• Cognizant Reports
Retail Mobility: Consumers in Control
The new playing field for retailers is a mobile one, and the most
successful retailers are overcoming challenges to provide a compelling
mobile experience for tablet- and smartphone-based shopping.
Executive Summary
The retail industry has embraced the ubiquity of
mobile devices across the consumer landscape.
Studies of shopping behavior clearly indicate
increased reliance on mobile devices, especially
by value-driven consumers for product research
and comparison.
Large retailers are responding by both accelerating and continuously fine-tuning their mobile
commerce channel strategies. Retailers across
categories have had varying levels of success
in harnessing mobility, but the trend is clear:
Successful retailers are those that are succeeding
with mobility.
The 2011 U.S. holiday shopping season witnessed
an explosion in shopping conducted using mobile
devices such as smartphones and, increasingly,
tablets. Various surveys revealed a sharp rise in
the number of mobile devices used to research
and purchase products over the previous year,
especially on key shopping days like Black Friday.
This indicates a fundamental shift in how consumers have begun to approach the mobile shopping
proposition, one that is likely to be even more pronounced in the current holiday shopping season.
The new playing field comes with its own challenges, the biggest being continuously changing
cognizant reports | december 2012
technology and the rapidly evolving landscape of
third-parties and their related solutions.
Mobility is one of the few areas where retail has
led other industries. Most mobility investments
have been driven by the ever-increasing number
of consumers — existing and potential — armed
with smart devices with access to high-speed
Internet and the resulting demand for mobile
shopping solutions. But mobility in retail has also
been impacted by third-party applications and
offerings such as RedLaser and Decide, which
provide intelligence to customers unavailable just
a short time ago.
The interplay of the various actors in this
environment affects the outcome for retailers
striving to build a successful mobile commerce
channel. Factors include their strategies around
app development and design; their understanding of — and response to — consumers' mobile
shopping behavior; the way they leverage lessons
learned from the first wave of e-commerce; and a
desire to keep pace with the plethora of platforms
and applications proliferating today.
Additionally, the growth of tablet usage has
created an even greater impetus for retailers
to develop and execute a mobile strategy.
Tablet owners shop more, have a higher conversion rate and ultimately spend more using their
tablets than do the owners of smartphones — due
primarily to the improved shopping experience.
Tablet customers and applications should be the
highest priority for retailers today.
Mobile strategies must address capabilities
through both mobile browsers and applications. While customers can be attracted through
the browser, many retailers feel they can best
retain customers through capabilities only
possible through a mobile app — thus the need
for both. However, shoppers are growing more
aware of the demands that mobile applications
place on their smartphones, and retailers need
to be careful of overloading capabilities and,
subsequently, data and battery usage.
Mobile Commerce Trends
Mobile-led shopping is on the rise. Moreover,
mobile-empowered consumers are rewriting
the rules of the retail game, compelling retailers to play along. Retail revenues generated by
the mobile commerce channel are projected to
influence 17% to 21% of all store sales by 2016.1
One reason: Consumer bargain-hunting is
significantly bolstered by smartphones and
tablets. With economic uncertainly abounding,
shoppers who engaged in "digital deal-seeking"
during the 2011 holiday season utilized their smart
devices to research products, compare prices and
secure the best discounts available (see Figure 1).
These near-ubiquitous devices equipped buyers
with superior tools, strengthened their purchase
decisions and improved their overall shopping
experience. According to a Google study, 77%
of tablet owners used their devices for shopping
during the 2011 holiday season.2 A National Retail
Federation survey notes that 37.4% of consumers with tablet devices used them to conduct prepurchase research during the 2011 Black Friday
weekend, and 25.7% used them to buy products.3
Our research, conducted with over 2,000
shoppers in 2012, confirms that mobile checkout and payment are not yet embraced by the
majority of consumers, but younger shoppers and
high-income shoppers show the highest propensity to take this approach. Thus, we believe it is
a matter of “when” and not “if” retailers should
begin developing mobile checkout capabilities
(see Figure 2, next page). (For more detail, explore
our Third Annual Shopper Experience Study,
conducted with RIS News, “Enabling Retail
Without Boundaries.”)
The Tablet Phenomenon
According to research from the E-tailing Group,
tablet owners use their devices for shopping to
a greater degree than smartphone owners.
The survey found that 69% of tablet owners
rated their recent shopping experiences via
these devices superior to the smartphone, with
39% reporting a significantly better experience. The remaining 30% rated their shopping
experience as somewhat better vs. shopping with
their smartphones.4
Shopper Use of Smartphones Leading into the 2011 Holiday Season
Looked up product information
57%
Compared prices
52%
Searched for coupons
47%
Scanned a barcode or QR code
43%
Checked inventory availability
40%
Redeemed a digital coupon
39%
Used shopping app to earn points
30%
Used mobile payment
24%
0%
10%
20%
Source: Shoppersciences.com Holiday Shopping 2011 Survey
Figure 1
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30%
40%
50%
60%
Features that make the tablet more enjoyable for
shopping include a larger screen and better user
functionality for browsing. A significant amount
of online shopping is done in the comfort of a
living room, and with their larger display and
immersive features, tablets enhance the entire
shopping experience. Also, tablet owners tend
to be gadget-buying early adopters — young,
educated and affluent and, hence, traditionally
greater spenders.
A Forrester/Bizrate survey clearly indicates that
tablet owners across all age groups use these
devices for shopping and prefer tablets over smartphones for shopping-related activities (see Figure
3, next page). The trend is more prominent among
the younger Gen Y and Gen X consumers, as they
are early adopters of gadgets. In fact most Gen X,
Gen Y and baby boomer consumers find shopping
on a tablet at least as convenient as on a PC.
Adobe Digital Index analyzed the more than
16.2 billion online transactions of over 150 U.S.
retailers in 2011. The research indicates that tablet
visitors are more likely to make a purchase and
spend more per purchase than other visitors
using other devices.5 Adobe also predicts that for
the 2012 holiday season, tablets will spearhead
the online sales channel. Tablets will constitute
13.5% of all online sales, followed by smartphones
(6.5%) and other devices such as e-readers (1%).
The average order value (AOV) by tablet visitors
was 16%, 56% higher than smartphones and
laptop/PC purchases for the 2011 holiday season
(see Figure 4, next page). The AOV of purchases
made using tablets also remained significantly
higher than smartphone and laptop/PC visitors
on Black Friday and Cyber Monday.
Retailer strategies for the 2012 holiday season
and beyond should focus on developing Web sites
and apps optimized for the unique user experience offered by tablets. This may encourage
these consumers to shop more than they do when
visiting sites optimized solely for smartphones
or traditional computers. Further, they should
develop promotions and incentives that appeal
High-Income Shoppers Show Highest Propensity to Use Mobile Checkout
Electronics
>$150K
$75K - $149K
$25K - $75K
<$25K
Apparel
>$150K
$75K - $149K
$25K - $75K
<$25K
Health & Beauty
>$150K
$75K - $149K
$25K - $75K
<$25K
Grocery
>$150K
$75K - $149K
$25K - $75K
<$25K
Household
>$150K
$75K - $149K
$25K - $75K
<$25K
0%
In-store
Web site
20%
40%
Mobile (using smartphone)
60%
Mobile (using tablet)
80%
Phone and others
Source: “Enabling Retail Without Boundaries,” Third Annual Cognizant Shopper Experience Study,
conducted with RIS News, 2012
Figure 2
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100%
Consumers Prefer Shopping on Tablets
65%
I use my iPad/tablet more
than my smartphone for
shopping-related activities
72%
67%
51%
60%
62%
57%
It is as easy to visit and/or buy
from retail sites on my iPad/
tablet as it is on my computer
42%
73%
70%
I would buy/have bought
from a retail Web site
using my iPad/tablet
64%
48%
Gen Y
Gen X
Boomers
Seniors
Source: Forrester/Bizrate Insights, Q2 2011 Tablet Commerce Flash Online Survey
Figure 3
more directly to tablet visitors and/or utilize the
tablet user experience.
Apps vs. Mobile Browsers
Dedicated mobile applications have been a
cornerstone of retailers' mobile strategies since
the introduction of the iPhone in 2007. Our
research indicates that 26 of the top 30 retailers
(by revenue) have a dedicated iPhone app, and
23 have optimized their Web sites for the iPhone
browser. Our study also suggests, however, that
consumers, overall, do not show a preference for
a dedicated app across all stages of the purchasing cycle. In some cases, they display a marked
disinclination toward using a dedicated app over
a Web site optimized for mobile browsers, according to an Adobe survey (see Figure 6, next page).
Conversion rates from tablets are also substantially higher than those from smartphones.
For the 2011 holiday season, the conversion
rates from tablets were 1.8% higher than those
of smartphones. The rate further increased on
Black Friday and Cyber Monday, when they were
2.4% and 3.2% higher than smartphone visits
(see Figure 5, next page).
With the number of tablet owners expected to
skyrocket over the next few years, these shoppers
potentially constitute the most important market
segment that successful retailers will factor into
their mobile and merchandising strategy in the
years ahead.
Consumers seem to prefer browsers over
dedicated apps because of the convenience
of simply typing their queries directly into the
Tablets Claim Higher Average Order Value
$91
Black Friday
$119
$129
$100
Cyber Monday
$113
$123
$71
2011 Holiday
Season
$96
$111
$0
$20
$40
$60
$80
(Average order value across devices)
Smartphone
Laptop/PC
Tablet
Source: Adobe Digital Index Report, 2011
Figure 4
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$100
$120
$140
Tablet Conversion Rates Substantially Higher Than Smartphones
1.0%
Black Friday
4.4%
3.4%
1.0%
Cyber Monday
4.8%
4.2%
0.70%
2011 Holiday
Season
3.2%
2.5%
0%
1%
Smartphone
2%
Laptop/PC
3%
4%
5%
6%
Tablets
Source: Adobe Digital Index Report, 2011
Figure 5
browser instead of having to first search for and
then download apps from an app store. Given that
the mobile browsing and search environments for
most devices closely resemble the desktop experience, it seems that desktop-based browsing
behavior is being transferred to the mobile environment. Finally, most consumers are unlikely to
download and maintain a large number of apps.
achieved a higher percentage of sales through
mobile devices than their competitors (see
Figure 8, page 7).
RSR research also indicates that most retailers
are looking to leverage mobile devices to increase
customer interaction and intimacy and also to
provide better tools to their associates. This
objective was given higher priority than “save the
sale,” indicating that retailers view mobility as a
strategic capability (see Figure 9, page 7).
Retailers’ Mobile Strategies
Our study of retailers’ mobile strategies reveals
significant variations in their pursuit of growth
in the online and mobile channels. A major
variation is the extent of sales achieved
through e-commerce/mobile channels. Studies
from Retail Systems Research (RSR) indicates
that retail leaders (those that have grown faster
than the average industry growth rate of 8.85%8)
However, when retailers’ planned investments in
the mobile channel are assessed, this strategic
intent is less visible. Most retailers seem to
be playing catch-up and are still working to
develop baseline capabilities (see Figure 10,
page 8). Using our annual Shopper Survey as
Shoppers Prefer Browsers to Mobile Apps
67%
72%
Mobile Web browser
68%
63%
33%
28%
Mobile application
32%
38%
Browsing and searching products
Registering/receiving online
promotions and coupons
Researching and reviewing products
Purchasing and order tracking
Source: Adobe Mobile Consumer Survey
Figure 6
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a guide, most shoppers are giving retailers a
reasonable timeframe in which to integrate mobile
capabilities throughout their organizations;
however, younger and more affluent shoppers
will be most sensitive to these gaps. Thus, while
retailers might be able to make it through the
2012 shopping season without true mobile
integration, we don’t believe shoppers will grant
them the same latitude during 2013 and beyond.
regarding customer preferences, return on
investments and technological approach.
Large Retailers’ Strategies
During the first quarter of 2012, Cognizant
Business Consulting’s Retail Practice compared a
number of U.S. retailers’ mobile capabilities across
several parameters. The intent was to study the
variations, if any, in their mobile capabilities and
technical platforms, as well as to assess the range
of services implemented to capture the attention
of the mobile-enabled consumer (see Figure 11,
page 8). Findings include:
The challenges of implementing a robust mobile
strategy are exacerbated by the sheer variety
of technologies and platforms, the rapid pace
of growth of new technologies, and uncertainty
Quick Take
To App or Not to App
Retailers lagging behind in the race to offer mobility have either been hampered by resource and
infrastructure challenges, or are feeling overwhelmed by what they see as the scorching pace of
adoption and the leaders’ rapidly evolving capabilities. Also, many are unable to decide whether to
introduce an app or use the conventional e-commerce Web site for their offerings.
According to a survey by Adobe, despite all the attention branded apps received in 2011, the connected
consumer does not like shopping via branded smartphone or tablet apps. Instead, a significant
majority chose smartphone or tablet mobile browsers as their preferred platform.6 Even as investments
rise, successful retailers will need to continuously evaluate how their apps integrate with the lifecycles
of targeted consumers.
Another survey by RSR reveals that 33% of retailers remain “neutral” on mobile apps, and 20% do not
believe apps will yield more engagement than a mobile site.7 Meanwhile, 47% think mobile apps will
add value to their brand offering, and 79% feel that just creating another version of a desktop-based
e-commerce site is not a viable option (see Figure 7).
Will an App Be Apt?
A downloadable app
will yield more engagement
than a mobile site
9%
38%
33%
19%
1%
1%
A cut-and-paste version
of a full e-commerce
site is a viable mobile strategy
12%
51%
28%
7%
0%
20%
Strongly agree
40%
Agree
Source: Retail Systems Research
Figure 7
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Neutral
60%
Disagree
80%
100%
Strongly disagree
Retail Leaders Sell More Through Mobile Devices
Leaders*
10%
17%
Others 5% 5%
24%
41%
27%
0%
20%
7%
55%
40%
9%
60%
80%
100%
(Percent of annual sales from mobile devices)
More Than 5%
3%-5%
Less than 2%
None
Don’t know
* Retail leaders are defined as those that have grown faster than the average industry growth rate of 8.85%.
Source: Retail Systems Research
Figure 8
•
Business capability: There was a fair degree
of similarity among retailers in similar
sub-segments, with some basic capabilities
extending across all offerings. For example,
two luxury department stores offered basic
deals and in-store events that are likely to be
of interest to their customers.
• Technical platform: The iPhone appeared
to attract the heaviest concentration of
capabilities, although the pace of Android
releases is increasing.
•
Implementation/release timing: Most retailers have implemented major functionality in
fairly large releases that typically occur only
once or twice a year.
• Product-related research and pricing is the
most popular service that retailers provide
through their mobile site/app, followed by
store location services.
• Check-out services are the least popular
mobile service offered by retailers. The
complexity of integrating back-end supply
The Mobile Opportunity
Deeper customer engagement to build
loyalty through mobile channels
73%
25%
2%
Identify innovative mobile use cases
that no one else is doing yet
61%
27%
11%
Deeper customer engagement to drive
sales through personalized offers
61%
27%
11%
Deeper insight into shopper behavior
through mobile site or app
59%
34%
7%
Empower store employees through
mobile site or app access in stores
41%
41%
18%
Mobile "save the sale" at the shelf
40%
42%
18%
30%
Stop the decline in store sales
Mobile in-store concierge to alleviate
sales burden from store staff
27%
Disrupt other retailers by providing a mobile
experience that encourages the use of my product
27%
Discourage the use of price comparison
by offering another mobile option
16%
Very valuable
Source: Retail Systems Research Survey
Figure 9
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36%
44%
34%
29%
48%
41%
Somewhat valuable
25%
43%
Not valuable
Mobile Capabilities: Investment Plans
Register/redeem gift cards
17%
Click to call
17%
21%
Purchase gift cards
17%
21%
Check loyalty status
17%
21%
Buy merchandise
17%
Receive coupons/offers
17%
28%
19%
23%
Access product reviews
15%
28%
0%
10%
20%
Budgeted project
30%
40%
50%
Planned, not yet budgeted
Source: Retail Systems Research
Figure 10
chain and payment systems is a significant
challenge in providing such services.
• Services aimed at improving the shopping
experience — from store location services and
product locators to couponing services — are
a key component of mobile app development
strategies for the retailers studied.
• Coupons and discounted prices remain a
significant driver for mobile shopping, and
hence, most of the retailers studied provide
coupons to attract customers.
their ongoing business plans and technical release
strategies. RSR found the key inhibitors for mobile
commerce to be budget and ROI, closely followed
by a lack of skilled mobile/ e-commerce resources
(see Figures 12 and 13, next page).
Most retailers agree that quantifying the returns
from mobile commerce investments is difficult,
and a significant number (28%, as shown in
Figure 12) also state that the fast pace of
technology change makes it difficult to keep up.
A key differentiator between retail leaders and
other players is that leaders recognize consumer
trends before others and so are better equipped
to stay a step ahead of the technological curve.
Because many retailers introduced price-match-
Challenges Facing Retailers
Despite the progress so far, retailers still need
to devote a fair amount of resources to further
develop and integrate mobile capabilities into
Mobile Services Offered by the Top 12 Retailers
Research products and pricing
12
Geolocation services
11
Loyalty/coupons
9
Dedicated app
9
Check-out
8
0
2
4
6
Source: Cognizant Business Consulting, 2012
Figure 11
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8
8
10
12
14
Organizational Obstacles for Mobile Commerce
ROI is hard to quantify
60%
Budgeting — there is little
capital investment available
51%
We don't have enough e-commerce/mobile
resources to manage all the available opportunities
40%
Difficulty getting IT resources for
e-commerce/mobile projects
37%
Mobile technology changes too quickly
for us to be able to make solid investments
28%
Stores don't understand the mobile,
social or cross-channel opportunities
19%
Stores are a higher technology
investment priority
19%
Our executive team doesn't
understand the mobile opportunity
16%
We don’t know how to turn data gained from
mobile channels into actionable business intelligence
16%
The marketing organization does not understand
the digital strategies we need to support
9%
Source: Retail Systems Research
Figure 12
ing policies late in 2012, they are looking to mobile
to arm associates with capabilities to address
shoppers’ concerns at the point of purchase.
The Road Ahead
We believe successful retailers will concentrate on
the following key elements for a winning mobiledevice sales strategy:
•
Pay obsessive attention to both content
and design: Craft a user experience that goes
beyond just a mobile app and Web site to a
mobile-optimized Web experience.
•
Leverage
existing
technology
and
intelligence where possible. Apply current
investments, existing tools and technologies and accumulated knowledge associated
with prior desktop delivery methodologies to
provide mobile-optimized experiences.
• Listen to what customers tell you and learn
from their behavior. Continuously assess
mobile shopping and usage behavior, satisfaction levels and expectations by leveraging
the wealth of analytical data capture and
analysis tools.
Mobile Business Challenges
Mobile price comparison at the
shelf is hurting our business
24%
4%
33%
Our competitors have a mobile
strategy and we need to respond
23%
24%
31%
Our competitors don't have a mobile strategy
Store sales are getting
cannibalized; mobile can help
33%
38%
Mobile technology is moving
too quickly; we can't keep up
38%
48%
29%
We're seeing significant online traffic
from mobile sources and need to respond
42%
81%
Consumers are using mobile as part of their
shopping experience and we need to be there
Leaders
Others
Source: Retail Systems Research
Figure 13
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9
92%
•
Engage across a variety of consumer
segments: Smartphone adoption will soon
be ubiquitous, and differences in user
engagement will narrow. Retailers must be
smart about ensuring that large consumer
segments are not under-served due to a
narrow focus on one slice of the pie. Doing
this requires:
> Integrating their mobile capabilities as part
of a multichannel/omni-channel business
organization, focused first and foremost on
the customer experience.
>Developing and executing a technical
development strategy that brings new
capabilities to market at a speed that meets
consumer needs.
With mobile platform-influenced revenues
estimated to be about one-fifth of retail revenues
by 2016,9 the choices that retailers make in
their strategies and related investments will be
a key indicator of future business performance.
As previously discussed, most shoppers are
giving retailers some latitude in how quickly they
develop mobile capabilities, but building these
capabilities takes time. Retailers cannot wait to
develop strategic capabilities that will impact
such a large portion of their revenue.
These strategic choices will determine whether
these revenues will come at the expense of
existing channels or will open up a plethora of
possibilities, such as deeper and more meaningful
consumer engagement. Successful retailers are
treating (and will continue to treat) mobile retail
as a strategic imperative and not merely as an
adjunct to the existing e-commerce channel. The
mobile application strategy for retailers is thus a
C-suite issue and not merely a to-do item on the
e-commerce division's agenda.
Footnotes
Michelle Hernandez, “The Mobile Influence Factor,” Deloitte Digital, June 27, 2012, http://www.
deloittedigital.com/blog/the-mobile-influence-factor.
1
“Tablets and Smartphones Become Holiday Shopping Assistants,” eMarketer, Dec. 8, 2011, http://www.
emarketer.com/Article.aspx?id=1008725&R=1008725.
2
“Big Online Gains For Black Friday Weekend, with Help from Tablets,” eMarketer, Nov. 29, 2011,
http://8.10.209.13/Article.aspx?R=1008710.
3
Lauren Freedman, “The ‘Shopping’ Mindset of the Mobile Consumer,” E-tailing Group, March 2011,
http://shopcoffeetable.com/wp-content/uploads/2011/05/e-Tailing-Whitepaper-March-2011.pdf.
4
“The Impact of Tablet Visitors on Retail Websites,” Adobe Digital Marketing Insights, 2012, http://www.
cmo.com/sites/default/files/Digital_Marketing_Insights_WP_FINAL.pdf.
5
“Adobe 2012 Mobile Consumer Survey,” Adobe Systems, Inc., 2011, http://success.adobe.com/en/na/
programs/products/digitalmarketing/offers/1207_20860_mobile_consumer_whitepaper_generic.
html?s_osc=701a0000000l9JeAAI&s_iid=70130000000l88xAAA.
6
Nikki Baird and Steve Rowen, “Keeping Up with the Mobile Consumer: 2011 Benchmark Report,” Retail
Systems Research, September 2011, http://iwoorx.com/ref/Keeping%20Up%20with%20the%20
Mobile%20Consumer.pdf.
7
8
9
Value Line database, January 2012.
“The Mobile Influence Factor,“ Deloitte Digital, 2012.
References
•Sucharita Mulpuru, “Mobile Commerce Forecast: 2011 To 2016,” Forrester Research, June 2011.
•“Winning Over the Empowered Consumer,” IBM Institute for Business Value, 2012.
•“Emerging Mobile Commerce Best Practices,” RIS-Cognizant Research, 2012.
•“Harnessing Mobile Innovation,” RIS-Cognizant Research, 2012.
cognizant reports
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Credits
Author
Nitin Bajaj, Deputy General Manager, Cognizant Research Center
Subject Matter Expert
Colleen Coleman, Associate Vice President of Merchandising, Cognizant Business Consulting,
Retail Practice.
Analyst
Avinab Nandi, Research Analyst, Cognizant Research Center
Design
Harleen Bhatia, Creative Director
Suresh Sambandhan, Designer
About Cognizant
Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process
outsourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered
in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With
over 50 delivery centers worldwide and approximately 150,400 employees as of September 30, 2012, Cognizant is a
member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the
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