It’s not just mobile devices that are increasingly “smart” – they’ve earned their sobriquet by greatly boosting their owners’ intelligence as well. Consider how they’ve broken the bar code, that series of thick and thin vertical lines attached to a product that contains price information and helps vendors track inventory. Now your clever little hand held friend can scan it and track down the best price, wherever it may be. You may only need you to type or speak the name (or even just description) of your object of desire. And shazaam: the best deals, online and in stores.
Retailers have grown afraid of these ruthless new competitors residing in the pockets of their erstwhile customers. But not nearly enough.
Almost half (45 percent) of shoppers with smartphones use them to do on-the-spot price checks, according to consulting firm IDC Retail Insights, putting huge pressure on retailers to compete on price – on everything, all the time.
The big box has become a big sponge, letting all sorts of precious, valuable information in and out. “The four walls of the store have become porous,” Greg Girard of IDC told The Wall Street Journal. “The retailer’s advantage has been eroded.” [WSJ, 12/16/10]
That leaves the salesman with less and less to do. Almost three quarters (73 percent) of shoppers with smartphones preferred to consult their mobiles rather than an appliance jockey on the floor, according to a 10-nation study in 2010 conducted by the big management consultancy Accenture.
The casualties are already mounting. Best Buy, the nation’s largest electronics chain, saw its stock plunge before Christmas 2010 (typically its most lucrative period) after it conceded it was losing market share, which analysts said was due at least in part to mobile-equipped bargain shoppers.
On the day retailers traditionally go “into the black” for the year (dubbed “Black Friday,” the day after Thanksgiving), 5.6 percent of shoppers used a mobile device to access retail sites in 2010 – a 56-fold increase in one year, according to Coremetrics, an IBM division that measures e-commerce activity. [WSJ, 12/16/10] Soon enough it will be the percentage of those not shopping with their mobiles that will be in the single digits.
There are ways for retailers to suck it up and make lemonade from the new reality. Beleaguered Best Buy, for instance, has partnered with TheFind (which was downloaded 400,000 in its debut month) to target consumers with ads while they’re in the store – or at a competitor’s like WalMart. “That is an opportunity to steal a sale right when someone is in the throes of making a decision,” Barry Judge, Best Buy’s chief marketing officer, told The Wall Street Journal. “That is what makes mobile so powerful.” And shameless.
Siva Kumar, chief executive of TheFind, is unapologetic of playing both sides of the transaction. “It is not a consumer-only game,” he told the Journal. “Retailers can use it to their advantage.”
Nobody said war was pretty, but competing strictly on price is a losing battle, especially with the high upkeep of physical stores. More promising survival tactics would include:
- Selling merchandise that customers can’t get anywhere else
- Bundling special services with products
- Removing or encrypting bar codes to stymie deal-seeking mobile customers
No matter how retailers adjust to the mobile age, it seems clear there will be less need for so many or such large retail showrooms, especially those selling commoditized merchandise or stuff readily available on the web. You have to wonder what’s going to happen to the commercial real estate market when this realization really sinks in.
