A department store in pocket-sized format

Brick-and-mortar department stores could quickly become a remnant of yesterday's shopping pleasures. Recently I noticed a young guy was checking some pairs of shoes in a local store. As he found his favorites, he took a picture of them with his smartphone, did a little more typing – and left with a pleased smile on his face. This young man probably belonged to the emerging group of "connected customers" who use their mobile devices to make personal shopping decisions. However retailers could actually benefit from this change in shopping behavior: If they leverage the full commercial potential of the mobile shopping channel, they can increase customer loyalty, gain unprecedented insights into their customers' preferences and exploit untapped cross- and up-selling opportunities.

Just like for the communications industry, mobile devices have become a game changing force for retailing. A finding from the recent holiday shopping season indicates that this change is happening at breathtaking speed. Forrester analyst Sucharita Mulpuru noted that 16% of US consumers have been using their mobile devices for purchasing gifts. What's even more astonishing is that this figure has increased by 77% within just one year!

While the new way of buy anywhere get anywhere is quickly becoming a commodity from the perspective of the users, many companies have been struggling to integrate this new channel into their general customer experience management strategy. An interesting example is Amazon. However the US retailer has also provoked some criticism for turning customers into "undercover agents": Amazon's smartphone app offers a rebate if the user takes a look at a book, DVD or any other item in a local shop first and then buys the same item online at Amazon's web shop. And thus usually undercut prices in local stores. On this side of the Atlantic, companies usually decide to move forward with a less offensive mobile strategy. They offer apps that increase customer experience by making purchases on the move as convenient as possible. A fine example is the German sports' wear retailer Sportscheck offering a smartphone app which allows customers to search for items they have photographed with their mobile device. If there is an identical or similar item on stock, customers can purchase it with just a few finger tips. However this approach could prove to be more radical than Amazon's rebate, as Sportscheck is not only turning competitors' stores but even the sidewalk into their own shop window.

As convenient this app is for the customer, as valuable it is for the company itself. First of all, it facilitates impulsive buying. In addition, more potential can be successfully tapped if the data generated by the app users is analyzed. For example, retailers like Sportscheck can learn more about the preferences of their customers both on a global and personal level. Business opportunities are manifold: Retailers could add new items to their range of product if these are photographed by a previously defined number of customers. With this kind of "early warning system", companies could learn which items are becoming fashionable among their customers in real time. And if they combine these insights with traditional customer data within their corporate data warehouse, marketers could precisely define micro-segments of customers they want to address with dedicated campaigns. In the near future, retailers could even offer items that match the customer's latest purchase instead of just suggesting another item from the same line of product.

Paul Winsor