Retailers Sing the Merits of Social, Local and Mobile in 2010
Three trends accelerated in 2010 that may redefine the way we shop for good: Social, local and mobile.
And, in case that’s hard to remember, for short we will refer to it as “so-lo-mo,” like do-re-mi from the “Sound of Music,” except without much “Glee” for retailers.
That’s because other than the recession, this past year may represent the biggest challenge for the retail industry since the mid-’90s, when e-commerce was born.
Here’s how this daunting, yet exciting and opportunistic, trifecta played out this year:
Mobile: There’s definitely an app for that. As smartphones go mainstream, savvy shoppers use apps to price-check and read reviews of products in the store.
Result: Retailers watch in horror as shoppers leave their stores empty-handed and drive across town to another store or go online to order a different or cheaper product.
Social: Friends and social circles influence purchase decisions through the rise of Facebook and Twitter. Users check in on apps, such as Foursquare and shopkick, for discounts and incentives.
Result: Retailers who don’t bone up on their social media skills may miss out on generating conversations across the Web that result in online sales or traffic to their stores.
Local: Advertising begins shifting to Groupon and LivingSocial, as group discounting and daily deals gain popularity.
Result: At least initially, these deals have been successful at locking in sales for local stores and restaurants looking for a bump in visitors.
These trends led Cathy Halligan to leave her cushy job as chief marketing officer of Wal-Mart Stores, the world’s biggest retailer, for PowerReviews, an obscure social commerce early-stage start-up.
As the company’s SVP of marketing and sales, she explains her decision:
“I’ve been in retail for 22 years, and starting in fourth quarter of last year, I saw that consumers were adopting different tools, techniques and shopping methodologies at scale. I saw things like Groupon and Foursquare, and then there were things like [eBay's] RedLaser, which lets you scan an item on a retailer’s shelf to get a price from the retailer across the street.”
That’s a catastrophic change she hasn’t seen since her days at Blue Nile when the high-end jewelry e-retailer was just getting off the ground.
The big difference with these trends in 2010 vs. e-commerce in the mid-90s, she said, is adoption: “Consumers are adopting stuff and actually using it.”
The uptick in behavior started occurring as early as the first quarter.
Now, at the San Francisco-based company, she’s mostly focused on the social component of the retail experience.
The PowerReviews platform works across more than a thousand e-commerce sites, including REI’s, and Diapers.com (now owned by Amazon), to let consumers leave messages about products and link their reviews to their Facebook profile, if they choose.
In 2010, Facebook shifted the shopping scene to become one of the leading ways people discovered new products, she said.
The social network did so by becoming a significant source of referral traffic to e-commerce sites–and, in some cases, surpassing Google. The “Like” button allowed users to connect to brands and helped them spread virally.
The most stunning example of the year, in her opinion, was when Apple released the Beatles on iTunes and more referrals came from Facebook than from Google.
Eva Manolis, Amazon’s VP of retail customer experience, had a contrarian viewpoint for the online behemoth.
“There’s still a ton to be done. Social hasn’t really gotten farther than sending an email,” she said.
Amazon allows users to log in to their Facebook account on the site in order to get recommendations for bands, movies, etc., based on what their friends have “Liked,” but she says one of the more exciting social uses is the Wish List functionality that allows users to tag products from all over the Web to a list.
The feature is 11 years old, but it was particular popular during the 2010 holiday season, with Wish List purchases increasing six times compared to the rest of the year. Manolis said it’s logical that “the rise in being more comfortable with social is making Wish List more popular.”
But if it’s not social, it’s mobile that’s creating retail disruption this year.
EBay is not the only major retailer that has a price-comparison app. Among many barcode readers, Google has one. And this year, Amazon launched Price Check on the iPhone, which allows users to search by scanning a barcode, clicking a picture of a product or speaking the product’s name into the phone.
This week, Amazon disclosed that there were millions of Price Checks from Black Friday through its Free Super-Saver Shipping cutoff date for delivery before Christmas.
Mobile also often intersects with social.
Take shopkick, the Menlo Park, Calif.-based start-up that already counts big retailers as its clients, including Target, Macy’s, Best Buy and others.
CEO Cyriac Roeding, a former EVP for CBS’s mobile unit, created the concept to get people inside stores by giving points and other rewards to consumers who check in on their mobile phones.
Founded in the summer of 2009, shopkick is already getting some positive feedback. Sports Authority details its experiences after running several tests over a four-month period. After increasing the amount of rewards they gave, the sporting-goods store saw a 50 to 70 percent increase in shoppers walking into the store.
Users can then exchange the “kickbucks” for gift cards, Facebook Credits and more, or retailers can provide discounts on items in the store.
Likewise, Foursquare also tries to encourage consumer loyalty.
Merchants may team up with the so-lo-mo network to offer discounts or other incentives for check-ins, or for those who visit often enough to become the “Mayor.” While discounts and incentives were only beginning to take off at the start of the year, Foursquare now has a steady stream.
Just take the middle of nowhere as an example: The Pizza Hut in El Dorado, Kan., will award the Foursquare Mayor one free order of breadsticks per day with purchase of a large pizza. And in neighboring Wichita, Payless ShoeSource is giving first-time check-ins $5 off any $25 purchase.