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Thursday, March 7, 2013

The App & Mortar Opportunity

Shopping destinations are crowded with connected consumers. However, retail has yet to perfect a means to harness mobility to direct traffic to retail stores. 

What is “App & Mortar”?

By 2010 every destination shopping center was crowded with a new way to drive traffic to their stores, but no-one has been able to do it right. Yet.

At the time, several applications sprung up that tried to address the market including Shopnear.me, Snapette, Shopkick, Fancy, and more. The runaway success of Groupon and LivingSocial (starting a little earlier in 2008) left some important lessons for new ventures in the space. Specifically, retailers were frustrated with cash-flow problems created by newbies who came once and never again, not to mention the potential for erosion of loyalty and brand value.

In 2012 and '13 big retailers are finally taking this opportunity into their own hands. According to Flurry, the “App & Mortar” segment of mobile applications grew by more than 500% in the past year. Flurry’s data indicates much of this growth was driven by the likes of Starbucks, Walmart, and Macy’s, who have all invested significant resources into their own mobile strategy.

Forbes reported that more than 80% of retailers have a presence on mobile (Check out the infographic below by Cognizant). Most of them are offering all the things you’d expect, from shopping and payment to (of course) deals and store location. Retailers who can, do have a mobile presence, and some are doing a great job of executing.

What’s the big opportunity?

Shopping is often about brands, but those brands extend to the destinations. In 2010, my briefly lived startup focused on Santana Row, San Jose, precisely because the location itself is a brand. People travel there to shop, but also to spend an afternoon with family and friends. It’s a social experience as much as anything. These destination cater to a consumer who enjoys spending an afternoon in a well decorated space, where beautiful and unique things surround them, and (of course) can be acquired.

There are hundreds of high-quality individual or regional shops in any given, well-branded, retail destination. This includes a range of retailers from clothing and accessories, to health and beauty services. Are we going to rely on each retailer to have his or her own application? Do the math, that’s a lot applications and no-one wants to spend the energy to keep track of them all.

Big retailers have the advantage, since we all could use a Starbucks app or Westfield Mall app. However, that leaves a huge opportunity for the App & Mortar retail aggregators servicing the destinations and the experience. Connecting people with brick-and-mortar retail through mobile devices will change the way we shop; rather, already has. But the real promise of mobile applications for retail has yet to be fully realized.