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.