NRFtech 2010 Mobile Strategies

A situation map of the rapidly changing landscape of mobile retailing, along with some strong suggestions for just where retailers should position themselves on it, were provided by speakers at two different NRFtech sessions.

Van Baker, vice president and research director for retail and manufacturing industry advisory services for Gartner, offered a high-level overview in “Mobile in Retail: Emerging as a Critical Consumer Touchpoint.” A somewhat more radical take was offered by Richard Crone, founder and CEO of Crone Consulting. Essentially, Crone argued that mobile technology offers the retail industry a good deal more than simply another sales and marketing channel: It offers the opportunity to redefine the dynamics of payment, advertising and product search in ways that heavily favor the retailer.

Though m-commerce is still in its infancy, a number of business models have already proved themselves to be viable, Baker said. These include mobile-only content (ringtones, games), advertising and promotion, digital content (music, video, apps), ticketing and end-to-end transactions. Other, newer models are emerging, including context-aware models that depend on knowing where a customer is and time-sensitive models dependent on the consumer’s ability to use the phone to respond to a sudden impulse.

A mobile strategy, Baker pointed out, is like any other strategy: It needs to be based on the business’s overall objectives, and it needs to be carefully thought through. Retailers need to ask themselves some basic questions: Do they want to be able to accept mobile payment in the physical store? Do they want to assign P&L responsibility to the mobile channel? Do they want it to drive sales, traffic and retention in other channels, in the mobile-only channel, or both?

Underlying these questions is a larger question that still haunts discussions of m-commerce: How important is this, really? How big is it going to get? Baker offered several recent research projections of some basic metrics. Dataquest predicts that the total number of mobile payment transactions (purchases, remittances, bill payments, transfers) will reach 4.5 billion in 2012, with a compound annual growth rate of 105 percent. In terms of dollar volume (value of goods, independent of payment mechanism), Deloitte expects m-commerce to reach $9 billion by 2014.

Beyond the numbers, the real driver of mobile is customer expectation. As the use of mobile devices — especially the soon-to-be-ubiquitous smartphone — increases, retailers will be expected to interface with their customers through this channel and must, therefore, develop the ability to do so. When considering a mobile user interface, Baker said, retailers and technology vendors tend to think in terms of how a consumer will interact with a phone. Before grappling with that issue, however, he suggested that retailers need to ask themselves three basic questions: Will they deliver a multi-channel experience? Will they allow transactions to take place on the phone? Will the mobile application they are building perform one function or multiple functions?

The answers to these questions, he said, will make designing the mobile user interface “significantly easier. We often find that IT gets asked to design the mobile experience, but it is really the responsibility of those charged with crafting the customer experience to answer these questions first.”

Retailers developing a mobile strategy also need to work out and articulate their position in research, advertising, promotions, loyalty, customer service, multi-channel shopping, commerce and payment, Baker said — and they need to do it quickly. Baker laid out a three-part mobile strategic development plan for CIOs, business leaders and mobile architects.

Immediately: Create a business-led team that will determine the role of m-commerce in improving customer interaction and transactions.

Over the next 90 days: Determine which consumer processes will best fit a mobile context. Work with your ad and marketing team to ensure that, where appropriate, mobile is part of your customer communications strategy. Engage vendors or resources that can quickly build capabilities for you in an iterative process. Be ready to stop any project that isn’t working.

Over the next 12 months: Develop a mobile strategy.