Mall Busting with Wal-Mart, Facebook & Zappos

Samsung strikes a deal with the beleaguered Best Buy to subsidize their rent with a store-in-a-store initiative. Borders exits the mall and last-man-standing Barnes & Noble seems to becoming a living room chachka vendor with more book browsers than book buyers. Zappos Labs runs field research in malls and Facebook launches a commerce strategy (again).

Is a retail dust bowl about to blow through the mall nationally? Or is this a digital tempest in a tea cup?

We know that online commerce is booming but it still accounts for a small slice of America’s mall business. Undeniably, this $200 billion digital business (ComScore) is expanding scope daily.

If there was ever a digital demarcator, it is the soap business. When Unilever and P&G, the markets main consumer package goods companies, begin to sell soap on Amazon, and when Wal-Mart begins to ramp up its online business, leveraging its 4,000 stories and 158 warehouses as an online distribution network, then mall property owners possibly need to rethink their role in bricks and mortar.

Inertia as a strategy

Malls are entertainment destinations. Always have been. We go to the mall for a movie or latte just as we bundled the family into the Buick 60 years ago to go shopping. But if Best Buy and Barnes & Noble leave the mall, what is left to attract the consumer? Hours of gizmo browsing and cook-book thumbing gone.

Browse-verse-buy business has whittled way the margins of many stores making Blockbuster and Gamestop digital road kill. It forced Target Chief Executive Gregg Steinhafel and Kathee Tesija, Target’s executive vice president of merchandising to cry uncle on “showrooming” in a memo to its suppliers in 2012.

However, muscling your supplier’s prices down is a pharic victory. Even with the volume sales of Target and Wal-Mart know that they need to move some of their business into the cloud. During Wal-Mart’s August 2013 earnings call it announced that eCommerce sales rose by 30 percent in two trailing quarters. Neil Ashe, Wal-Mart’s CEO indicated its total online sales could pass $10 billion in fiscal year 2014.  This is only two percent of the stores earning and only 12 percent of Amazon which sales totaled $61 billion in 2012 but it is a marked trend and a harbinger of the exodus of earns from the mall.

What incumbent stores presently have in their favor is inertia.  The cloud and the mall are still not fluidly connected. Although each shopper is armed with a mobile computer which has the capability of scanning, sourcing and saving the consumer in every aisle, there are too many hurdles and friction between the idea of digital buying and the products within arms reach.

The mandate of any red blooded digital retailers is to eliminate this inertia.

No-click Cloud Checkout

Apple’s iTunes, Amazon and Paypal built their business on simplifying checkout: making sure that the act of buying does not get in the way of intent to buy.

One-click checkout or combining stored customer credentials with a simple password is the sole reason that these companies continue to grow their market share. Their UX team would tell you that every informational and graphic design is based on optimizing clicks to checkout. Each click makes a precipitous drop off and abandoned shopping carts litter the web.

But digital checkout demands trust and mindshare. Even online real estate barons such as Facebook have been unable to enter this market.  Although “Social” and “commerce” seems natural allies, Facebook has not been able to delivered on its promise to leverage its millions of customers to shop cross-channel.  The company launched Facebook Credits in 2009 and phased them out last year. “F-commerce” experiments abound. Remember Facebook + Amazon + P&G partnering in 2010 to change the world. Unilever followed suit launching a storefront on Facebook for its Dove brand. Retailers including JCPenney and Gamestop have attempted to monetize their Facebook community by opening stores inside the Facebook network. After underwhelming results they shut their virtual doors.

Apple and Amazon have proven that community plus one-click checkout works. These digital wallet holders started their business explicitly to sell stuff. And they are poised to remove the inertia from online shopping and with it the last refuge of the mall owner. Online shopping provides advantages with an endless aisle allowing for access to more sizes and categories. According to Nielson the average basket size is much larger for consumer package goods ($80 online to $30 offline) and beauty purchase ($30 online to $10 offline).

The question is that when the households put soap and diapers on their shopping list will they log into Amazon to buy Dove Body Wash 24 Ounce Bottles (Pack of 4) and Pampers Sensitive Wipes 7x Box?

Baked Beans & Apple Pie

The last refuge of the American mall maybe a can of baked beans and fresh produce. If the household shopper wants to grabs a can for dinner tonight or smell the oranges and squeeze the melons before buying, then off to the store they will go. Grocery stores are big box convenience stores.

However, should mall owners that are grocery-anchored feel safe? Their clientele should come from a weekly shopping list.

Well, hold your Kraft peanut butter!

The traditional grocery retailers are faced with increased competition. In March, Wal-Mart opened grocery concept stores about a tenth of the size of their supercenters. With big box and online retailers entering the grocery space, specialty grocers capturing the “foodie culture” consumer and brands creating direct relationship with the consumer, perhaps this is not a safe bet for mall owners.

Google Wallet, ISIS and other phone wallets promise to make in-store shopping more digitally fluid, but what is the digital wallet never makes it to the mall.  Online grocery shopping has grown five fold over the past eight years to $25 billion. Tablets devices have made shopping more leisurely and couch commerce has accelerated.  With CPGs moving their diaper and detergent business into the mainstream online stores like Amazon, the inertia may soon come from the home.

Poaching People

Since Tesco opened their virtual grocery store on the subway in Seoul, Korea two years ago, scan and shop on-the-go signage has become more common. While it is still a media gimmick, it has the potential of becoming a way of luring the shopper online. In every mall or transit hub America at least one brand has attempted to use the in-mall media to engage with the shopper and move them into their cloud store.

In CNET interviews with Zappos Labs’ (an Amazon-owned online retailer) the Director, Will Young, confesses that his team sits around malls stalking shoppers. Their goal is to emulate these shoppers’ behavior online. Young is asking “How can you make the digital experience feel like the in-store experience?”

Whether they succeed or not, there is no question that malls need to re-evaluate their passive media deals. When a brand buys signage on an ad impression basis but uses this media to poach customers then this signage perhaps should not be sold as an impression but as a “mini-storefront”.

Mall owners nationally are holding strategy sessions to evaluate how technology is affecting their business. These stakeholders need to re-evaluate their real estate assets and start to see media as leasable square footage.

Part Two: Mapping the Mall (to be continued)

MultiScreen not Omniscreens or Second-Screen

I strongly believe that the space between the screens that allows the brand to connect their consumer experience is critical. I call this “digital Velcro”.  Connecting your consumer screens seamlessly throughout their day is one of the most important challenges we face.

Additionally, one media experience plus other media screen experience equals a multiple of value to the brand: “1+1=3”  This is not a second screen debate. It is a consumer journey challenge that impacts all brands and retailers in their media buying and engaging. That is why we focus on the MultiScreen not the Omniscreens or Second-Screen discussion.

Next week on Tuesday and Wednesday in NYC I will be hosting the MultiScreen Summit. We incubated this event concept in Los Angeles, last year and have expanded the MultiScreen Summit to include Abu Dhabi and Berlin (which will be held in October). Our goal is to establish a global platform to address the growing needs of business to create a seamless digital experiences across their customers, fans, audiences, shoppers . . . screens.

So who owns this? CIO, CMO and CDO? CIO needs to get together with the CMO and the Chief Digital Officer (CDO) needs to become the Chief Disruptive Office (CDO) making backend process screens work with marketing engagement on the consumer screens.

Data has always been important. In a connect device world with location and behavioral
MultiScreen economy and media strategy will become the most important element tying a brands strategy in place.

The question is: How can buyers think horizontally across their consumer screens and add value to their vertical investments? We need to buy media both vertically and horizontally. Small screen buys need to have native mobile strategy attached that go beyond CPMs and drive mobile conversion goal into the cloud and into the, this consumer journey is more complex than we had assumed. We now know that we need to work harder to drive real shopper insights and shopper marketing goals. Data tools we can use now include location, screen insights and digital relationship building.

As the MultiScreen Summit Chair, I am so grateful to have such an remarkable group of media thought leaders onstage next week at the MultiScreen Summit, June 11th and 12th.

Why Apple’s New Patents are Commerce Game Changers?

This week Apple added a new patent (US 8,321,294) to its war chest.  The EasyPay patent is worth a closer look. The commerce patent allows mobile shoppers to activate and buy items from physical stores via the Internet connection on their device.

While this seems pretty clear and reflects Apple’s EasyPay trials:  it is far more profound. Combined with Apple’s earlier patent (US 8,290,513) in October using magnetic fields (as a substitute to NFC) this is clearly is Apple’s showrooming and mobile commerce positioning statement.

Why are these two patents so interesting? One, while the EasyPay trail used QR codes, the new patent definition of shopper is far broader:

“Techniques for improved interaction between online retailers and traditional brick-and-mortar retailers that provide patron-accessible networks are disclosed. The location and/or the fact that any given purchase was made from a particular retailer’s patron-accessible network can be tracked for a variety of purposes. The invention can facilitate partnering between online retailers (i.e. online stores) and traditional ‘brick-and-mortar’ business establishments. As an example, the invention can be used to track and give credit for online purchases at an online retailer that are facilitated by a brick-and-mortar retailer.”

Now combine the two patents. The earlier Apple patent in October was for a Method and Apparatus for Triggering Network Device Discovery. This was Apple way of side stepping NFC and using the phones’ compass output patterns (magnetic field signatures).

EasyPay can be expanded to leverage any network device discovery.  This allows any store shelf or walk-by media to be activated via a magnetic field tap and jump into an EasyPay checkout process. Path-to-purchase becomes “PURCHASE”.

Floor finder. Google Maps Malls! More Big Data!

Big news: Google maps goes indoors: Macys, Home Depots, IKEA. Now pick your floor, your aisle and map.

(Here is me safely found at the Macy’s Clinique counter on the first floor.)

Indoor mapping has always been key to better understanding shopping behavior and marketing in a more targeted, intelligent manner.

Google has partnered with retailers, airport authorities in the United States and Japan. Share floor plans. And I would guess share valuable consumer data!

Sorry Android only. A setback for Apple maps and their data domination.


Starbucks & M-Payment: Selling an addictive substance on every street corner in America

Starbucks card transactions accounting for more than 25 percent of sales in U.S. stores. $3 billion has been loaded on to Starbucks cards this year. The my Starbucks rewards loyalty program has more than 10 million members, half of whom have opted in to receiving communications from Starbucks. Starbucks recently enhanced its loyalty program in the U.S. and Canada to make rewards fully digital and to make it easier for customers to earn free rewards.

With investment in Square and other mobile innovation, is Starbucks a poster child for other stores to emulate?

I will contend that selling an addictive substance on every street corner in America is probable more of a factor in their mobile success than their technology innovation.

Another factor for their success is their openness to a simple frictionless payment process. Starbucks mobile POS manages prepaid ‘micro’ transactions and thus has the luxury of making checkout painless without much concern for fraud on their system.

Starbucks’ app is a success but other apps in the retail market have languished. The Starbucks app is simple and effective but it success lies in the mass reach.

While MCX and other payment solutions seem to be getting traction with retailers, Starbucks basic 2D scanning system works because of the sheer volume. As NFC-enabled phones are adopted by consumers this year and next, it is possible NFC-based mobile payments will appeal to more companies, possibly even Starbucks. NFC tap and go will inevitably be embraced by Starbucks as NFC is ideal for high traffic, low-value transactions.

Transit and Starbucks are model anchor tenants for contactless adoption.

As Starbucks advocates: pay faster, sip slower.”

Mobile, Dating & George Costanza in 100-degree NYC

Gary Schwartz, author of The Impulse Economy and the upcoming book: FAST SHOPPER . SLOW STORE, braved the 100-degree New York weather to speak about the origins and future of impulse purchases and how mobile feeds into it.

The crowd – who found out about the Direct Marketing Association (DMA) FlashCon through Twitter and Facebook – were entertained and educated by tales of dating, gumball machines, and George Costanza! Here is some of the street fair: The full versions of both this FlashCon and Gary’s interview back at DMA HQ with Paul McDonnough are now available on the DMA’s YouTube channel.

Smartphones let retailers target deals to shoppers (CNN)

Los Angeles (CNN) — Your smartphone might help retailers to be smarter about your purchasing habits and even let them send you targeted discounts while you shop.

Mobile marketing is an essential tool for the retailer in the next two years, said Gary Schwartz, the CEO of Impact Mobile, a mobile-tech firm. He said nearly half of all cell phones in use today are smartphones, the kind necessary for mobile marketing. In two years, that figure will jump to 70%, he said.

You can register with a retailer and sign up for alerts, text messages or other notifications about special offers and sales. The retailer then can keep tabs on your shopping and spending habits and lure you into their stores.

Schwartz said it’s quite possible that smartphones will help boost sales and in doing so, help lift the economy.

“If they’re used in a smart way, it will absolutely drive sales,” he said.


Dealing with Mobile Consumer Trust on April 24th

We are all excited about the potential for mobile wallets in the store and the cloud. The consumer can click permission for mobile services to track their location and scrape their social graph. These services allow for shopping and social convenience.  They allow for seamless, frictionless, realtime interaction with brands and retailers.

There however is an unwritten balance between convenience and trust. When does an location-based application like Highlight move from helping to spooking the would-be social consumer?

On April 24th in DC, join me to discuss how to build a consumer friendly ecosystem that is not dictated by legislation but rather by best practices, transparency and user-friendly signs for the consumer of the services.

There are high stakes. If the industry is not proactive in addressing this crucial issue, the fallout will be costly. Juniper Research recently stated that over $74 billion worth of contactless transactions will occur in three years and the privacy and security issues could cost billions.

Top high-level executives from leading online/mobile companies, content players, ad agencies and governmental agencies will gather to discuss the pressing privacy and security issues facing M-commerce and M-content.

MEF’s Mobile Commerce and Content Privacy Summit

When: April 24, 2012 from 2pm to 6pm, with a reception following
SNR Denton’s DC Offices – Penthouse Suite 1301 K St NW Washington, D.C

For more information or to RSVP, please contact: Marjorie DeHey, GM MEF – North America 

Impulse Economy: Connect effectively to the M-Shopper (PodCast)

Welcome to episode #295 of Six Pixels Of Separation – The Twist Image Podcast.

While many companies were still lamenting a basic website back in the nineties, Gary Schwartz was already imagining how content, voice and mobility would change how we connect to one another… and the brands that serve us.

For over a decade, Gary has been a leader in the mobile industry. He is CEO of Impact Mobile (offices in New York, Los Angeles, Toronto, etc…), is Chair of the Mobile Entertainment Forum and Chair Emeritus of the Mobile Committee for the Internet Advertising Bureau. Recently, he published his first book, The Impulse Economy – Understanding mobile shoppers and what makes them buy. He brings a plethora of experience and insights from the mobile landscape to our marketing world, and it’s a true privilege to have him as a guest on the show this week. Enjoy the conversation…

Here it is: Six Pixels Of Separation – The Twist Image Podcast – Episode #295 – Host: Mitch Joel.

Interview before MWC on mobile books & shopping

Interview with Ajit Jaokar in Europe before the Mobile World Congress in Barcelona. We chatted on the subject of mobile books and shopping:

Ajit Jaokar: Mobile moves so fast. How can you write on the subject?

Gary Schwartz: Is similar to trying to work out who is winning a battle when you are stuck in the trenches and watching the missiles fly overhead. There is so much noise on a daily bases it seems improbable write a definitive book on the subject.

However the core thesis of book is universal and something that I believe strongly the mobile industry needs to content with:  how to effectively drive impulse mobile consumption.

The shopper is natively an impulse shopper. They buy in what retailer call “5 by 5″ which is five seconds by five foot. They may write out lengthy shopping list and do hours or research on products but in the store, 80 percent of their basket is full of products bought on impulse.

The phone is now a shopping aid and it can help the shopper be more effective impulse buyers or it can fail and inhibit shopping behavior. This is the industry challenge. The retailer that manages to engage effectively with this new shopper will win.

Ajit Jaokar: What should the reader take away from the book?

Gary Schwartz: There is a disconnect in retail. The shopper is becoming faster and the store is becoming slower. The shopper is proactively looking for new phones, new applications, new ways to search and buy effectively.  Just look at the power of the new devices that the consumer walks into the mall with:

The AGC (Apollo Guidance Computer) that sent the first person to the moon had 2kb memory, 32kb of read only memory (storage), CPU 1.024 MHz. The Samsung Galaxy II S that is in the shoppers pocket has 1 GB memory (1 048 576 kb), 32 GB storage (33 554 423 kb), CPU Dual-core 1.2 GHz (1200 MHz x 2)

This hand sized shopping aid is essentially 2 thousand times faster… but that’s just raw speed.

Instead of trying to embrace this shopper’s new technology effectively, the store is trying to plug a leaky ship by making it difficult for the consumer to comparison shop, use their technology in the store or in the cloud.

Ajit Jaokar: How are retailers responding?

Gary Schwartz: Blockbuster, Borders, have all fallen to the digital efficacies of the internet. Are Target and Best Buy next?

It is clear that stores do not know how to use this super phone and are under siege. TARGET recently went on the defensive talking about “SHOWROOMING,” the phenomenon of using the store to touch and feel a product and then checking out in the cloud (a competitor’s internet cloud).

These retailers do not know how to respond. They try to leverage the phone and new channels but in large part they consider the phone a threat not an opportunity.

Ajit Jaokar: In that case, which retailers are in most trouble?

Gary Schwartz: There are two types of retailers:

Brand Retail: Like the Gap, Pottery Barn, Polo (in which one company makes and markets everything in the box) are channel agnostic. The brand retailer needs to make sure the shopper stays loyal and makes it simple to move from purchase intent to purchase. This retailer needs to count clicks to commerce and optimize the mobile experience.

Mixed Brand Retail: Like Target, Wal-Mart, Best Buy (in which one company houses multiple brand names on their shelves) need a more aggressive strategy to stay relevant and in business. They also need to work on optimizing path to purchase but they have the additional problem of price comparison and losing the shopper into competitive deals on the mobile internet (in four walls of the store.)

Amazon is their nemesis.

Amazon clearly feels that its success with the PriceCheck app is a good indicator that their new Kindle Fire tablet will be the mobile commerce device of choice. When this device become 4G later this year it will rake havoc on the mall. Already this holiday season we saw Amazon’s impact on retailers.

Amazon sees it role as “pro consumer” and if it is all about price then they are right.

If the retail industry continues to lament the rise of “showrooming” is it simply crying-uncle to Amazon. For Target to change its merchandise UPC codes, shut down WIFI or source unique product that are hard to price compare are not sustainable solutions.  By making it more difficult to price compare items in-store is a short term or no-term answer.

Ajit Jaokar: So, what is the solution?

Gary Schwartz: The top three factors in shopper decision making is PRICE, CONVIENCE and TRUST. If it is all about price, we should all close up shop and go home.  Convenience can work for the cloud and bricks & mortar. Trust is the silver bullet.

Mixed retailers need to use mobile technology to engage the shopper in the store and enter into a DIGITAL relationship. Use an iPad to clientel.

Clienteling is a retail term that predates mobile but mobile is the idea channel for the service. Clienteling is when the retailer interacts with the shopper and provides one-to-one personalized service, offers and communication in the store.

Retailers need to use tablets to interact with the shopper. Help them find a product. Add this to a wish list – tie this wish list to a profile. Ask them for their mobile number to send updates, sale reminders, VIP invites. Retailers need to engage the shopper at the cash register and ask for their mobile number for follow on deals and offers.

Ajit Jaokar: So what is the big take away?

Gary Schwartz: Cross channel disconnect is where most of the retail revenue is lost: between the store the online site. Amazon and other mobile savvy folk will either grab your shopper as they fall through the cracks or, worse yet, your will just loose the shopper to another store because you are just making the path to purchase too difficult.

Mixed retailers and brands retailers need to develop a “trust” relationship that will keep that consumer as a loyal consumer. Store that can develop a digital trust relationship across all their retail touch point will help the impulse shopper make that impulse buy at their checkout.

Full post here