Former Agenda LLC co-owner Seth Haber is tasked with turning around the bankrupt web retailer.
(Page 2 of 3)
The deeper interaction also means Moosejaw clerks naturally have more up-sell opportunities because consumers share more information. When a clerk learns a customer is shopping for a sleeping bag for his upcoming kayaking trip, he'll suggest a customer might want a bag designed to keep his stuff dry, and walk him to where those are in the store, for example. "In specialty retailing today, it starts with the staff in so many ways. You need people who know the product they are selling. If you don't, you are in trouble," Comerford says.
The problem with counting on store employees being real experts is retail turnover: a quarter of retail employees left their jobs in 2010, according to the U.S. Bureau of Labor Statistics. And the turnover rate is much higher for the part-time workers who make up a substantial portion of store employees—the turnover rate for part-time store workers was 67% in 2011, says consulting firm Hays Group.
Web retailers aren't waiting
Adding to the pressure on stores is the aggressive way web retailers, particularly Amazon.com Inc., are promoting their own mobile apps that encourage consumers to use stores as showrooms. Amazon.com's mobile app is among the top five free shopping apps available in Apple Inc.'s App Store and Google Inc.'s Play store, which sells apps for Android-powered devices.
Half of the top 10 free shopping apps on Play include bar code scanning capabilities. Amazon built this scanning feature into another mobile app, aptly called Amazon Price Checker, last November, and caused an uproar among store retailers when it promoted the app for a limited time by offering a 5% discount on scanned items' prices. Presumably, consumers scanned items while standing in a retail store. 30% of smartphone owners who have downloaded apps say they've downloaded a shopping app that lets them compare prices or manage shopping lists, according to WSL Strategic Retail's How America Shops survey. Balanced against the entire U.S. population, that equates to 5% of all consumers.
Retail chains are fighting back in a variety of ways. Target Corp. made headlines in January when it sent a letter to its suppliers asking them to develop products only for sale at Target, products that then would not be available on the web. The letter, signed by Target president and CEO Gregg Steinhafel and executive vice president of merchandising Kathee Tesija, read in part: "What we aren't willing to do is let online-only retailers use our brick-and-mortar stores as a showroom for their products and undercut our prices."
But experts say that while selling differentiated products is one way to compensate for in-store comparison shoppers, what retailers really need to do is think long-term about the role their stores will play. "I don't think stores are moving quickly enough to find innovative ways to improve the store experience," says Ali Levy, a senior manager and retail strategist at Kurt Salmon, a management consultancy. "There are tools that stores can use to try and stop the bleeding, but what they need to do is invest in key areas that make sense."
While training store personnel is important, the transient nature of store workers limits its effectiveness, she says. This is where retailers can benefit by incorporating their own mobile resources in stores, such as quick response, or QR, codes on displays or shelf tags that, when scanned by a smartphone customer, link to product information, product reviews or videos on the retailer's own web site.
Kasey Lobaugh, multichannel retail practice leader at Deloitte, says retailers shouldn't think of the mobile web as an enemy, but as a sales enabler. Deloitte's recent analysis of the mobile web's influence found that smartphone shoppers are 14% more likely to convert in stores than consumers who don't use smartphones to help them shop. Store retailers get the first crack at closing the sale because the consumer is in a store making a purchasing decision. "That's where you need the right information and the right functionality," he says.
Deloitte estimates that mobile influences 5.1% of retail store sales today, a percentage it projects will grow to between 17.2% and 20.6% of store sales by 2016. (See chart on page 25 for more).
Rob Veres, general manager of bar code scanning and shopping app RedLaser, which is owned by eBay Inc. and has been downloaded more than 20 million times, believes mobile can drive higher in-store conversions because consumers who check prices on their phones then feel more comfortable making a purchase. "Doing a price check gives them the additional vote of confidence that they are getting a pretty good deal," he says.
Corlett of WSL Strategic Retail agrees, but says that if stores are going to remain relevant to consumers, retailers will have to do more to combat price-driven retailing. "Retailers need to embed reasons why consumers won't walk out because a product is $2 cheaper across the road," she says. For grocers, this might include carrying groceries to shoppers' cars or offering cooking classes; for a store that sells baby products, this could mean installing a car seat in the customer's car rather than letting her walk out with the box.
Mobile and marketing technologies play a role here, too. Retailers like American Eagle Outfitters, Toys 'R' Us and Macy's work with mobile shopping app shopkick, which grants points, or "kicks" in shopkick's nomenclature, when consumers using the app walk into a store, and more kicks as they respond to certain promotions or go to certain places in the store. Accumulated kicks can be redeemed for retailer gift cards or other goodies.
Macy's in July rolled out shopkick to all its 800-plus department stores. "We are continuing to bolster mobile efforts that enhance the shopping experience in our stores while creating an immediate and personal interaction with our customers," says Martine Reardon, Macy's chief marketing officer.