Retailers are eager to exploit the tremendous potential of connecting digitally with customers to drive higher sales and loyalty.
The challenge is that they are still in the early stages of testing–much less fully understanding–the impact of digital engagement via the myriad solutions and devices now on the market.
Even more unsettling with mobile apps, mobile webpages, beacon technology and other personal interactive solutions is lack of clarity on gauging customers' willingness to opt into solutions that track and respond to shopping behavior. How much is too much? When does tracking become "creepy"? What is the right mix of value or formula to persuade consumers to join in and to stay engaged?
Most industry leaders believe mobile apps represent the future and that widespread adoption is only a matter of time.
"Retailers need mobile websites and mobile apps. But if you are in the food industry, you cannot afford to miss out on having a mobile app," says Greg Buzek, principal with IHL Consulting Group, a retail technology analysis and consulting company.
Customers typically are loyal to just one or two grocery stores. As a result, there is exceptional opportunity to use apps to strengthen customer relationships. "But there has to be real value–addictive qualities–right from the start," Buzek says.
Other observers also point to the need to offer the right value into the equation to tip the scales toward wide-scale use and success of apps.
"You are seeing a huge shift toward the intersection of loyalty programs and mobile apps, with the apps becoming the central nervous system, or repository, for all loyalty actions," according to Michael Puffer, senior director for mobile solutions and strategy at digital marketer HelloWorld.
Promotional activities integrated into the app and continually refreshed give consumers a reason to come back and to engage. "We feel strongly that is the reason one in seven adult consumers in the United States have a Starbucks loyalty card in their pocket. Tying together loyalty, promotions and the app creates a big increase in revenue," he notes.
WEB STILL MOST COMMON
Despite all the excitement about the promise of mobile apps, mobile web remains the most common format for connecting with consumers. Shoppers can view coupons and special promotions, find store locations, research nutritional information, read product reviews and find other information on the web.
The reality, however, is that screen size and ability to manipulate tabs and buttons to download pages and view information often make web pages cumbersome on mobile devices.
Mobile apps are designed from the start to be used on smartphones, tablets and similar devices. Mobile web, on the other hand, faces serious ease-of-use challenges for shoppers.
Responsive design has provided some degree of improvement for customers replying on mobile web instead of a larger screen desktop. But mobile web remains primarily a basic tool in an era when quick interaction and engagement in near-real time are key to meeting customer expectations. Anything that slows the experience in this age of speed gives consumers a nearly instinctive and immediate reason to leave the site and never come back. Mobile web may be a tool for pre-shopping and building awareness but not for sustaining engagement.
"The rule of thumb is that retailers are using web for customer acquisition and the app for retention. In grocery, retention is way more important than acquisition," says Nikki Baird, a partner with Retail Systems Research, a retail and technology research company.
But Chad White, research director at Litmus.com, a mobile email testing and marketing analytics company, questions even the viability of retail-specific mobile web for basic tasks. "Finding store hours or locations can be tough. It is easier to just go to Google to find that kind of information," he says.
CONVENIENCE DRIVES VALUE
Mobile apps, beacons and other technologies coming onto the market or in development represent the future of customer engagement. Greater convenience, both in speed and function, will empower retailers to roll out programs that drive up customer value in totally new ways.
"The model for mobile web has been Walmart. They have a great, simple, easy-to-use website. If I want to browse coupons or browse information for that new television I want to buy in the electronics department, it is all there," Puffer points out.
"But you can see where they are refocusing their strategy. They are reframing their engagement to bring everyone into their app. You can see that in the huge push with their mobile wallet," he notes.
Target's loyalty program has also been cited as a major success for engaging customers on an ongoing basis.
"Ultimately what you want to get to is personalization, and I am not saying grocery is advanced in doing that," says RSR's Baird. "But at least they have done more thinking about what the consumer is doing when online, how the mobile app can be most valuable, and how to keep interacting with the consumer in the store."
Baird also points to the complementary role that beacons can play beyond simply promoting products on the shelf.
"I am seeing retailers tie beacons to the shopping cart so retailers can tie in not only to a product but to the entire shopping experience," she says. Some retailers are also testing using beacons with associates to track where people are and boost productivity.
According to IHL's Buzek, there are a number of distinct stages to rolling out mobile.
The first stage is getting the manager a device so he or she is not stuck behind a wall in the back and can interact with staff and perform other functions as needed. The second stage is getting associate devices so they can upsell, and there has been a big bump there, he says.
The next stage is much harder, and involves accepting payment. A number of factors have stalled progress, including EMV regulations. But it is coming.
"I think the smartest retailers are the ones who are going to the app, who are going to allow customers to keep their credit or debit card on file, and create a situation where the shoppers literally scan and bag as they go through the supermarket," Buzek says.
OBSTACLES TO PERSONALIZATION
While progress has been made, getting to personalized engagement faces major obstacles.
Disparate systems and buckets of information must be integrated, the analytics to determine best value offerings and ROI must be implemented, and suppliers' and grocers' goals must be better aligned. Until those issues are solved, implementing personalized programs and gaining apps buy-in by customers will remain an ongoing challenge, Buzek says.
"There's a lot of apps fatigue. People don't want to clutter their phone with too many apps," says Ken Morris, a partner with Boston Retail Partners. Instead of relying on apps, Morris urges retailers to better leverage WiFi in stores so that customers can opt in or not.
Moreover, he says, to get to the point of offering personalization, supermarkets must integrate departments such as IT, operations and marketing, so there is a single repository to draw from when developing customer-centric programs, whether via apps, beacons, mobile web or other technologies yet to be rolled out.
"Retailers need to converge all those departments and information into a single repository–wrap it all together. Some have done it, but 80 percent have not," Morris says.