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Cartesian Perspectives
Mobile Opportunities for Retailers
October 2012
2. 2Confidential and Proprietary — Copyright © 2014 The Management Network Group, Inc. d/b/a Cartesian. All rights reserved.
Context for today’s discussion
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Mobile technology presents tremendous opportunity for retailers, much
as it has already changed our personal and professional lives
The benefits of mobile extend far beyond m-commerce – mobile has
the potential to differentiate retailer brands, to drive in-store sales, to
streamline operations, and to provide valuable customer insights
Retailers are at a very early stage of implementation – a select group of
innovative retailers is leading the way, but none is yet capturing the true
potential
As technology specialists, Cartesian understands the potential of
wireless – we know the key trends, the enabling technologies, the
ecosystems, and business models
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Evolution of Mobile Retail
Though mobile technology has the potential to transform retail, very few brands have
begun to make the shift
With our expertise in mobile technology, Cartesian is helping
retailers and technology players capture these opportunities
Mobile Retail 2.0
• Use of mobile technology to engage with
customers in-store (e.g., augmented retail)
• Streamlining of store visits (e.g., mobile self-
checkout)
• Delivery of contextually-relevant promotions
(e.g., coupons based on in-store location)
• Tying of loyalty programs to the consumer’s
mobile identity (e.g., check-in for rewards)
• Capture of customer insights from new data
sources (e.g., geofencing)
Mobile Retail 1.0
• M-commerce via mobile web and mobile apps
• Mobile advertising
• Integration with social media and third-party
shopping apps (e.g., Goodzer)
• Support for cross-channel sales (e.g., order on
mobile, pickup in store)
Most retailers today
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US Mobile Facts
Mobile 101
Retailers need to understand the transformational impact of mobile technology, which
is changing consumer behaviors and perceptions
• Mobile technology refresh cycles are
short – customers will often own more
advanced technology than retailers
have implemented
• Mobile has increased consumer
expectations for access to information
and support – consumers expect
everything to be delivered on-demand
• Mobile use allows for high degrees of
personalization – customers demand
flexibility and customization
• Privacy and security are paramount, as
mobile devices are increasingly among
the most personal products consumers
use – mobile outreach must be handled
with care
Implications for Retailers
Source: Business Insider, Flurry, comScore, InMobi, Recon Analytics, eMarketer, Cartesian
Consumers replace their
mobile handsets every
22 months
The average smartphone
user spends 94 minutes per
day using mobile apps*
Mobile devices
account for 26% of
media consumption
More than 40 million
Americans use tablets;
40% of iPad owners use
iPad as their primary PC
8% of internet
traffic comes from
mobile devices
* In comparison, the average smartphone user spends
72 minutes on the web (both desktop and mobile)
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Mobile Shopping
Mobile technology use is already widespread within stores, and generally occurs
without the retailer’s involvement
Customer Experience Funnel
Gain Awareness
Locate
Evaluate
Purchase
Use
Service/
Support
21% of smartphone users are
comparing prices in-store and
using stores as “showrooms”
82% of smartphone users
report noticing mobile ads
36% of smartphone shoppers
purchase items on their
smartphone in store
Retailers need to determine what role to play in supporting mobile technology use both inside
and outside the store, and involving owned and third-party communication channels
Finds location of nearest retailer for a
particular product
Acts as unified loyalty card to replace
existing loyalty cards across multiple
retailers
Alerts consumers of price adjustments
post-purchase, allowing them to get
price difference quickly refunded
Compares price of products across
multiple retailers, and allows user to get
input from friends before purchasing
Provides alerts on deals, ads, and
coupons across retailers based on user
location
Over 38% of smartphone users
have used their phone to make
purchases at least once
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Status of Deployments
Use of mobile technology by retailers is still at an early stage
Advanced Mobile Feature Penetration
of Top 100 US Retailers, 2011
(% of Retailers)
Source: Wells Fargo, Cartesian
• 71% of STORES.com Top 100
retailers plan to implement
multi-channel integration within
3-5 years
• 24% of surveyed retailers view
Associate Mobile In-store
Functionality as a top priority
• 24% of surveyed retailers view
Customer Mobile In-store
Functionality as a top priority
• Within the next 2 years nearly
50% of retailers plan to support
Mobile Phone NFC Payments
More sophisticated functionality such as location-based capabilities or cross-channel support
have been enabled by a minority of large retailers, but are a focus area for the future
9%
16%
24%
30%
31%
45%
48%
0% 10% 20% 30% 40% 50% 60%
Location Based Flash Promotion
In-store Pickup
Personal Recommendations
Reward Game
Inventory Lookup
Social Network Integration
Ratings/Reviews
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Retailer Examples
Some retailers are adopting innovative approaches that employ mobile technology to
increase customer in-store interaction and brand awareness
Retailer Case Studies
Vendor/
Service Provider
Location
Description
Augmented Reality
Global
• Lego has created a personalized,
interactive experience with the
brand, not available online
• Special screen shows full 3D
product when box is held in
front of screen’s camera
• Customer’s phone or tablet can
be used as lens to see alternate
product features (colors,
recipes, etc.)
Interactive App and
In-store Kiosks
US
• Sephora has created an interactive
in-store experience promoting brand
engagement and additional sales
during checkout wait
• Tablets are integrated into makeup
stations, designed to engage
customers who are getting their
makeup done
• Sephora-branded beauty magazine
lets customers browse latest beauty
trends and purchase items in app
• Virtual mirror lets customers follow
Sephora makeup tutorials using
tablet
• Store associates estimated 3 out of
10 customers used mobile app in
stores
Store-centric App
US
• Apple has created an app that
focuses on in-store customer
experience and is tailored to
customer service and expedited
store services
• App recognizes and customizes
information to current store (events,
etc.)
• App allows customers to make
purchases for in-store pickup, or to
scan items in store for self-checkout
• Customer can scan a product to see
detailed info, then click to request
help from a sales associate who is
immediately summoned
8. 8Confidential and Proprietary — Copyright © 2014 The Management Network Group, Inc. d/b/a Cartesian. All rights reserved.
Retailer Examples
Some retailers are adopting innovative approaches that employ mobile technology to
increase customer in-store interaction and brand awareness
Vendor/
Service Provider
Location
Description
Mobile Payment
US & UK
• Starbucks has designed a mobile
payment solution that ties
customers to the Starbuck’s
loyalty program
• Users download the Starbucks
app and link it to gift card or
debit/credit card
• At time of purchase, cashier
scans personal barcode for
payment processing and loyalty
tracking
• Solution currently processes 1M
transactions per week
Self-checkout with
Coupon Integration
US
• Stop & Shop has created an
innovative shopping experience that
helps customers reduce wasted time
during checkout
• Shopper picks up a wand when
entering the store, or uses own
smartphone with a Stop & Shop app
• Shopper scans and bags items as
they are placed into shopping cart
• Related items and coupons are
shown to user after item is scanned
• Checkout occurs at any POS, without
need for employee interaction or
rescanning of items
• Stop & Shop reports a labor savings
of 10-15%, and basket lift of 10%
Virtual Store
South Korea
• Tesco has created a revolutionary
way to shop, turning wasted time
spent waiting into productive time
spend shopping
• Subway stations in South Korea are
wallpapered with posters of virtual
stores with many grocery products
displayed
• Using Tesco app, customers scan QR
codes for each product they want to
add to their online shopping cart
• Store assembles and delivers
shopping cart to user after user is
home
• As a result of the virtual store,
registered members grew 76%, and
online sales increased 130%
Retailer Case Studies (Cont.)
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Apple Retail App
Apple’s mobile app is service-oriented and designed around customer activities; the
app enhances store visits by presenting real-time store information
This best-in-class example illustrates the potential for
mobile technology to enhance the in-store experience
Source: Apple, Cartesian
Apple Case Study: Mobile Smart Store Experience
Main page presents customer with store-specific
information to help them best manage their visit:
App automatically
identifies customer
location Customers who already know what product they
want can use EasyPay’s mobile self-checkout to
quickly get in and out of the store
Customers are informed of upcoming store-
specific workshops
Customers seeking in-store support can make an
appointment with the Genius bar
• Real-time estimates on the number of
customers in line and the next appointment
opening help customers gauge wait time
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Source: Company websites, Cartesian
Innovative Use of Mobile
Mobile represents a natural complement to many loyalty programs, with many
retailers looking to mobile to provide further functionality and differentiation
Mobile Elements of Loyalty Program Mobile Technology Enabler
• Starbucks created an app that combines loyalty and mobile
payments
• App replaces card-based system rewarding customers for
predefined number of purchases
• Encourages loyalty program participation & improves
Starbucks’ ability to capture customer dataRetail – Café
Mobile payments
• Stop & Shop pushes mobile coupons and deals to customers
that use the mobile self-checkout system (requires loyalty card)
• User adds item to cart and discount is automatically applied
• Drives basket lift and a differentiated shopping experience
Retail – Grocery
Indoor location
• Power Up Rewards members gain points for checking in at store
locations
• Non-members are encouraged to join after checking in
• Drive foot traffic & customer engagement
Retail – Consumer
Electronics
Check-in
• Maurices pushes ad or coupon to mobile phone when customer
is located within predefined range of store
• User must opt in to receive promotion
• Improves ad targeting through increased contextual relevance
Retail – Clothing
Geofencing & push
notifications
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Overview
Looking beyond the customer experience, sourcing data from mobile devices enables
retailers to significantly expand their view of consumer behavior and preferences
Source: Cartesian
Customer Behavior Metrics Enabled by Mobile
Furthermore, mobile enables Best Buy to link the two
types of data – behavior can be linked to a unique
customer profile via the customer’s mobile device
Traditional
Metrics
Mobile-
Enabled
Metrics
Consumer Behavior Consumer Preferences
Transactions
Average Basket Value
General Brand Perception
Post-Purchase Customer Satisfaction
Foot Traffic
Dwell Time
In-Store Traffic Patterns
Out-of-Store Location Trends
Real-Time Brand Preference
Real-Time Customer Satisfaction
Omni-Channel Customer History
Mobile Ad Conversion Rates
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Mobile Web / App: What role for your mobile app vs. mobile
website? What app / web platforms to support (e.g., HTML5)?
In-store Technology: How to equip and train sales associates?
What form factors and functionality for customer terminals?
Where are the best ROIs?
Omni-channel: What use cases to support across mobile, online,
and in-store channels?
Mobile Advertising: How to maximize relevance of promotional
message delivery? How to balance user privacy / control and your
promotional objectives?
Social Media and Third-Party Apps: How to best leverage third-
party sites and ecosystems? What to control and what to open?
Loyalty and Customer Analytics: How to involve mobility in loyalty
programs? What novel data sources does mobile technology
enable? What insights can be gleaned?
Key Questions
Retailers face a challenging set of questions around how to maximize leverage from
mobile technology
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Mobile Payments: When to start adopting mobile payments, and
what types? How aggressive a role to play in this nascent market?
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Importance of Mobile
Mobile technology has the potential to influence nearly every aspect of a retailer’s
interaction with customers as well as its own internal operations
E.g., analysis of in-store
traffic patterns using mobile
device traces
E.g., pushed promotional
messages, both in-store
and on-the-go
E.g., warehouse workforce
mobilization
E.g., mobile inventory
check and ordering
with in-store pickup
E.g., mobile app
displaying product info
and expert reviews
Source: Cartesian
In-store customer
experience
Multi-channel
sales and support
Corporate and
store operations
Customer identity
and loyalty program
Marketing and
social media
Mobility
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Cartesian Expertise
Cartesian has direct experience across many areas of relevance to retailers
• Supported a major US retailer seeking to
improve on in-store and out-of-store customer
experiences via mobile
• Conducted a mobile shopping market scan:
retailer activities, consumer shopping
behaviors, and vendor solutions
• Supported the development of a mobile
strategy, with a roadmap for implementation
Mobile Customer Experience
• Assessed the mobile payments landscape with
a focus on NFC-based payment methods
• Evaluated mobile payments solutions and
business models from major players
• Studied the enabling technologies and ongoing
standardization efforts
• Considered market evolution scenarios and
implications for ecosystem participants
Mobile Payments
• Developed a mobile coupon strategy for a
wireless operator
• Assessed the couponing ecosystem and
identified business model options for mobile
couponing
• Evaluated alternative mobile advertising
campaign types and proposed specific
campaign structures
Mobile Coupons
• Assisted a major US brand in developing a new
reward program
• Performed cross-industry benchmarking of
reward programs to understand program
structures, economic drivers, and trends
• Develop multiple options based on corporate
strategic and financial objectives
• Tested options via qual + quant research and
modeled financial impacts
Reward Programs
15. 15Confidential and Proprietary — Copyright © 2014 The Management Network Group, Inc. d/b/a Cartesian. All rights reserved.
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Contact Information
Ed Naef
Vice President
ed.naef@cartesian.com
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