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11/08/2016

S.O.S.: The Mobile App as a Lifeline for Brick-and-Mortar Retailers

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Consumers gravitate towards convenience for the things that they have to do anyway. They want to get to their intended action with the least amount of unnecessary effort. They’ll even change their behavior to do so. Think of mobile deposits: many consumers have made the switch to using their bank’s mobile app to deposit checks, finding it far more convenient than driving to their local branch or ATM.



Tack additional value onto that convenience and consumers change their behavior and adopt new technology solutions that much faster. Uber is a case in-point: Consumers have embraced the ride service because it makes their life easier, enabling them to get from door-to-door cost effectively, without the hassle of dealing with cash, credit cards or receipts. Payment just happens in the background, and receipts are delivered digitally. While neither check-cashing nor hailing a ride are anything new, banks and ride-sharing providers have managed to change consumer behavior in a short period of time and disrupt industries by altering the way consumers’ access their essential services.



Amazon has similarly disrupted the retail space by bringing a streamlined, personalized shopping experience to consumers’ fingertips. Using the Amazon app, Shoppers not only purchase products with one-click from Amazon at a competitive price, but are able to make an informed decision before buying by looking at reviews, product information, relevant product suggestions and customized price discounts. The rise of Amazon has led to the erosion of brick-and-mortar retailers’ revenues and customer-base, a situation that won’t improve until physical retailers offer similar convenience and value.



Many physical retailers are looking to e-commerce for a boost in business and profits. Macy’s announced it will close 100 stores to increase its focus on Internet retail, while Walmart paid $3 billion for Jet.com recently and has scaled back physical store openings. Such initiatives are important and needed, but – the fact is – close to 90% of commerce still happens at physical stores, and retailers cannot afford to ignore their offline business.



Redefining Physical Retail

Physical retail looks a whole lot different than it did ten, or even five years ago. The ubiquity of smartphones has changed shopper behavior, and 90% of consumers now use their smartphone when shopping in-store.



This has led to an alarming trend for retailers – the rise in “showrooming,” wherein the consumer buys from Amazon while standing in a retailer’s physical store. Since Typically, shoppers use the app to scan a product UPC code, which automatically takes them to a product-specific page within the Amazon app to review and buy the item with a single click. A recent survey revealed 10% of purchases made by 831 Amazon shoppers were completed using the Amazon app inside a brick-and-mortar store. This is a major problem for physical retailers, whose conversion rates already sit typically at 2-to-4 out of every 10 shoppers who visit retail locations.



Driving the Mobile App Experience

The above statistics will only get worse if retailers don’t deliver their own -branded app that provides better utility to their shoppers than Amazon. Using this retailer app, a repeat customer should enjoy a personalized and contextual shopping experience, where he receives the most relevant information, offers, and recommendations based on the type of products he is looking for, what type of environments he currently is in, personal preferences and his past buying experience with the retailer.



The shopper should not be fumbling with paper clips, text messages, or emails at the time of purchases to track down the offers he received from a retailer, nor be forced to go to an online site to redeem loyalty points. All of this should happen digitally as part of the retailer mobile app pay experience at the time of checkout, resulting in more business and long-term loyalty for retailers from their customers.



Starbucks offers a great example of a retailer mobile app that is an extremely effective customer relationship tool, especially for repeat customers. The Starbucks app enables customers to not only pay with the app and earn loyalty points for free coffee using Starbucks’ store card, they can pre-order from the app to avoid standing in long lines. By providing convenience and value, Starbucks has lowered payment-processing fees through increased usage of its store card, reduced operational costs due to shorter wait times, and garnered more loyal customers through the delivery of a great experience.



A good retailer mobile app enables merchants to learn the profile and behavior of repeat customers, giving retailers the ability to serve those customers more effectively: The retailer’s app can make the shopper’s trip to a physical store more fun and engaging, with a personalized shopping experience, and the gratification of instant savings through easy redemption of loyalty points, rewards and offers at the time of checkout. By purposefully building an ongoing relationship with customers, retailers drive more frequent visits to stores, increased sales per visit, and improved participation in their loyalty, rewards and offer programs.



Not to mention, retailers improve their bottom line by using their mobile app to drive usage of their preferred payment option, especially by their repeat customers. By steering shoppers toward private label or co-branded payment options, brick-and-mortar retailers reduce transaction fees and drive higher credit card revenue-share from their credit card partner.



Level the Playing Field

For retailers to grow their in-store business, they need to cause disruption by delivering convenience and stronger multiple values via their branded mobile app. They need to be highly attuned to their customer needs and wants, and serve them accordingly – helping shoppers see how the retailer’s price compares to others, providing price-matching, revealing what other buyers have said about a product, showing which colors and sizes are available, and recommending which complementary products they might be interested in. At checkout, retailers need to deliver the “Uber” payment experience integrated with seamless redemption of loyalty, rewards and offers.



To retain loyalty, retailers cannot let their consumer experience be driven and dominated by third party apps. Retailers need to recognize that their branded app is one of their most important strategic and dynamic tools to cause disruption in their own retail business, not only for physical stores but also for online, in-app and other channels.



By delivering consumers compelling utilities in retail-branded mobile apps, merchants are able to control the shopping experience and know their customer behaviors and preferences deeply enough to serve shoppers better and drive sales growth and profitability – ultimately making their mobile app a major savior in competing against a retail industry disruptor, like Amazon.






Mohammad Khan is co-founder and president of OmnyPay, a secure, “retailer pay” white label digital commerce platform that encourages consumers to use their mobile phone for all aspects of their buying journey.