TRENDS & BEST PRACTICES: MOBILE AND THE IN-STORE EXPERIENCE IN RETAIL

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1 TRENDS & BEST PRACTICES: MOBILE AND THE IN-STORE EXPERIENCE IN RETAIL WINTER 2016

2 CONTENTS INTRODUCTION MACRO TRENDS SHIFT THE EXPERIENCE STORE MODE CONCLUSION Trends & Best Practices: Mobile In-Store Experiences In Retail

3 INTRODUCTION Over the past six months, we have spent a lot of time exploring mobile as it relates to the in-store experience at brick and mortar retailers today from the customer s point of view. We spoke to executives at major U.S. retailers who expressed their interest in providing enhanced in-store experiences to shoppers via mobile devices and recognized the potential that those devices hold but struggled to understand what their shoppers really wanted and needed, and what might ultimately impact their bottom line. With this is mind, we set out to provide retailers with information, insights and expertise around mobile in-store experiences that would align with their business goals. To accomplish this, we did three things. First, we fielded an original survey to understand what shoppers want out of a mobile in-store experience. Second, we built a Mobile Maturity Model to help retailers recognize what they are providing their shoppers today. And finally, we performed over 100 evaluations of mobile in-store experiences currently available at major retailers across the country. Our survey findings uncovered that 82% of high-income shoppers said an improved mobile in-store experience would make the shopping experience better. And 74% of millennials said they would actually spend more money at a store that provided an improved instore experience on mobile. We believe that mobile in-store experiences have the ability to transform the industry. If you d like to see the full summary of our survey results or our Mobile Maturity Model, you can download them here. In addition to those resources, the results from all of the retail assessments we conducted are posted online, here. Throughout this process and evaluation, we have seen several trends and best practices emerge. That s what we ve outlined here and we look forward to seeing what the rest of 2016 holds. 3 Trends & Best Practices: Mobile In-Store Experiences In Retail

4 MACRO TRENDS LIQUID EXPECTATIONS As today s consumers engage with brands that provide seamless user experiences (like Uber, where your ride comes to you and is paid for in a simple click), they are beginning to expect the same level of ease, simplicity and delight from every brand they interact with. Brands that do not meet these expectations will see their customers quickly move on to other brands that do. Compared to established and complex companies, startups are at an advantage for delivering these seamless user experiences. Many established retailers are struggling to adapt to these new expectations. Screenshot taken February 8, 2016 RECOMMENDATIONS & PERSONALIZATION As technology gets more advanced and the ability to access and understand vast amounts of data increases, the ease at which brands are able to customize content, recommendations and more also increases. Consider Netflix, where 75% of content viewed is actually recommended to the user via Netflix s powerful algorithm. Or Stitch Fix, where 100% of products purchased are recommended via a combination of big data and human intelligence. But when you consider brick and mortar retail stores, there is little to no personalization or recommendation that occurs between the brand and the instore shopper. In the year ahead, we believe growing expectations for customization of product assortments and experiences will drive retailers to focus on increasing in-store personalization. This personalization will be best delivered via consumer mobile devices and associate clienteling applications. 4 Trends & Best Practices: Mobile In-Store Experiences In Retail

5 CONSUMER MOBILE DEVICES ARE THE SINGLE MOST UNDER UTILIZED TECHNOLOGY IN BRICK AND MORTAR STORES TODAY. 5 Trends & Best Practices: Mobile In-Store Experiences In Retail

6 SHIFT THE EXPERIENCE Brick and mortar is in the midst of dramatic transformation. How to stay relevant and justify the costs of physical locations in a world that s increasingly digital? The opportunity exists to leverage the devices currently used only for ecommerce to help transform the in-store shopping experience. Retailers can harness the value of mobile technology to help the in-store experience feel more like the online experience, making it more relevant to today s connected consumer. FROM UNGUIDED > > Impersonal > > Dependent on the Store Hours > > Waiting in Line > > Dependent on Store Associate Guidance TO GUIDED > > Welcoming > > Personalized > > Empowering > > Convenient > > Shareable > > Relevant 6 Trends & Best Practices: Mobile In-Store Experiences In Retail

7 2016 WILL BE THE YEAR OF STORE MODE 7 Trends & Best Practices: Mobile In-Store Experiences In Retail

8 STORE MODE OUR PREDICTION FOR 2016 After reviewing and scoring 100 top U.S. retailers on the mobile in-store experiences they are providing to their customers, several trends and standout applications emerged. The majority of retailers who scored highest on our assessment were working towards something referred to as Store Mode. In addition to offering ecommerce functionality through an app, these retailers unlock additional features when a shopper is in one of their physical stores. This is designed to aid and improve the in-store shopping experience. Whether these features are housed in a completely separate app, or are built on top of the ecommerce application, we believe this is a strong solution for achieving the in-store experience shoppers want. If done thoughtfully, these enhancements have the power to reverse the declining in-store sales retailers are struggling with today. WHAT IT WILL INCLUDE Our survey research unveiled the six key areas shoppers find most valuable and feel would improve their in-store shopping experience if available. They are: > > PRICING > > PERSONALIZATION > > INVENTORY > > STORE GUIDANCE > > REVIEWS & ADVICE > > REWARDS & CHECKOUT This report will outline retailers who have had success implementing functionality within these categories. The scores and reports on each of the 100 brands we evaluated are available on our website: dminc.com/study-retailers 8 Trends & Best Practices: Mobile In-Store Experiences In Retail

9 STORE MODE PRICING Customers want the ability to easily look up or compare pricing. They also want to see pricing that is specific to them. HOME DEPOT Home Depot has linked in-store advertising, promotions and discounts with its inventory via mobile. When viewing a specific item within the application, the sale price matches what the store is offering. Home Depot also has a barcode scanner, which makes it simple for shoppers to view product and pricing information. Home Depot s app also helps shoppers locate items inside their preferred store and allows users to compare products side-by-side. Provide consistent pricing across channels and make it easy to compare similar products. Screenshot taken January 27, 2016 WALMART Walmart makes checking the price of an item, comparing the price to other products, identifying the savings Walmart provides and taking advantage of their price guarantee seamless and pleasant. As the world s leading retailer, whose business model is centered around discounts, it s no surprise they have invested in making this component of their app flawless. Inform your shopper how to save the most simply & easily. Screenshot taken October 7, Trends & Best Practices: Mobile In-Store Experiences In Retail

10 STORE MODE INVENTORY Customers want the ability to check inventory at nearby stores and online, so they can take action based on that information. AMERICAN EAGLE American Eagle is one of the only retailers that allowed its shoppers to reserve items via its mobile app in specific physical locations giving them the power to try on and purchase an item at the their convenience. The link between specific store location and inventory was impressive, and any technological gaps in inventory are buffered by an SMS texting confirmation program. Technology might not be perfect implement confirmation layers to ensure customer satisfaction. Screenshot taken November 6, 2015 WALGREENS Walgreens app allows shoppers to see whether or not a specific location has an item in stock. The barcode scanning feature provides in-store pricing and inventory information, with a seamless connection to online inventory and price information. Strive for seamless connection between in-store and online inventory. Screenshot taken December 1, Trends & Best Practices: Mobile In-Store Experiences In Retail

11 STORE MODE REVIEWS & ADVICE Customers want easy access to product/brand information, customer reviews and even varying degrees of expert advice. SEPHORA Sephora is one of the few retailers beginning to use Store Mode. With a wide variety of products for sale, Sephora offers a significant amount of content, including suggestions and robust product reviews. One thing that sets Sephora apart from the rest is their IQ feature. With fragrance, color and skincare IQ, they use technology to help shoppers understand their products, as well as find new products based on their preferences and complexion. SAKS FIFTH AVENUE Saks does a nice job of making product reviews readily available and readable, as well as supplementing product information with video content. For example, when viewing a shoe, shoppers are able to watch a 360 video of the shoe, or dive deeper into related content, like a video about the designer or brand. Know your audience and give them more information about whatever is important to their decision-making process. Screenshot taken December 1, 2015 Use preferences and data to help drive shoppers to new product selections. Screenshot taken January 27, Trends & Best Practices: Mobile In-Store Experiences In Retail

12 STORE MODE PERSONALIZATION Customers want their shopping experience tailored to them based on their profiles and past behavior. KOHL S Kohl s was the only retailer we reviewed that prompted users to unlock Store Tools when approaching a physical store. When shoppers open the app while in-store, they are again encouraged to use Store Tools to enhance their experience. Know when your shoppers are in your store and guide them to a better experience. Screenshot taken December 1, 2015 NORDSTROM Nordstrom s app provides product suggestions, recommendations and inspiration based on past purchases and items on a shopper s wish list. The retailer does a good job of making the app feel personalized and help its shoppers dive deeper into Nordstrom s wide variety of inventory. Use information you already have about users to provide recommendations and content. Screenshot taken January 26, Trends & Best Practices: Mobile In-Store Experiences In Retail

13 STORE MODE STORE GUIDANCE Customers want the in-store experience to be more like the online experience, with plenty of guidance for maximum efficiency. NEIMAN MARCUS The robust directory and contact system featured in Neiman Marcus mobile app is a unique and desirable feature, especially for its target audience of high-income shoppers. While this feature is not specific to the in-store shopping experience, it allows customers to contact experts (via phone, text, or FaceTime) for assistance at any time. TARGET Target provides the best store guidance functionality of any retailer we have seen to date. Items you add to your shopping list are automatically connected to inventory, along with a map of the store closest to a user at any given time no zip code input needed. Help shoppers quickly and easily find exactly what they re looking for nearby. Screenshot taken December 1, 2015 Give customers easy, convenient access to experts and customer service reps. Screenshot taken November 5, Trends & Best Practices: Mobile In-Store Experiences In Retail

14 STORE MODE REWARDS & CHECKOUT Customers want shorter checkout and return lines, as well as straightforward, automated loyalty programs. WALGREENS Walgreens is included again, since its loyalty program does a fantastic job of visualizing points and making rewards easy for shoppers to redeem. The Balance Rewards Summary lets shoppers know how much more they need to spend in order to earn rewards or discounts. Make rewards programs easy to understand and have users work towards goals. Screenshot taken October 5, 2015 GIANT Giant Foods Scan It! app was designed to provide the ultimate in-store grocery shopping experience. This app allows shoppers to walk around the store, scan items they add to their cart, and check themselves out. This is one of the best, most tailored experiences we have seen to date. Reduce as much friction as possible between browsing and checkout. Screenshot taken February 8, Trends & Best Practices: Mobile In-Store Experiences In Retail

15 CONCLUSION Throughout 2015, retailers made significant strides in providing their shoppers with valuable mobile experiences. However, it will be important for retailers to understand whether or not those improvements are affecting the bottom line. Mobile in-store experiences have the potential to enhance the shopping experience and increase sales. The mobile channel serves as a complement to other digital and ecommerce channels, which are designed for shoppers at home or on the go. As retailers move deeper into the space, they ll need to design in-store experiences that align with the needs of their particular customers. It is critical to know which segment of your audience you are building these experiences for, and then build for that segment, rather than any shopper you may attract. This will be key to driving usage, engagement and business results. Mobile will unlock a richer, more streamlined shopping experience in 2016 if retailers approach it thoughtfully. FOR MORE INFORMATION AND ADDITIONAL RESOURCES, PLEASE VISIT DMINC.COM/RETAIL-MOBILITY CONTACT US TO LEARN MORE: DMINC.COM

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