Mobile apps key to avoiding retail apocalypse

Retail Tech Innovation editors
19 Dec 2017

The media has been full of proclamations of a retail apocalypse as spelling the end of the world as we know it – mostly for retailers. The apocalypse may have more significance to the US retail scene in 2017 where the media is awashed with successive stories of brand products and mall closures.

One technology that retailers are coming to terms as inevitable is the mobile device and specific to each retailer – their mobile strategy.

According to App Annie, a strong app strategy is necessary for success in retail. In the “Retailers: Why Data Should Drive Your Mobile Strategy” App Annie says consumers are turning to mobile first when they’re planning on making a purchase.

For retailers, data is at the heart of a successful app strategy. Insightful metrics allow retailers to make informed decisions to drive customers to their app, create features that increase the likelihood of purchase, and accurately measure customer satisfaction and implement changes to reflect customer demand.

A data strategy will also enable retailers to benchmark themselves against competitors and incorporate best practices that are proven to move the needle on critical engagement metrics affecting basket size and lifetime value.

Jaede Tan, regional director of App Annie, shares his insight on what is happening in the mobile app scene specific to Asia’s retail sector:

Analysts and experts have pronounced the retail apocalypse in recent times, and we see apps as a way to reinvigorate consumers’ retail experience. Brick-and-mortar retailers have already embraced apps and shoppers are now very engaged; results are telling from the Great Singapore Sale 2017, which saw an increase in sales thanks to the GoSpree app.

In Indonesia, which has a population of 261 million and a burgeoning middle class, users spend an average of just over 90 minutes per month in Shopping apps, placing it at #2 after South Korea. On 11 November 2017, dubbed Single’s Day, Alibaba generated a record breaking US$25.3 billion in sales, with mobile users accounting for 90% of sales. These numbers are only the beginning of what is a rapidly evolving retail experience for consumers.

Come 2018, apps will continue to cause consumers to change their shopping habits which will in turn redefine the relationship between and even the very nature of existing retail channels (e.g., mobile app, web, brick-and-mortar). China, for instance, is one huge influencer in this area. We are seeing people in western markets increasingly use physical stores as a place to pick up items purchased on mobile. In addition, cash registers’ longstanding role in the checkout and payment process will become reduced, or in some cases replaced, by mobile. For many consumers, mobile will be a core part of the shopping experience regardless of channel.

As we predicted in last year’s post, there was some consolidation in the food delivery space. Looking ahead to next year, we expect that aggregators such as Korea’s Yogiyo will continue to expand the addressable market for this space by opening up underpenetrated markets as well as converting users who do not currently use mobile apps from intermediaries to order meals.

Meanwhile, delivery as a service (DaaS) providers (e.g., UberEATS , Deliveroo ) will gain market share in premium markets where customers are more likely to pay more for higher-end restaurants that don’t have their own delivery fleets. Furthermore, we expect more quick-service restaurants (QSR) to respond to the increased competition from food delivery by partnering with DaaS apps, similar to McDonald’s growing partnership with UberEATS . As with video streaming, this space will face consolidation in later years as it needs to rationalize the fragmentation felt by customers and the profit pressures felt by service providers competing in a crowded space.

App Annie’s Tan says there is growing acceptance of m-commerce as a new channel for online shoppers in Asia. Retailers are scrambling to launch mobile-enabled websites and mobile apps with location-based and other interactive functions. Another factor serving to push forward the m-commerce phenomenon is the shift to a cashless society.

The notion of cashless society has been predicted more than a decade ago but it is only recently, with the convergence of smart devices, consumer friendly commerce sites, and secure mobile payments, that we have seen what looks like a sustainable shift to cashless society.

As the x-commerce ecosystem continues to develop, we will likely see more retailers launching their m-commerce players and other members of the ecosystem.

First published in Retail Tech Innovation

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