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Are retail apps losing relevancy as the mobile Web gains?

November 19, 2013

Walmart's mobile app

While many retailers have a mobile application at this point, few provide enough value to keep shoppers coming back. Some retailers are integrating apps with their loyalty programs to enhance relevancy, others are shifting focus to the mobile Web.

Starbucks and Walgreens are two retailers that have discovered the power of apps to drive customer engagement and provide a competitive differentiator. Apple’s recent introduction of iBeacon suggests that the next big step forward for mobile apps could be in-store.

The jury is still out on the suitability of mobile apps for retailers,” said Jason Goldberg, Chicago-based vice president of strategy, commerce and content at Razorfish. “Retailers are learning that mobile apps require a significant investment in new updates to hold the interest of their user base, and many retailers are finding that they can serve their mobile customers with a mobile-optimized Web site and skip the app entirely.

“So, a mobile-optimized Web experience is becoming table stakes, while mobile apps are really only for a subset of retailers that have a unique need that can’t be met with the mobile Web,” he said.

“In general, mobile apps are more about offering unique features that build brand loyalty rather than ecommerce transactions, so at this point the success criteria for mobile apps is usually around impressions and engagements rather than revenue.”

Consistent innovation
Part of the problem with apps for retailers is that many have not invested much in their apps after the initial launch. As a result, users often end up rarely returning to an app and eventually deleting it.

However, this is starting to change, with retailers increasingly recognizing that they need to consistently innovate their apps to keep users coming back.

One of the biggest areas of innovation right now is in integrating apps with loyalty and frequency programs.

Starbucks’ mobile app

For example, Dunkin’ Donuts recently began rolling out a revamped DD Perks program that will be integrated into its mobile app to deliver targeted offers to loyalty members.

In-store mode
Another area of focus for retail apps is on in-store features such as indoor geo-location and self-service checkout.

For example, Walmart’s app enables users to check in when they arrive inside a store and then helps curate the in-store shopping experience with geo-targeted aisle navigation and offers as well as the ability to scan items and check out.

Target’s app provides in-store navigation help as well as ratings and reviews for shoppers on key products.

However, despite a lot of talk about in-store mode over the past year, there are really still only a few retailers offering it.

This could start to change with the introduction of Apple’s iBeacon, which uses Bluetooth Low Energy to communicate with app users.

“In-store mode proved to be more of a challenge than most people thought,” said Scott Michaels, executive vice president at Atimi Software, Vancouver. “It was basically a bit too early, since iBeacon and the technologies needed to do this properly are really just rolling out now.

“In the past year you saw the experiments and implementations with technologies like Passbook, but the ability to really message the end user at the time they enter the store was still quite weak,” he said. “We expect to see this changing in 2014.”

Driving participation
Retailers are also experimenting with gamification in their mobile apps, integrating mobile payment options and streamlining the checkout process as ways to enhance the app experience.

“In order for shoppers to stay engaged with your app, the retailer must drive participation,” said April Carlisle, senior vice president of global shopper marketing at Leo Burnett/Arc Worldwide, Chicago. 

“Most retailers’ apps are still being viewed as a marketing/merchandising touch point with shoppers, similar to a circular, and they are being managed as such,” she said. “Those retailers that view it as a true extension of their brand experience, like Starbucks does, and invite shoppers to be part of their brand experience even though it still has practical applications such as mobile payment – will be most successful.

“Revenue will likely be sourced from CPG manufacturers looking to highlight their products within the shopping experience, whether’s it’s online or to enable the in-store experience.”

Another example of a retailer who is getting retail apps right is 7-Eleven, per Ms. Carlisle. For example, users who are within a few miles of a 7-Eleven are served a coupon that is good for 20 minutes that is also customized by day part.

Seamless mobile shopping
Despite these opportunities, some retailers are discovering that feature-rich mobile sites are better for generating traffic and discovery than apps, per Razorfish’s Mr. Goldberg. With continued device fragmentation in the mobile space, retailers are finding it is easier to support a mobile Web site than to constantly have to test and upgrade native apps for a variety of devices.

Retailers still face numerous challenges when it comes to delivering on the promise of seamless mobile shopping experiences via their apps.

One persistent challenge is the small screen size of smartphones and shoppers’ need to enter data such as a shipping address, payment information and complex search terms.

“Across the board most retailers have stepped up and created better applications,” Atimi’s Mr. Michaels said. “Certainly there are missteps – CVS’s 3D store interface for example – but overall there have been great strides forward.

“The biggest area of improvement would be the overall polish of the applications and how they tie into the retailer’s campaigns much more tightly,” he said.

“This is an output of mobile becoming more of a core strategy than something they feel they needed to do because the competitor did.”

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York

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