How retailers can own 2015

By on January 21, 2015
retailers

Lynette Hundermark looks at mobile trends and the new tech of SA’s retail economy.

There are just over 37 million adults in South Africa today, and if you want to reach them, there’s no better way than to use mobile technology. Some 36 million people who are 15 and older have a cellular phone, which means that the opportunity for connecting with consumers is massive.

And connecting well has never been more important because the economy has put pressure on consumer spending. The financial slowdown has affected every level of society, but austerity is more obvious in low income groups. This was borne out by Famous Brands financial results – the retail food group reported that while ‘upmarket’ brands, like Tashas and Turn ‘n Tender performed well, Wimpy customers had tightened their discretionary belts.

As money becomes tighter, people will browse more and comparison shop — whether it’s digital or in real life. Price-checking apps are massive in the US, South America and Europe, and they’re gaining good traction locally as well. Consumers will use mobisites and apps to help them save money before plonking down their dosh.

Customers will look up and compare price tags using a services such as Pricecheck, to find better bargains. This particular price checker has a website and a mobisite, as well as free downloadable apps from all four app platforms – Apple iOS, Android, Windows Phone, and Blackberry.

Vouchers are another way that customers will try make their budgets go further. Checkers has teamed up with EeziCoupon for a virtual voucher system. For this app, customers are told that all they need to do is enter their unique code to redeem their savings at the till point.

But the app store tells a different story and it is here that people using the app will voice their gripes. This means that retailers who use apps will need to keep a very close eye on app stores to monitor the type of brand experience that users are having, and how this measures back to the retail brand promise.

As such, it is imperative that brands already invested in the app space continue to add relevant features to these applications in order to continually optimise and improve the user experience.  A case in point is the Checkers SA app, which launched in 2012. Even though it brought the digital couponing experience to mobile phones – the app itself has not evolved or changed over the past two years. Still generic in nature, consumers have to browse through hundreds of coupons to find what they are looking for. And even though the Checkers brand is going head-to-head with Woolworths, not adding any new features since its launch to further enhance or even personalise the consumer experience, makes us question whether the supermarket’s “better and better” slogan really measures up in the app stores.

Word of mouth is still the killer app. Retailers need to consider that people use social media to communicate their likes and dislikes, and this impacts directly on the bottom line. Social media is word of mouth on steroids, and will not be controlled. Disappointed customers are quick to vent and complain; happy customers have to be truly delighted to give a compliment — that’s human nature.

In the luxury market, people will want greater specialisation. Here the trend is to the niche – people will want to buy unique products, which gives rise to curated commerce. The curators are trusted niche operators who provide designer products and collectable items — anything with personality. In the top demographics, shoppers will find trusted retail sherpas who will go out and find rare and remarkable items. Locally, this spot is occupied by IWantItAll.co.za, while a great global example is AHALife.com, which sources desirables from designers and artisans from across the globe.

YuppieChef is another example of a brand that is doing well in this space, by delivering imported designer kitchenware on time with the personal touch needed to drive brand loyalty. Research indicates that delivery is a significant factor in driving repeat purchases. Let’s face it – if I receive my product on time, or even earlier than expected, I will trust the brand and the service offering and will most likely engage again.

Celebrity culture holds major sway in SA, and it’s not just the Kardashians. DJ Sbu, Bonang B* Matheba, Euphonik, and Gareth Cliff have massive influence with local youth. Internationally, this has spawned the phenomenon of celebrity apps. Kim Kardashian’s game has had millions of downloads, and is expected to earn her millions due to its in-app purchases. William Shatner’s free app, that mashes up random poetry and then reads it in his voice, has only seen downloads in the tens of thousands.

Customers, especially those in the upper LSM bracket, expect an app to provide a highly user-centric, customised experience. The more the customer uses the app, the more it learns about the customer. Of course, this requires a well-developed back-end: I often say that the success of retail apps depends on the back-end. Yes, a good UI, fast loading times, and frequent updates are all important, but if you don’t have a basic, built in understanding of the consumers’ shopping habits in mind, when designing the back-end of an app – it will all be pointless.

For example, when I use a retail app, then I would expect the app to know about my past purchases and my entire experience through this app should be based on my history. For example, the landing page should contain product recommendations based on my previous buying patterns to ensure that these recommendations are relevant to me. This intelligence could also extend into product specials spanning all the products and product categories that would connect into my buying history and increase the likelihood of a repeat purchase.

Analytics is critical to retailers, but there is so much data available. This is why it’s important to get people who can analyse and interpret that data in a way that makes sense, and creates a virtuous cycle where retailers get smarter about how they better serve customers.

It is now possible to profile users down to a fine-grained degree, and, depending what your company does, provide content or information that the user will likely find interesting or useful. And it has to be that — we absolutely hate spam in our inboxes. If we can be guaranteed that 90 percent (or even 70 percent) of what we get from a certain source will be of interest, then we’ll be more likely to look at it.

New technologies continue to drive marketing practices. A technology called Beacons is being tested at store giants such as Tesco, House of Fraser (UK), Safeway, Waitrose, American Eagle, and Macy’s (US). This a BLE (Bluetooth Low Energy) system that registers when customers enter the store, how long they linger in particular points, and what they spend on – and using predictive analytics based on previous purchase behaviour, sends information or offers to the customer.

It’s early days yet, and no-one in South Africa has tried it, but I predict the only way it’s going to work is if there is real, tangible benefit for the customer. Instant discount vouchers or other loyalty mechanisms need to be cleverly integrated, or else it will be perceived as yet another spam channel, and consumers will opt out.

Looking a bit further into the future, the next trend is the Internet of Things — where every appliance is connected to the web, and you will interface with it using its app. For instance, your smart fridge will keep an eye on the freshness and quantity of its contents and make recipe suggestions, or compile a shopping list based on your buying habits. A tap on your smartphone will then send the list to your favourite supermarket(s), and you will be notified of the expected delivery.

So, which retailer will own the app store in 2015? It won’t necessarily be the one with the most outlets. Nor will it be the one with the biggest advertising budget. It will be the smartest retailer – those brands that understand how to add real value to customer’s lives, and who use technology to truly set them apart.

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