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Urban Outfitters, H&M lead teen retailers in leveraging mobile for engagement

H&M, Kohl’s and Urban Outfitters are nailing the mobile experience in building interactive in-store and loyalty efforts, an area where American Eagle Outfitters, Aéropostale and Abercrombie & Fitch could learn from as sales continue to plummet for the three big A’s.

Aéropostale, American Eagle Outfitters and Abercrombie & Fitch are struggling to turn around sinking sales and are relying on mobile to spark up some engagement with fickle teenagers. However, these brands are missing the mark on mobile by solely focusing on mobile commerce.

“Mobile can’t solve world hunger,” said Sheryl Kingstone, Toronto-based research director at Yankee Group. “It can help with better marketing, but these companies face stiff competition now from trendier stores.

“If a teen is already not shopping there because of merchandise selection, mobile can’t help,” she said. “It can help with mobile offers along with mobilizing their loyalty program to gather better customer behavior and patterns.”

Fickle shoppers?
Although teenagers are not spending their own money to shop now, insight from this demographic is a strong indicator of what retailers’ next-generation mobile strategies will look like once the group is shopping for themselves.

Over the past few years, teenager retailers have beefed up their mobile presences to stay relevant to teenagers, particularly around creating streamlined commerce experiences.

For example, American Eagle Outfitters led the pack in a recent study of 10 branded retail apps from Plastic Mobile when it comes to incentivizing consumers with exclusive offers and deals (see story).

However, American Eagle Outfitter’s profits were down 68 percent and revenue dropped six percent in the third-quarter of 2013 from 2012.

Abercrombie & Fitch also seems to have the mobile commerce experience down despite a slip in revenue.

The retailer was named one of the top retailers that offers the smoothest mobile checkout by LightningBuy in November (see story).

Abercrombie & Fitch reported a 12 percent revenue drop in the third-quarter of 2013. Similarly, Aéropostale’s third quarter revenue was down 15 percent.

At the same time that teen retailers are streamlining mobile commerce apps and sites, many are leaving much to be desired in transforming the in-store experience where the impact on teens is most prominent.

While technology obviously plays a big role for millennials, the bigger issue for teen retailers is staying relevant with engaging in-store content and experiences that bring back repeat traffic.

“The problem is in the payment,” said Nikki Baird, Denver-based managing partner at RSR Research. “While teen retailers need to connect with teens, they also need to stay relevant to the people who are most often paying – the parents.

“A lot of teens deal in cash, and mobile isn’t going to facilitate a cash-based relationship,” she said.

“If a teen retailer is saying that mobile is going to save their company, they’re looking in the wrong place. They need to look at their merchandise and their prices and make sure they are brand-right.”

Building mobile engagement
H&M, Kohl’s and Urban Outfitters are all examples of teen retailers that are benefitting from focusing less on mobile commerce and more on engagement.

Data from Mobidia finds that H&M and Kohl’s, which both boast significant sales from teenagers, are getting mobile engagement right.

Kohl’s mobile app receives a 73 percent monthly engagement rate, and H&M brings in 61 percent of app users on a monthly basis. To compare, Gap has a 48 percent monthly usage average, and Target clocks in at 30 percent.

“Both H&M and Kohl’s have mobile apps that deliver rich shopping experiences that go beyond price lookups to harness key enablers, including omnichannel experiences such as inventory checks, rewards, look books, social and cross-channel shopping tools,” Yankee Group’s Ms. Kingstone said.

H&M is also gaining some steam over Abercrombie & Fitch, American Eagle Outfitters and others because of the fast turn-around on merchandise, which is appealing to teens since products are cheap and there is always something new to buy.

Urban Outfitters on the other hand is relying on loyalty and social as key drivers in mobile, which appear to be paying off based on its third quarter results.

For example, the brand recently added a news feed feature to its app (see story).

Urban Outfitters’ app also plays up rewards and lets consumers compete in challenges to unlock content. There is also a branded radio section to the app.

Urban Outfitters’ third quarter revenue was up 12 percent from a year earlier with sales hitting $774 million. Additionally, the brand’s same-store sales were up 7 percent.

The key for teen retailers in creating compelling mobile experiences is to focus on the social and in-store features that spur interactivity and social engagement, according to Lauren Freedman, president of the etailing group, Chicago.

However, accomplishing this will be harder for teen retailers than others since millennials are constantly changing their opinions about brands.

“It will be tough as retail is and always will be about product,” she said. “Additionally in the teen market, they are very fickle making it more difficult to turn things around.”

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York