The Rise of the Unstore

How mobile is changing retail to create a new type of store:

The rapid uptake of smartphones has had a significant impact in retail. Many stores are seeking ways to combat ‘show-rooming’, where consumers browse in-store and then buy elsewhere on their mobile. Some, such as Best Buy are simply matching online prices, others such as Macys and Toys-R-Us are creating a more immersive app-based experience to win their customers on the service side.

The other trend has been the re-invention of the store. Take the products away, and instead use posters to display the products. It means that the shops can be pretty much anywhere. Whilst some have described these as ‘virtual stores’, arguably they are not virtual as they clearly exist in the real world. Instead I am calling these ‘unstores’.

The first to appear was Tesco Homeplus in Korea, with their QR-based metro posters. Since then retail brands including PayPal (Singapore), eBay (London), Argos (London), Delhaize (Brussels) and John Lewis (Brighton) have delivered similar offerings. Net-A-Porter’s (London and New York) pop up window used augmented reality rather than QR codes, and Tesco’s F&F pop up store (London) used iPads and QR tags to allow users to order products.

These examples were all short-term, largely PR exercises, however the future looks more permanent. Chinese supermarket retailer, Yihaodain, plans to open 1000 unstores. It makes complete sense in that market. Chinese have no tradition of desk-top retailing, but the rapid uptake of smartphones creates an opportunity to engage the time-poor Chinese worker. This is likely to be just the start. I would expect many brands in Europe and the US to follow suit.

Tesco’s Falling Sales: another example of why shops won’t be shops

ImageThe supermarket’s Xmas sales slump is an indication of the massive changes happening in retail. An article in the Guardian explores the reasons behind Tesco’s poor performance: ‘The age of the fortnightly shop is disappearing as more people turn to mobile devices’. I’d previously blogged about how online and mobile are changing the face of retail. It looks like those changes are coming faster than expected.

Tesco’s problem is that consumers now have the tools to fight the supermarkets dominance. They can no longer have it all their own way. We have a situation where consumers are generally both cash and time poor. Necessity is driving us to find the best bargains. They are found online, but increasingly, they are being found on smartphones whilst shoppers are in the supermarkets. Some shops are beginning to get it. ‘Click to collect’, for example, represented 10.4% of all orders at the end of 2011. Whilst a majority of online orders are home deliveries, not everyone wants that. Click to collect offers an immediate solution without the hassle of queuing in the store. Other attractions such as free WiFi to help shoppers find the best deals and more engaging interactions such as virtual mirrors are also supporting the in-store mobile experience. John Lewis has made a point of going for mobile sales, and encourage customers to make price comparisons on their smartphones.

In the end, we will see more diverse shopping behaviours, driven largely by smartphones. Hopefully the biggest benefit will be the end of that dreaded phrase, ‘unexpected item in the bagging area’.

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 Shopping study shows that consumers want it now …

Will customers scan barcodes? Apparently not.

… but businesses are not ready to deliver it yet.

A new study by the DMA and Empirix on consumer and business attitudes to mobile shopping has identified a significant gap. Consumers are ready for it now, but business aren’t ready. The study surveyed over 3500 consumers and 1500 businesses, many of them customer contact centres.

A couple of interesting figures came out of the report:

Much like the DMA/IAB study last year, this time most consumers want promotional offers from retail brands on their mobile. However, privacy and security were key to this. 79% said they would like promotional offers but only if the brand cannot see their personal data. This is clearly an opportunity for pull-based offers through social location, such as Facebook Deals.

The other bit of interesting data was when consumers were asked about QR codes … 32% new what it was, but had never used one and 39% didn’t know what it was. That’s over 71% of people who weren’t using them. Whilst brands are keen to push QR, it seems that consumers just don’t see the point.

From the business perspective, 75% of companies thought that implementing mobile would be at an additional cost to them. Even more significant, 89% of the companies didn’t have a mobile strategy.

Underlying all of this gap is the difference in perception between consumers and businesses. Brands are still stuck in their traditional silos: Call Centres, Digital, ATL etc and channels; sales, marketing, CRM and customer service. As consumers, we don’t work like that, and expect to communicate with brands from any device about any matter. Many people in the industry talk about the ‘single customer view’ rather than silo-ing. This is an essential step for business to make if they want to be getting the most out of mobile and social media.

A new look for New Look

Another week and another brand gets in on the mobile-retail act. This week it’s high street brand, New Look with their fully transactional mobile site. Designed and developed by MIG, the site was developed for speed and ease of navigation on mobile. In fact it ticks all the boxes on how to build a mobile retail site: one click purchase for registered users (and a fast registration process if you’re not a user), clear simple menus and social media integration to ‘like’ products.  For a clean, simple yet functional site, retailers would not go too far wrong in taking a leaf out of New Look’s book.

You can see the site by pointing your mobile phone to

M&S mobile site sees 1m+ uniques per day

Proof that mobile retail is the next big thing, M&S have announced that their mobile site saw over 1m unique visitors per day in December. Whilst high street retail sales were decimated in the last month of 2010, it looks like those brands with mobile sites were doing very nicely thank you. Sienne Veit, M&S’s head of mobile said: ‘We’re delighted, as this is confirmation that our customers are ready to shop in this way’. Whilst they haven’t released any sales figures the indication is that shoppers are ready to buy through their mobile. Increasingly the mobile site is the one that customers choose to visit at home, using their smartphones in preference to their PCs.

There’s an app for that? I’d rather use the web, thanks.

Whilst brands have been rushing to get their apps (and the iphone variety in particular) into the appstores, a study has found that most mobile shoppers would prefer to use the mobile web. An Orange study (Orange Exposure 2010) has found that 70% of people would prefer it that way. In many ways these figures are unsurprising. So many brand apps could have been done using the mobile web, at less cost and with a far greater reach. Marks and Spencer‘s understand this. They don’t do apps. Apps don’t reach many of their customers (an interesting side note to this is that men are far more interested in downloading apps than women). Instead they came up with a fully transactional site with 26,000 products. And people buy from it. Would they have achieved the same success with an app? Very unlikely. Although the ebay iphone app has been successful, the company has a very broad demographic, and a very good mobile website.

Mobile retail is currently small – around £125m in the UK – but set to grow. Figures from Verdict and Ovum suggest that mobile retail sales in the UK will more than double in the next two yours with 4% of online sales being made by mobile browsers. Given that only around 2% of the UK buy through their mobile at the moment, the potential there waiting to be realised.

You can get more mobile internet stats here.