Groupon says its focus is on the bottom line, rather than top-line growth.
Nikki Baird of Retail Systems Research explains how e-retailers can appeal to in-store shoppers.
I once heard a retail executive say his mantra for customer engagement is that every touch point with a customer is an opportunity for a competitor to steal his customer away. In other words, if you don't own every point of contact, someone else will. Nowhere is this more true than in the store.
For example, if you search for "vacuum cleaner" on Google today, you'll find about 49 million results. Included in those results are brands, prices, ratings, reviews, even inventory availability at store locations nearby. But if you walk into a store, you'll be lucky to find six or eight options that you can select from, assuming they're all in stock. You may get a placard that has the price and a few lines of product descriptions that probably repeat information already printed on the box. You won't find ratings or reviews, guidelines on what to look for in a vacuum cleaner or a guide that can help you determine which vacuum is best for you. And please, don't expect to find a knowledgeable employee to help you.
Store-based retailers understand this is a problem for them. And that's why many are rushing to put mobile technology into their employees' hands so that they will be able to access the information available on the Internet as they engage shoppers.
As far as retail priorities go, the future of the store is among the top three for nearly every store-based retailer that I and my colleagues speak with. But oddly, even with this kind of priority, consumers' use of mobile in stores seems to be a strange blind spot at the executive level of store-based retailers. 40% of retailers in Retail Systems Research LLC's last pricing survey reported that they had not seen any evidence of showrooming activity, such as consumers checking online prices from their smartphones, in their stores.
That blind spot offers a huge opportunity for web retailers to steal away one of the biggest touch points in retail—the store. But it's important to note that this is not a greenfield opportunity. Several shopping comparison apps have already made significant mobile inroads, and many store-based retailers are not sitting idle, either. To win at the shelf, web retailers need to hit a fairly high standard right out of the gate with competitive product research tools and steal-the-sale opportunities.
While most of the brouhaha in retail around mobile has focused on showrooming—the practice of using a retail store to look at an item that a consumer ultimately purchases online—in reality consumers conduct a lot of product research that does not focus on price. Retailers that choose to go after ownership of this contact point should keep in mind that there are strong contenders that many consumers use when researching at the shelf. Whether you choose to go it alone, or employ a strategy that takes advantage of aggregators like ShopSavvy Inc. or eBay Inc.-owned RedLaser, you'll need some basic capabilities:
Search and browse
Bar code scanning is a necessity. It is available across most shopping aggregators, alongside keyword search. Beyond that, apps from Amazon.com Inc. and Google Inc. offer image search, which enables a consumer to run a search using a photograph taken with her smartphone camera. But when it comes to products, that image search leaves a lot to be desired. On a recent store visit, pictures of toasters on the shelf yielded matches to things like blade servers, if the app found anything at all.
But once an item or category is searched, how search results display on a smartphone screen can also differentiate one retailer or aggregator app from another. For example, an app like eBay's Milo (in the process of rebranding to eBay Local) excels in displaying a concentrated amount of relevant information in a very small space. It conveys a lot of information to consumers without making them take extra steps.
Product detail pages are also an opportunity to provide a differentiated experience. In the grocery category, apps like Fooducate and ShopWell do a good job of providing more information than consumers typically get from a product box, including nutritionist-driven health ratings, alerts against a list of allergies or specific requirements like "no more than 6g of sugars." Nearly every app offers some kind of ratings and reviews functionality.
For retailers with web and store operations, a map-based display of store locations where the item in question can be found is a basic requirement for product research. To differentiate here, some kind of guidance on inventory availability would be needed, even if it's as simple as "yes/maybe/no."
Of course, price comparison can't be ignored, especially when that is the place where online retailers tend to have an edge over store-based competitors. But shopping aggregators are learning that consumers aren't using them how you'd expect.
For example, mobile shopping app provider ShopSavvy reports that only 30% of first-item scans lead to the shopper purchasing outside of the store she is standing in. Of that 30%, about half take place at another local store—not online. Where online retailers make the most competitive inroads is on the second item scanned. Half of those won't typically convert in stores, and these have a much higher likelihood of converting online.
When you think about the type of behavior behind this result, it starts to make sense. Retailers understand which items are most important to them competitively and they stay very sharp on those prices. But they try to make up that margin with add-on items that surround that main purchase.
In the vacuum cleaner example, the store-based retailer might competitively price the vacuum cleaner, but lose out when the consumer compares prices on attachments or filters. For online retailers, these add-on sales may be more fertile ground for winning over the store-based shopper.
Steal the sale