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Can mobile reinvigorate traditional department stores?

By
May 30, 2013

Sears’ efforts to leverage mobile technology to reach today’s connected shoppers are falling short so far, with the retailer recently reporting a significant quarterly loss and declining sales.

Mobile is playing a growing role in how customers are engaging with brands, so it is no surprise that department stores are looking for ways to leverage the technology. However, the results have been mixed with some retailers finding mobile success and others not.

“Mobile is not a magic bullet for reviving the department store model, which is really a century old approach to retailing,” said Kevin Mellyn, senior vice president of strategy for North America at MPayMe, New York. “It is simply another form of interaction with their customers who need a compelling reason to buy.

“The key advantage of mobile is that with the right technology merchants can dynamically try out offers and discounts to consumers that ‘check in’ to their physical and online stores,” he said.

“Equally, mobile can trigger immediate opportunities for consumers to buy from print and online media of all types, taking the department store to the customer whenever and however they encounter it.”

Connected customers
In general, it has been a tough few years for department stores, who are facing declining foot traffic and increased competition from online and specialty retailers.

Edward Lampert, CEO of Sears – who took over the reins at the retailer in February – has been leading an effort to make the brand relevant to today’s connected shoppers as he looks to drive sales.

For example, the retailer has equipped store associates with iPads to enhance interactions with in-store customers and introduced a new app feature called Store Assist that lets users send a message to store associates.

However, these moves do not appear to be having the impact that may have been hoped for. Sears recently reported a loss of $279 million while same-store sales fell 3.6 percent and overall sales fell 9 percent during its most recent quarter.

JCPenney made a big push into mobile last year and saw those efforts fall flat, in part because at the same time it tried a new pricing strategy that drove away a lot of customers and saw its CEO Ron Johnson pushed out when sales dropped (see story).

What shoppers want
While mobile is important to shoppers, it needs to be part of an overall strategy that is relevant and meaningful to a targeted audience. Mobile alone will not cure all that ails a merchant with poor sales.

Part of Sears’ problem is that it does not have a strong ecommerce presence, with online sales reportedly accounting for only 2 percent of overall revenue.

Additionally, while leveraging mobile to enhance the in-store experience is a smart move, customers need to be excited about the merchandise inside the store for this strategy work. However, Sears has consistently reported declining same-store sales.

“Department stores have to figure out what their customers want,” said Paula Rosenblum, managing partner at Retail Systems and Research, Miami, FL.

“They must insure their assortment is appropriately curated for their target customer, prices are in line with expectation, and store look and feel is in line with their core competency,” she said.

“Once you know who you are, you must insure that message is consistent across all channels and for all stakeholders – employees, customers and managers.”

Getting it right
Mobile can be used to drive some excitement in stores if used correctly. However, Sears’ strategy to outfit store associates with iPads may have scared customers more than thrilled them.

Store associates were equipped with a black harness that has several straps attaching an iPad to the employee’s chest and attaching the harness around the employee’s body. The store associate can flip the iPad up or flip it down so they can type on it.

“Talk about taking a cool technology and making it look decidedly uncool,” said Nikki Baird, Denver-based managing partner at RSR Research.

“It looked more like they were preparing to climb a building than help a customer,” she said.

Some department stores are finding success with their mobile strategies.

Nordstrom is consistently named as an example of a department store that has leveraged mobile in a way that makes sense for its audience. The retailer recently updated its iPhone app with product sharing via SMS and user reviews.

Macy’s also has a strong reputation in mobile, using a combination of apps, augmented reality, QR codes, SMS and the mobile Web to enhance customer engagements.

“So far, it appears Nordstrom is doing a decent job,” RSR Research’s Ms. Rosenblum said.

“Macy’s is also quietly implementing customer-facing Wi-Fi in many of its stores,” she said.

“I’ve got to give Mr. Lundgren his props.  He has definitely been reinventing the chain to be more millennial oriented.”

A cohesive approach
Going forward, it is likely that department stores will continue to look for ways to incorporate mobile into their strategies.

This could include mobile POS, personalized promotions delivered to customers’ devices and the ability to send mobile alerts from fitting rooms to store associates.

“In such a big space, bringing the shopper and store associate together is an important job, and mobile is a key way to make that happen,” Ms. Rosenblum said.

“Mobile can also bridge the geographic gap between like products from different designers,” she said. “So maybe, just maybe, if I’m a shopper looking for a black turtleneck, a mobile app can deliver answers about where I might find them – in Hilfiger, the generic ‘womens department,’ Lauren, etc.

“It can bring the fundamentally fragmented store design into some form of cohesion.”

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

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