SoMoLo : The Latest, Greatest Threat to the Store, or Competitive Opportunity?by Dave Bruno, Director of Commerce Studies, RedPrairie
Facebook. Twitter. Smartphone. Foursquare. Gowalla. SCVNGR. Cityville. Instagram. iPad. Shopkick. MyTown. Retail Therapy.
The list of social, mobile, and now local (SoMoLo) apps, gadgets, games and networks that have become part of most consumers’ lifestyles is virtually endless. And all of them affect shopping behaviors. Social networks have become legendary for their ability to influence purchasing decisions. Price-hunting on smartphones is standard operating procedure for most shoppers, and location-based services that provide information based on the geographic positioning of the mobile device are beginning to attract nearby shoppers – often times right out of one store and into another down the block with a more compelling offer. Stores Under Siege
Caught in the middle of these transformative behaviors is the retail store. Our stores truly are under siege. Foot traffic continues to decline and comp store sales continue to stagnate, while digital channels are grabbing larger and larger shares of the consumer’s wallet every year. Forrester estimates that online shopping will own a full 15 percent share of all retail sales excluding grocery by 2015. A few categories such as books, music and video have been virtually wiped from stores shelves, while the online share of other categories, including electronics, toys, and baby products is pushing 25 percent of total sales.
In addition to fewer customers and fewer categories, our ability to provide informed and helpful service to the shoppers who do visit stores have also diminished dramatically. In Motorola’s 2010 Holiday Shopper Survey, 55 percent of retail associates expressed frustration because in-store shoppers typically have better product information than they do. Shoppers are frustrated as well – almost half (47 percent) of consumers surveyed by RIS News indicated that poor associate knowledge was their most disliked experience when shopping in store. The cumulative effect on sales and store walk-outs is nothing short of frightening. The same Motorola Shopper Survey estimates that as many as 28 percent of all store visits now end up with shoppers walking out on $132 of potential purchases because of deal-habituated behavior, uninformed sales associates, out of stocks, and long checkout lines. The biggest culprit behind these walkouts? The Smartphone, of course. Almost 40 percent of all walkouts are influenced by information shoppers gather (or are presented with) on their phones. When was the Last Time You Optimized for t-Commerce?
The future of the store doesn’t look much brighter, either, as channels and devices that just a few months ago we labeled as “emerging” are quickly gaining traction. Already, 68 percent of approximately 20 million iPad owners say they have made purchases on their shiny new tablets, and iPad owners purchase 50 percent more than traditional web users. (Internet Retailer) Smartphone shopping continues to grow at a rapid pace, with analysts now estimating mobile commerce to be a $30B business in a little more than three years. (Barclay’s Capital) Shopping – and transacting – on social networks is expected to see 93 percent compounded annual growth rate (CAGR) in the coming years, and the less trendy, but still significant, business of social gaming is already a billion-dollar business. (Booz & Co.) Daily deal sites, despite their recent fade from glory in the eyes of investors, aren’t going away either, with most experts predicting that close to $4 billion dollars a year will be spent on daily deal offers by 2015. (BIA/Kelsey)
The evidence is clear: the time is now for retailers of all sizes in all categories to embrace the SoMoLo shopper and the tools of their trade. For those that do, I see a landscape filled with opportunities, rather than threats. The retail landscape is dotted with numerous forward-looking retailers who have found creative and compelling ways to harness the potential of social, mobile, and local technologies to drive greater engagement, more store traffic, and more conversions.
To read about successful examples, and the lessons learned from these early adopters, view my latest presentation, available now on CommerceInMotion.com
– a digital resource established by RedPrairie to deliver thought-provoking and actionable content and commentary to supply chain and retail executives as they strive to achieve competitive advantage in an era of relentless globalization and ever-changing consumer demands.
Posted by RedPrairieBlogs on 10/24/2011 2:37:34 PM