October 1, 2010, 10:00 AM

Top retailers mobilize

Retail chains see mobile as a way to bridge web and store this holiday season, but Internet-only retailers aim to divert that consumer traffic

Lead Photo

A shopper in a Target store is examining a patio table and chairs and decides the set is just the thing to replace her dreary old one. The four chairs are great, but what about a chaise lounge to match? There’s none to be found. Enter mobile commerce. She sees signs promoting the Target.com mobile site and a sales associate suggests she go online on her smartphone to view the complete selection of patio furniture Target carries. Finding the matching chaise she’s looking for, she buys the set in-store and the chaise on her phone. Mission accomplished.

Or perhaps this scenario plays out differently. She is at her dreary old patio table in her backyard and craves a new one. Too comfortable to truck down to her local Target, she pulls out her phone, browses the Target.com mobile site, selects a table and chairs, and completes the purchase. Mission accomplished—an e-commerce experience without a computer.

“Mobile is the connective tissue between channels, it’s the virtual shopping assistant—Target.com wherever you are, or the ability to access content when you’re in a store, this is very powerful,” says Stephen Eastman, president of Target.com, which operates an m-commerce site, and offers a mobile app, text message promotions and mobile coupons. “On the commerce side, we are seeing a significant amount of purchases taking place in mobile, and an even greater amount of traffic growth to access information like ratings and reviews that help guests purchase in stores. This is a huge part of our multichannel strategy.”

Mobile commerce can blend e-commerce and in-store marketing in a unique way. It stands as a channel unto itself, enabling consumers to research, browse and buy via the mobile Internet, and enables retailers to make special offers based on where a consumer is standing.

But it also is a powerful multichannel tool that consumers are using to research products and compare prices in stores, even scan bar codes to retrieve information and offers, however they ultimately choose to buy. It’s mobile’s ability to enable speedy purchases on the go and strategic decision-making in stores that makes m-commerce a force to be reckoned with this holiday season.

“Walking through our flagship store in New York, there’s not a time I don’t see customers interacting with their mobile devices,” says Larry Promisel, vice president of e-commerce at Barneys New York, which operates an m-commerce site built by Demandware Inc. and soon will launch a mobile app and text messaging program. “As a result, we needed to be there and present them with an optimized experience for Barneys.”

The key word is optimized. Of the hundreds of retailers in mobile commerce today, the majority have started with an m-commerce site as opposed to a mobile app. That way a consumer typing in the retailer’s URL on her smartphone will see a site optimized for her phone.

Apps can provide a more immersive experience as they are designed for a specific phone, but they’re also more limited, as an iPhone app only works on iPhones. Half of all mobile phones in use by U.S. consumers at the end of next year will be smartphones, The Nielsen Co. projects, making it increasingly important for retailers to offer appealing apps that can be downloaded to these mini-computers.

People are buying

Sites and apps effectively make up the mobile sales channel. The giants are reporting blockbuster mobile sales—eBay Inc. says it sold $900 million through mobile last year and projects $1.5 billion in 2010; Amazon.com puts its total at $1 billion in the 12 months ending July 2010, though it includes Kindle e-reader sales that were mostly not mobile. However, for most everyone else, mobile sales today are where web sales were around 1997—in their infancy.

While few will reveal details, many retailers say they’re pleased. Eastman says mobile sales are “meaningful enough for us to view this as a legitimate growth channel for Target.” As for mobile traffic, he adds with a note of astonishment, “I haven’t seen anything quite like it.”

Mike Dupuis, vice president of digital strategies at American Eagle Outfitters Inc., also is happy with sales on the apparel retailer’s m-commerce site. “We have been incredibly excited about the adoption of the mobile channel, both in terms of traffic and conversions,” he says. “Our customers are using the mobile site as a way of researching our products, finding out what’s new, and finding out what promotions and deals are out there, but they are also converting, they’re buying.”

Shoppers are buying at Barneys New York, too. “Mobile commerce sales are in the single digits as a percent of all web sales,” Promisel says. “Traffic has been good, in the high single digits when it comes to percent of overall web traffic.”

The ultimate multichannel tool

While merchants expect consumers will buy through mobile sites and apps, most are quick to qualify their expectations, sending a message loud and clear: mobile is the ultimate multichannel tool.

“Mobile is critical for any retailer that has a strong online presence and a strong store presence. Mobile is with our customers at all times and that is the essence of multichannel retailing—to be there and be convenient,” says Tim McCauley, director of mobile commerce at Walgreen Co., which offers a site and an app, both built in conjunction with Usablenet Inc., and text messaging services, operated with 3Cinteractive LLC. “Mobile is really the crossover from the online channel to the store.”

American Eagle Outfitters is making that web-to-store link via a mobile app known as shopkick, which sends shoppers rewards points and special promotions when they walk into a participating store (see story, page 12). “It’s important because it is a program that enables us to encourage customers to have deeper, more interactive experiences in the stores using their mobile devices,” Dupuis says.

A common theme among retailers espousing the cross-channel value of mobile technology is bringing the e-commerce experience into the store.

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