The Rise Of The Retail Smart Apps

How did UK retail figures get to be so gloomy? Is it all Amazon’s fault? And what can retailers do to fight back? We take a look at some innovative solutions.

The retail state of play

In Q1 2018 High Street stalwarts Maplin, New Look and Toys R Us went under, and January profit warnings were issued by Debenhams, Mothercare and CarpetRight.

In fact, things had been coming to a head since way before Christmas. Record online Black Friday sales saw shoppers take advantage of discounts by making Christmas purchases early. This really took the sparkle off Yuletide sales for 2017, with a 3.5% fall in the number of people visiting shops in December (source: British Retail Consortium and Springboard). The first quarter of 2018 showed no sign of improvement and Easter weekend sales were 2.4% down on the same time last year.

Why has this happened? Well things have been tough for retailers and consumers over the past few years. A weak pound has destroyed once-healthy margins on imported goods and higher fuel costs have increased logistics expenses whilst consumer spending power has also been squeezed, with higher living costs and lower than inflation pay rises. People have less to spend and are choosier about where they spend it.

Against this bleak economic backdrop, online retailers such as Amazon have been driving changes in habits and customer experience expectations and in doing so have put traditional “bricks & mortar” retailers under tremendous pressure.

It’s now much easier for shoppers to find and compare product prices across a huge range of goods, get advice and opinion from user reviews and then make a purchase with just a few clicks. We’ve grown used to suggestions on additional items we might like to buy and have purchased as a result. Amazon has produced a new breed of highly informed cost-conscious consumer that never has to leave their home if they choose not to, with same day free delivery available on many items (for Prime members).

How to fight back: The rise of the retail smart app

Traditional retailers can raise revenues in-store and on-line and there’s plenty of opportunity in both.

Using smart apps, physical shops can combine the advantages of online with the availability of actual inventory. This can increase revenue through improved customer experiences:

  • IKEA’s app lets you see relevant content, including a 360-view of furniture displays when you scan the IKEA catalogue with your smartphone. More importantly, the app also uses augmented reality, so you can “virtually” place IKEA furniture pieces in your own home and more easily choose the products, colours and sizes that work for you.
  • Target, the US discount retailer, improved the in-store shopping experience with its Cartwheel app. The app offers in-store navigation, quick & easy mobile payment integration and special offers powered by Beacons infrastructure. The app’s impact was so high that there were over 10m downloads across iOS and Android.
  • Some manufacturers are embracing technologies such as AI to gain purchase insights and improve online sales. Clothing retailerNorthFaceis using a conversational interface that prompts customers with a series of purchase-related questions to determine which jacket is best for them. The potential to glean patterns from the volume of resulting data provides the opportunity to learn which suggestions ‘work’ (resulting in purchase) and which don’t.
  • Wholefoodsthe health food chain looks set to seriously disrupt the bricks and mortar grocery sector and radically change the grocery shopping experience using machine learning and AI. Shoppers behaviour will be used to power machine learning algorithms (and if purchases are allowed by mobile phone this will supercharge the algorithms). Some commentators note that the acquisition of Wholefoods by Amazon will be looked back in future times on as a ‘retail shopping singularity’ event.

Retailers are also using Smart Apps in other ways to improve productivity and drive profit:

  • Lingerie retailer, Cosabella, replaced their digital marketing and media buying agency with Albert, an Artificial Intelligence (AI) Marketing Platform.

Albert identified emerging user behaviour and patterns across social media.

Insights were produced by analysing behaviours – and suggestions made for optimal performance and scalability.

Albert then executed on the suggestions delivering results across channels which included:

  • Proactive creative and messaging insights and recommendations
  • Micro-campaigns of a multitude of campaign variables
  • Autonomous media buying using predictive analytics and deep learning.

The results were impressive; 20 x increase in online sales, 155% increase in revenue.

In conclusion…

Adapt or die. Bricks and mortar retailers with a strong sense of purpose, who have clear customer experience objectives and are willing to invest in digital technologies to innovate and disrupt will thrive in this retailing revolution. The skills learnt by dealing directly with clients can be transferred and transformed into a winning digital experience.

When mobile apps become Smart Apps through the use of new technologies such as AI, augmented or virtual reality, or geolocation technologies and data analytics, retailers have the means to truly differentiate themselves and their marketing to deliver a superior, personalised and most importantly, profitable customer experience.