In an era where the smartphone is consumers’ phantom limb, the true potential of harnessing its power in a retail environment has yet to be realised, writes Nicola Kemp.

They are the first thing consumers look at in the morning and the last thing they see at night. The love affair between consumers and smartphones knows no bounds, yet brands have been slow to capitalise on this relationship.

Marketers could be forgiven for believing that it has been the year of mobile since the dawn of time. eMarketer predicts a 90% rise in mobile adspend during 2014, with mobile becoming the second-biggest media channel in the UK by 2016, with a spend of £4.23bn.

However, the heady cocktail of increasing smartphone penetration, combined with growth in consumer attention and media spend, has not delivered many tangible benefits to marketers. Ultimately, despite all the hype, the growth in mobile advertising has not been matched by a similar increase in creative marketing activity on the small screen.

In advertising, context is everything, and agencies have, to date, struggled to unpick consumers’ complex relationship with their phones. This is particularly acute in the retail space, where the hype surrounding mobile shopping has often failed to deliver sustainable returns.

“The promise of technology has not stacked up to the experience,” explains Rob Sellers, director of Grey Shopper London, who says that the construction of most supermarkets as steel-and-concrete boxes full of water, means that connectivity is often an issue. “There is a real grey area when it comes to using smartphones in the retail environment, and brands really need to ask themselves whether they are doing something because it’s cool, or investing in a strategy that will have a significant impact across the business.”

Technologies such as iBeacons and digital mirrors have provided a notable splash of PR. However, in the rush to be first, are brands missing the chance to harness smartphones’ power to deliver the ever-elusive but much-hyped “single-customer view”?

Jason Nathan, global multichannel capability director at Dunnhumby, argues that many brands have succumbed to panic. “There is a great deal of urgency among retailers, who are seeing their online growth plateau and new players steal their market share. The ubiquity and speed of smartphones has created something of an arms race among brands.”

Experts warn, though, of the danger of being seduced by simplistic propositions as opposed to enacting the fundamental business changes needed to truly tap into the smart-shopping phenomenon. “We need to get away from talking about mcommerce and ecommerce, and embrace a more fluid form of shopping,” says Mark Holden, head of futures at Arena Media. “Fewer consumers are shopping in stores, so we need to think more carefully about how we connect with them. We need to get the technology in place to better understand the consumer across channels.”

Simon Hathaway, head of retail experience at Cheil, points out that the next stage of media and retail is being driven by the consumer, and powered by mobile. “Marketers need to think about three budgets: time, money and frustration,” he adds.

To move beyond the hype, here are the six key ways marketers can embrace the opportunity afforded by smart shopping.

1. Get the basics right

In the flurry of new product development and increased functionality, it is all too easy for marketers to be seduced by the next big thing, say, investing in digital screens and waxing lyrical about the possibilities of iBeacons, when they don’t even offer their customers free wi-fi.

Certainly in an era where connectivity is viewed as a utility, brands have to get the basics right when it comes to the latter, eliminating any complicated sign-in process. “Brands need to see strengthening relationships with their customers, not selling stuff, as the jumping-off point,” explains Arena Media’s Holden.

There is no doubt that consumers’ experience of online shopping has heightened their expectations in the real world, creating a friction point of which brands need to beware.

“A lot of shoppers use Amazon to quickly locate products, but it is difficult to replicate that experience in-store,” explains Tim Shepherd, senior creative technologist at RKCR/Y&R. Likewise, the browsing experience cannot be replicated online. Consumer expectations will only ever rise, so brands need to get the basics right.

2. Look beyond the iBeacon

“We tend as an industry to fixate on technology such as the iBeacon in isolation – it’s the power of the word ‘new’,” contends Grey Shopper London’s Sellers. He warns that brands need to tread carefully and not be fooled into thinking a single technology will solve myriad problems. “There are a huge number of companies with a vested interest in the growth of these mobile giants,” he says.

When you put aside concerns over the cost, accessibility and scale of iBeacons, questions remain as to whether the technology is really anything but Bluetooth under a different name. As one shopper-specialist quips: “Once the halo of the Apple brand and the PR buzz dies down, what you are left with is fundamentally not that interesting.”

The ubiquity and speed of smartphones has created something of an arms race between brands

Even if you do buy into the iBeacon as a silver bullet for shopper marketing, questions remain over what to actually do with the data. Michael Plimsoll, industry marketing director at Adobe Systems Europe, says that a digital screen or iBeacon will make no difference unless companies can accurately consolidate the data from these devices. “Those retailers who use tools to gather data and interpret behaviour will be able to offer their customers a much more effective and targeted shopping experience,” he explains.

3. Embrace social retail

Lawrence Weber, head of digital at Karmarama, says that marrying social with retail is key. “The smartphone is the most disruptive piece of technology, and mobile and social play off each other. The future of loyalty will be driven by consumers’ phones.”

With social, new currencies and mechanics for discounts can be used for the most influential shoppers. RKCR/Y&R’s Shepherd says that, in theory, brands can set up dynamic pricing based on the value of the customer. “You can offer customised discounts based on tweets. But there are privacy issues, and brands need to think about what they are offering in exchange.”

Shepherd believes social shopping will thrive as consumers accept the trade-off. “We are a more connected society than ever. Consumers are getting used to paying for things through sacrificing privacy.”

However, just as many consumers are looking to social to enhance their shopping experience, many others are turning to social to take them away from it, such as to the latest football scores. It is a trend marketers cannot afford to ignore.

4. Know your place: understand shopper mindsets

Imagine that every brand in your shopping basket wanted to have a one-to-one conversation with you via your smartphone. Shoppers would not be able to hear themselves think over the din, let alone actually complete the task at hand.

While brands such as Nike and Uber have shown the benefits of using the smartphone for location-based services, equally there are those that have overestimated the degree to which consumers want to have a relationship with them.

Brands need to understand the difference between shopping for leisure and the often abject boredom and functional mindset of grocery shopping. “On the whole, shoppers in supermarkets simply don’t care enough to interact with brands there for no reason,” explains Grey Shopper’s Sellers.

In fact, for many shoppers their smartphone is a way to escape the mundanity of shopping. “The reality is they are using their phone to look at the football score, or scroll the Daily Mail ‘sidebar of shame’,” he explains.

Shoppers in supermarkets simply don’t care enough to interact with brands

There is an inherent fundamental friction that while consumers now use their mobile phones as a broadcast medium, it remains, too, a personal medium – an extension of the “self”.

Simon James, global lead for marketing analytics at SapientNitro, created a panel of 1000 smartphone users for a client. The aim was to get under the skin of how they really used their mobile phones both in the client’s stores and those of its competitors. “The fact was, they weren’t using their phones in store to compare prices. They were giving them to their kids to keep them quiet,” he says.

However, the opportunity to better understand shopper mindsets through research is clear. “We used thermal imaging cameras and sound and proximity sensors to capture the moments when shoppers were meandering. When you can see a person who is dawdling, and analyse the layout and format of a store, and how they interact with it, that’s when you can get actionable insight,” explains James.

5. Adapt to the service economy

Arena Media’s Holden believes that enhancing the customer experience through providing tailor-made additional services is key. “Virgin Atlantic is a great example of a brand embracing mobile to improve their customers’ experience in real time. They are trialling technology that enables them to deliver customers live updates as they move through the airport, such as the gate number of their flight and other customer-service messages.”

However, brands must have enough of a user base to justify the outlay of developing a dedicated app. Then they need to have a genuine reason to connect with their shoppers and add value to their experience. Nike+, an app that launched eight years ago, is still the go-to example of a brand successfully embracing the service economy, which shows how few brands have grasped this opportunity.

“Start with a value proposition,” explains Dunnhumby’s Nathan. “Real-time stock controls, scan-as-you-shop, or location-based services – establish permission to talk to customers. If there is a brand takeover every five minutes, it won’t work.”

6. Make the single-customer view more than a soundbite

With big data on the tip of every thinking retailer’s tongue, building on the symbiotic relationship consumers have with their smartphones is key to boosting sales and data and empowering brands to communicate with customers as individuals.

The ability to embed RFID chips into showroom items to communicate with other smart devices and store users’ data is poised to be a key area for marketing innovation. Meanwhile, the single-customer view remains the ultimate goal for many of the world’s biggest brands, but this is not a quest that can be achieved through adopting a single piece of technology, however sparkling or new.

While Burberry has hit the marketing headlines for being an early adopter of new technology, notably through its digitally integrated flagship London store, it is its commitment to “Customer 360” that is truly driving the marketing agenda. This data-driven shopping experience builds highly personalised customer profiles across channels, seamlessly marrying their buying history and social-media profile. It is a strategy based on the use of a network enterprise solution (SAP HANA, in this case) rather than a single new technology in isolation.

The notion that brands need to ditch the channel-based approach to business is firmly ensconced. In February, PwC coined the phrase “Total Retail”, arguing that the fixation with channels has created “an expensive channel-focused model that involves multiple marketing, merchandising and supply-chain teams; needlessly complex, individually broken-out profit-and-loss statements; and even different accounting methods based on the channel from which sales originate”.

In its place, the report advocates the adoption of a unified brand story across all channels, powered by a consistent and superior customer-experience model and an integrated back-office operating model. In essence, advocating nothing less than a total business transformation.

It’s a transformation that the adoption of no one technology can deliver, but, arguably, it is the biggest opportunity in the history of marketing.

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