Walmart has acquired mobile app developer Small Society in a move that signals both the growing importance of mobile applications in the retail space and retailers’ desire to control as much of the mobile experience as possible.

Small Society will become part of the @WalmartLabs group, which is focused on creating mobile and social solutions that support a multichannel retail strategy. The move will enable Walmart to create better mobile experiences for customers and more effectively mine mobile data to better understand what consumers are responding to in mobile.

“We believe that mobile can have an impact on every part of the shopping experience for Walmart customers, whether at retail stores or online,” said Paul Cousineau, vice president of mobile products for Walmart, Bentonville, AR.

“Today, we have more than 200 million visits a week to Walmart stores,” he said. “We see a strong overlap between Walmart customers and smartphone owners. 

“Our goal is to make the shopping process easier for our customers ranging from planning a visit to a store and navigating the store shelves, to finding more about a product on a shelf and to ultimately using your phone to pay for a product.  Given this transformative power, apps are of central importance to our strategy of continually finding ways to bring everyday low prices to customers.”

App consolidation
Small Society has delivered apps for brands such as Starbucks, Zipcar and the Democratic National Committee.

The news follows closely on the heels of the announcement that Deloitte has acquired app developer Ubermind. Together, these two pieces of news underline the strong growth in mobile apps and their attractiveness both to consumers as well as companies interested in the mobile space.

As a result, there may be further consolidation in the app space this year.

“I think it is definitely a possibility that you will see some consolidation in the app space this year,” said John Devlin, London-based group director of AutoID and Smart Cards at ABI Research.

“There will be some consolidation and there will be a little bit of a land grab as well as not just retailers look to take this in-house and other companies integrate apps development into a more viable business as part of a wider offering to retailers and business systems,” he said.

While not every major retailer is likely to have an in-house app development team, the deal points to the importance that Walmart puts on having control over the mobile experience for its customers as opposed to sharing customers with third-party apps, which have proliferated in the past year.

“This is a demonstration that Walmart is certainly serious about mobile,” Mr. Devlin said. “This is their fourth acquisition in the last year or so in this area.

“This ties in closely with what we have been seeing in the past year, that the major retailers have now recognized mobile is a viable channel,” he said.

“This shows that the retailer wishes to have that direct link to customers and manage that side of the service themselves. They won’t have to offer one generic solution – it can be personalized to the region or a customer.”

Walmart will also be able to better mine, filter and manage data from mobile apps so it can gain a better understanding of what customers are responding to in mobile.

Enhanced customer engagement
The acquisition is timely given the significant uptick in consumer shopping that took place via mobile over the recent holiday period.

“I think Walmart is doing something similar to the eBay approach and piecing together the elements that a major retailer will need to meet the demands of the mobile consumer,” said Stephen Burke, vice president of the mobile practice at Resource Interactive, Columbus, OH.

Over the past year, customers have shown that they will use retailer apps. Going forward, retailers such as Walmart are likely going to be looking for ways to enhance customer engagement via apps.

“In phase two, you are going to see deeper levels of engagement and new functionality around coupons, engagement and store value as a way of making the app experience something that consumers want to come back to repeatedly,” Mr. Burke said. “Figuring out ways to maintain engagement beyond the deal of the day is something that we are looking at closely.”

The Small Society team is integrating into Walmart’s existing mobile development team in Silicon Valley that has produced apps for the iPhone, iPad, and Android.

Walmart released major updates to these apps just in time for the holidays which included a smart shopping list for the iPhone and a brand new app for Walmart.com on the iPad.

“Small Society brings tremendous depth of experience in the mobile apps space with expertise and experience working on iOS apps since the beginning of that ecosystem,” Mr. Cousineau said. “They have completed work for major brands like Starbucks, Zipcar, and Live Nation.

“We expect Small Society to have an immediate impact on our iOS portfolio, with new app updates being released over the coming months,” he said.

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