By Bryan Kirschner, Director, Apigee
The relentless rise of people shopping online, using mobile devices in particular, has left many retailers struggling to keep up. This is compounded by customers’ expectations growing too. Flawless performance, extensive functionality and top-notch security are being established as standards by leading shopping apps and websites. Those retailers that do move at the speed of their shoppers, however, may reap rewards from appreciative customers who are set to spend large using their tablets and smartphones this January.
That’s according to the latest Digital Impact Survey* from the Apigee Institute, which shows how mobile apps are changing consumer behaviour, how this behaviour is changing over time, and what these changes mean for enterprises, especially in the retail sector.
The study shows that almost a third of UK consumers (30%) plan to increase the amount that they spend online next year, while a fifth (19%) expect to spend more via apps specifically. This finding is consistent with the latest IMRG Capgemini Quarterly Benchmarking Report (Dec 2014), which reveals that more than a third (37%) of UK online sales come through smartphones and tablet devices – a whopping 4,000% increase over four years.
However, another key finding of the research paints a stark picture for retailers who have yet to answer the call to offer truly useful and engaging apps. Retailers lag far behind banks, social and search apps and even workplace apps on satisfaction. For example, just over half of UK smartphone users (58%) say that they are satisfied with retail apps, compared to more than four in five (82%) who are satisfied with banking apps.
There are potentially major opportunities for retailers who get their apps right. Almost two in three UK consumers (62%) say that smart mobile devices have changed the way that they shop somewhat or completely, while more than four in five (85%) say how they shop has changed at least a little. One in seven (13%) have started shopping at a new store because it has a good app. And UK smartphone owners project that they will spend £3.75 billion via smartphones over the winter holiday season. These findings suggest smartphones and tablets are increasingly important shopping tools for respondents, just as mobile websites and apps are becoming ever more important for retail stores.
We believe that the path forward for retailers is to prioritise useful, engaging, forward-looking apps and ensure continuous improvement of these apps to meet market demands. To compete and win in this new market context, every retailer needs to master a great mobile user experience and deliver apps as planned. The best-laid plans for apps will come to nothing without solid execution. But delivering apps on time, on budget, and with the intended impact is a challenge for many enterprises.
Morrisons’ new loyalty site and mobile app is a great example of best practice in mobile retail. The leading UK food retailer’s Match & More programme is the first of its kind to provide a price match guarantee against Aldi, Lidl, Tesco, Sainsbury’s and Asda. If a comparable grocery shop is cheaper at any of these supermarkets, Match & More users will automatically get the difference back in points on their card. The Match & More mobile app also provides users with a live stream of personalised offers based on their interests, offers available in their local store, personal shopping lists and a live account balance. The corresponding Match & More card has now been rolled out across the country in all Morrison’s stores.
As mentioned above, we see success for retailers nowadays as about moving at the speed of shoppers. That means staying up to date with new developments that can enhance their customers’ online experience. The companies that will be most prepared to meet their customers’ digital demands in the near future are those that focus on delivering high quality engaging apps enhanced by data analytics to understand the user.
This brings us to the advent of adaptive apps: a prime example of a new technology that retailers need to start paying attention to. Almost half of respondents (49%) in the Apigee Institute’s study say that they are more excited by apps that learn from their behavior – i.e. adaptive apps – than standard apps.
These apps employ predictive analytics to leverage customer data to individualise the user experience and predict the best possible offer. In other words, they could recommend a product based on purchase frequency (recommending toothpaste two months after a purchase of a single tube of toothpaste, for example), style preferences (showing designs from a designer the customer has previously preferred), demographic information (basing recommendations on age, gender, and geographic data), previous research (notifying users of sales on products he or she previously browsed), or some combination of those factors. Currently, we see apps and products such as Google Now, Nest, and Square Order as setting the curve for all app producers in this area.
It’s a tall order to keep up with rapidly changing customer demands and expectations, but the Apigee Institute’s research emphasises that retailers have to do this now if they haven’t already. If you are retailer without a compelling mobile app, the evidence is strong that you are leaving cash on the table. If you are a retailer that met the bar for customer expectations in 2013, note that the bar has risen to encompass use of adaptive apps, among other things. The leaders in the sector are already seizing the opportunity. “Wait and see” is no longer an option. The opportunities, however, are expansive.
*The Apigee Institute report - Run, Don’t Walk: Chasing Customer Expectations in Retail - involved 1,000 smartphone-owning adults in the UK and US. It was created in collaboration with Stanford University’s Mobile Innovation Group (MIG).