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Retailers must jump on mobile train or get left behind: CTIA keynote

SAN DIEGO – Disruptive technology such as a camera-enabled, Internet-connected PCs in the palm of every shopper means that retailers need to adapt quickly to a newly empowered shopper while at the same time protecting their core brand identity.

In retail, the range of possibilities and ideas often exceed the execution capabilities of retailers, particularly in emerging spaces like mobility. This issue was address during the keynote address at the Global Retail Executive Council’s Mobile Retail Experience at CTIA Wireless I.T. & Entertainment.

“We began looking at mobile because we believed that we should be able to reach our customer anytime, anywhere,” said Robert Fort, former CIO and vice president of information technology for Virgin Megastores at Virgin Entertainment Groups. “We wanted to bring our customers enthusiasm for their mobile phones into the retail environment.

“In the current landscape, mobile is the biggest game-changer for retail,” he said. “Customers are increasingly tech-savvy, and customers are bringing mobile technology into the store, meaning the store environment is becoming more interactive and the customer can become active instead of passive.

“The paradigm shift to mobile is fantastic, because it gives retailers the ability to measure customer interaction and is improving retailers’ ability to manage that interaction.”

Virgin Megastores is a now-defunct international entertainment retail chain of record stores founded by Sir Richard Branson.

Victims of competition from online retailers and illegal downloading, the Virgin Megastores were acquired by real estate concerns and have all been closed down. The Times Square location will soon be a Forever 21.

In addition to music, Virgin Megastores sold movies, books, games, apparel and electronics. It has a presence in the U.S., Europe, the Middle East, Japan and Australia. Only its U.S. and British stores have shuttered.

At its peak, Virgin Megastores had 25 destination locations nationwide and logged 36 million visitors annually.

The retailer’s core demographic was entertainment-oriented, technology-proficient consumers in their teens and twenties.

The case for mobile retail
Research reveals that consumers make 70 percent of their buying decisions once inside the store, according to Mr. Fort.

Retailers are looking for ideas that will distinguish their in-store experience from competitors and simultaneously increase sales, and mobile retail is the answer.

While global results of this phenomenon are difficult to determine during these early stages of growth, some analysts believe that mobile coupons will increase by 30 percent during the next two years and exceed 200 million users by the year 2013.

Mobile coupons are hardly the only use case for retailers, however.

It was a shame that the Virgin Megastores folded when they did, because the retailer had started to ramp up its mobile initiatives and had a host of additional mobile programs in development.

Mr. Fort shared many of these with the audience, revealing a comprehensive mobile strategy.

“Mobile was appropriate for our demographic—they were technology-oriented and tended to be younger people living on their phones,” Mr. Fort said. “Initially we used it as an extension of self-service capabilities.

“Traditionally CD and DVD types of purchases are a browsing experience, so what if you eliminate kiosks and move it right to consumers’ mobile phone?” he said. “In addition to helping with customer interaction and its role as a marketing vehicle, mobile can function as a transaction processor.

“We wanted to actually start facilitating the entire sale and check-out process through the phone.”

No one can accuse Mr. Fort of a lack of ideas regarding the integration of mobile into the retail experience.

Mr. Fort envisions a check-in process enabled by near field communication and GPS where consumers opt in to let a retailer track their in-store behavior, addressing privacy concerns and making sure consumers know the brand is offering them value.

Mobile also can offer retailers a way to personal each consumers experience via digital signage, targeted mobile coupons and product demonstrations.

There are many service assistance applications for mobile such as price or inventory lookup, interactive store maps, instant messaging with employees or summoning assistance and an “endless aisle” special-order experience.

“If you don’t have the product right in the store, the consumer can order it right there online without leaving the store using their phone,” Mr. Fort said.

Mobile integration at the point of sale and payments via a mobile wallet could help retailers create friction-free transactions, according to Mr. Fort.

Retailers could send exit surveys when consumers are walking out of the store for feedback. For example, they could send a question via SMS asking consumers to reply Y or N.

Mr. Fort also envisioned various ways to use mobile to encourage consumer participation in the retail environment such as a jukebox letting consumers control the music being played in-store or a community/social shopping experience via the mobile Web.

Mobile is also valuable as a branding tool, according to Mr. Fort, who lobbied for the creation of a Virgin Lifestyle mobile application that would provide virtual synergy for all of the parent company’s various brands.

“From a customer standpoint, Virgin is one big continuous brand offering value across all segments,” Mr. Fort said. “Retailers should ask themselves ‘Who is my customer and what is their value to me across all of my brands?’ and keep track of that information.”

Retailers need to ask themselves a series of questions. Will a mobile solution improve the customer experience? Will it increase sales?

Will it save us money? Will it improves our margins or improve our performance? In the case of mobile payments, is the cost per transaction lower?

Will it give us a competitive advantage? Will it increase market share, augment brand value, or increase ROI?

Despite all of the potential value mobile can provide to retailers when used well, there are challenges to leveraging mobile effectively that brands should take into consideration.

Brands need to allocate resources to continually refresh and schedule media assets.

There is fragmentation within the mobile industry, with a variety of mobile formats, platforms and standards to take into account.

“It’s the wild west out there right now,” Mr. Fort said.

Brands need to consider the sustainability of the mobile platform for future growth. Other challenges include infrastructure, regulations, data security and transaction costs.

However, if used effectively, mobile could be the key to turning around the current economic slump.

“That light at the end of the tunnel is an approaching train,” Mr. Fort said. “The focus always needs to be on the customer experience for retailers to maximize the business opportunity.

“Retailers should ask themselves ‘Do I want this to happen?” he said. “Because if you do, all of these concerns will be overcome with ease.”