well connected and their subways have super-fast WiFi connections. What about the UK? Well time will only tell, but John Lewis have just launched something similar to Tesco’s Korean offering in Brighton. What they’ve done is take John Lewis into Waitrose without any need for more retail space. Simply scan the code in the window and it adds it to your shopping basket on the John Lewis mobile site. Then you pop by your local Waitrose to pick up your item the next day.

Other retailers are experimenting with extending their retail brand into mobile. Net-A-Porter, very much an online brand, took things in the real world (sort of) with two pop-up shops in New York and London called The Window Shop. Except they weren’t shops. The windows had posters, and when scanned using with an image recognition app, ‘shoppers’ were taken to more content, videos and the buying page. Other fashion retailers are quickly following, with virtual shops being created by the likes of Diesel and Debenhams.

Are these new applications simply just a fad that appeals to media and ad types? It’s hard to know exactly what will catch on at this stage. Net-A-Porter got a decent number of scans and site hits from their Window Shop campaign, but most of all it gave the brand some great PR coverage. Fad or not, one thing is clear. Consumers are already redefining retail through their smartphones. The rise of the smartphone will continue to transform that. Nearly 50% of UK handsets are now smart and it will be 75% by 2014. The question is how will retail brands choose to engage with them?

Mobile Data Theft: why it’s a problem for marketing

Most people would have missed it, but at the end of October the Government’s Justice Committee published a report called Referral Fees and The Theft of Personal Data. It mostly looked at how referral fees for accident claims are fuelling a range of illegal and criminal activities. Many people are aware of spam accident claims texts, which are part of this ‘industry’. Although the spam messages were a smaller part of the report, there could be some important repercussions for the mobile marketing sector.

The report recommended the ending of referral fees, better investigation powers for the Information Commissioner’s Office and harsher penalties, including custodial sentences for data breaches. All of those are good things. Anything that can help clean up the mobile channel for legitimate marketers has to be of benefit. However, it is the age old problem with many regulations – it’s not lack of powers but lack of enforcement that is at issue. The ICO has never prosecuted anyone for sending an unsolicited SMS. There has been plenty of opportunity to do so, but it would appear that lack of evidence or investigation resources has meant that nothing has happened.

Whilst the need to clean up messaging is obvious for brand marketers, there is a less obvious worry about increasing government legislation. History shows that when governments try to legislate for technology they never do a good job. This year’s PECR update to include an opt-in for cookies is a good example. Everyone; brands, consumers and even the regulators are confused as to how it works or how it should be implemented. In these cases, industry self-regulation is always a more effective option.

Although this report isn’t largely concerned with spam, The Justice Committee called for legislation to look beyond just the accident claims sector. Although nothing specific has been suggested yet, you only have to look at recent legislation in India limited messages to 100 per day per person to see how draconian (and ineffective) it can get. Whilst that’s unlikely to happen in the UK, some people have already called for proof of ID when buying PAYG SIM cards. Both of these examples hurt individuals but do very little to combat the spam problem.

SMS spam is not simply a moral issue though. Whilst many brand marketers and ad agencies are thinking up whizzy apps and social media campaigns, spam messaging is damaging the whole channel. As mobile users we consume across all channels and the perception of spam will affect all brand campaigns. Poor legislation may actually make that worse.

In the end, the best solution is the introduction of better consumer spam reporting (as we have in email) and better filtering by the mobile operators.