Retailers Miss Opportunity To Reach Shoppers With Social, Mobile Commerce

The accelerated momentum in e-commerce, social mobile and daily deals will energize holiday sales, which officially launch on Black Friday. But it is unclear how that will carry over into consumer buying habits and merchant selling practices in 2012.

This emerging status quo will continue to reshape the retail and marketing experience, and even stimulate a lagging economy. While consumers charge ahead, marketers and retailers generally are not positioning themselves to take advantage of the phenomenon.

Americans will shop in greater numbers -- and spend more -- online the day after Thanksgiving than last year’s Black Friday, as well as throughout the holiday season, experts say. But even the biggest and savviest retailers are struggling to mine that opportunity.

Dominant retailer Wal-Mart continues to raise the bar on both sides: opening from Thanksgiving Day evening and promoting in-store layaway, while opening new pop-up stores designed to promote holiday electronics and toys purchased on its site with free shipping.

Target and other brick-and-mortar retailers are quickly following suit.

This comes amid Wal-Mart forecasting flat same-store sales growth for the year and retaining customers as they shift between physical and online storefronts. The trade-off -- as it is for all retailers -- is cannibalizing themselves or being devoured by someone else’s stores, Wal-Mart executives say.

Despite having the most robust Internet traffic of any retailer, Wal-Mart claims less than 10% share of all online visits.

Best Buy, Loews, Home Depot, Staples, Office Depot, Costco, Walgreens, and CVS are among the biggest domestic franchises with the worst online shopping record, according to a recent analysis by 24/7. How bad is it? Even with the collapse of Circuit City, Best Buy -- another tech giant that doesn’t get it -- has struggled for market share, especially in key television and computing categories. It still hasn’t mastered the art of mobile consumer connections, despite its recent $1.3 billion acquisition of Carphone.

All this fumbling is woefully inconsistent with the exploding world of mobile and online commerce.

U.S. retail ecommerce holiday sales will rise 16.8% this year to $46.7 billion and comprise more than 8% of total retail sales, which will grow only 3%, according to eMarketer.  Overall, e-commerce sales for the entire year will spike by nearly 17% to $195 billion, fueled by convenience, comparison shopping and cost-savings with higher-income consumers; zealous smartphone and tablet users will lead the way.

About half of these mobile-connected consumers plan online purchases this holiday season, according to a recent PayPal-Ipsos survey, suggesting that mobile commerce has the potential to morph into a major revenue stream.

With online sales coming at the expense of in-store sales, it is difficult to project whether it can be a catalyst for overall economic growth next year. Half of one percent growth in retail sales for October (0.5%) suggested a rebound in consumer spending, if it had not been largely driven by sales of Apple’s 4S iPhone. Economists are concerned that Americans could begin spending more on declining or stagnant earnings -- a trend that cannot be sustained in stores or online.

While the strategic use of social networking on mobile-connected devices can be a masterful advantage, too many national and local marketers and retailers are cowering from that challenge. Two-thirds of all adult Internet users (or 65%) use social networking sites for friend communications and recommendations, according to the PEW Research Center.

But nearly 7 in 10 (or 68%) of global marketing officers feel prepared for the demands of social media marketing, according to a recent IBM report, and 71% feel challenged by the marketing data explosion. That is a major shortfall, since 75% of active social network users are more likely to spend heavily on music and nearly half are more likely to spend heavily on clothing, shoes and accessories.

Facilitating e-spending behavior is a matter of how rapidly and securely mobile payments can be sold to consumers. Google’s fledgling Wallet technology continues to gain traction, with major retailers such as The Gap, Old Navy and Banana Republic, allowing shoppers to simply tap their smartphone wallet apps in-store for an instant 15% discount and transaction. The demographic involved will lend itself to social sharing and rapid viral adoption. It is the element that retailers most underestimate and fail to understand.

The need to share timely sales information and discount sales incentives makes Black Friday the perfect opportunity to experiment. Even the Salvation Army has shifted to digital donations this season, testing the use of Square, a mobile payments start-up that facilitates credit card payments on mobile devices.

Retailers and marketers that remain on the fence need only look at the obvious.
Topping the list of most-wanted holiday gifts are Apple’s iPad and iPhone, according to Nielsen. Juniper Research forecasts an explosion of the tablet market through decade’s end to 253 million units shipped in 2016 from this year’s 55 million -- in addition to an estimated 67 million e-reader devices that will be sold in 2016, compared with 25 million in 2011. Consumers are already where marketers and retailers need to be.

The goal is reaching, influencing and transacting with connected consumers in relevant and empowering ways that create an economic lift.  It is a sweet spot that can be a win-win for all concerned.

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1 comment about "Retailers Miss Opportunity To Reach Shoppers With Social, Mobile Commerce".
  1. Thom Kennon from Agency Pure , November 22, 2011 at 10:28 a.m.
    Brava, Diane, for an insightful, comprehensive take on the week, the quarter, the coming year ---- and the retailers and brands struggling way too mightily to figure out how to connect with and serve their customers. I would only add the deep, disruptive and increasing influence of Amazon on all this. More and more retailers - both in-store and online - are simply serving to help educate consumers ... so they can go to Amazon and buy it for less alongside all the other products that will be under trees this holiday season. @tkennon | bigevidence.blogspot.com | +Thom Kennon