© 2012 Critical Mass, Inc. All Rights Reserved

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About Critical Mass

16 700

8 25

Years Employees Offices Clients

+

+

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It’s no surprise Mobile is exploding

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Smartphone penetration is growing

Overall - US Smartphone Penetration 55% in July 2012 70% of new phones are smartphones

Smartphone & Feature Phone Penetration, US

Mobile Subscribers Ages 18+

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Web traffic is going mobile

With tablets, mobile page views are 20% of total views Mobile installed devices will overtake Desktop in 2013 Desktop search declined in Sept. for the first time since 2006

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Search is going mobile (and immediate)

Paid mobile and tablet search clicks are now 21% in the consumer goods category On mobile, action is taken within the hour

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Transactions are going mobile

Buying everything and anything on the phone is going mainstream. It started with virtual content inside apps… §  Half of smartphone users use

shopping apps §  Average of 41 apps on each

phone - up 28% y/y

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Retailers are going mobile

Buy.com - 5% of revenue from mobile ebay - $10B in mobile sales §  180,000 cars per year §  3 purchases/sec. on mobile §  >70% of 350M items are “new”

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Mobile and web – overall growth

Web commerce 2011 §  7% of retail sales Web commerce 2012 §  16% of retail sales Mobile commerce continues To grow 10X faster than web

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Building Your Strategy

4 Mobile Pillars for Retail

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Web vs App

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Web vs App

73% of mobile users prefer web over apps for shopping Apps work – providing native utility value §  Repeat use §  Scanning §  List making §  Easier Geotargeting

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Mobile shoppers love the web

Mobile web is not just for shopping §  Store finding §  Store hours §  Finding “deals” Cyber Monday shoppers - 2011 §  11% visit a retailer site via mobile §  3x over 2010 §  this year – 30%???

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Mobile web experience - search

Consumers are transferring desktop behaviors to mobile - but with immediacy Mobile search is evolving: §  Voice §  In-app §  Context §  Connected search

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Multiple apps for retailers and brands?

More than 1 = Major hurdle Secondary apps need a clear purpose and use case Consumers think “web or app?” not “web or which app?”

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Digital Couponing

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A digital coupon is… §  Passbook §  SMS §  Groupon §  a picture of a coupon §  a code off the web §  simply showing up

Any way you slice it – Consumers love them! Discovery and retention are challenges

The state of the mobile coupon

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Mobile coupons – optical vs NFC

Passbook is now leading the way Optical will win near term Example – Starbucks, Target, Walgreens, airlines

NFC is fragmented and evolving more slowly

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Mobile coupons – retailers vs brands

Retailers control the systems today: POS and apps Traditional brand/mfr. coupons aren’t ready for mobile Retailers are extending their advantage with loyalty programs

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Showrooming

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Showrooming is reality

Showrooming is… 56% of all shoppers say they will “showroom” this holiday 27% say they will likely buy online while in the store

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Guitar Center led the way

Music stores heard the music… Savvy musicians forced total price matching early for e-commerce Bottom line: Commodities compete on price!

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Best Buy has come around

The electronics giant revealed plans to match online prices (including Amazon)

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Mobile POS

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New apps and new POS models

Square and Uber apps are training mobile users §  Fast §  New interfaces §  Personalized §  Paper-free

Startups, Pay-Pal and even POS incumbents are building mobile capabilities

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Smartphones are replacing POS and more (inventory, kiosks, etc.) JCPenney promises to replace all POS by end of 2013 Expect to see “line busters” with mobile checkout this holiday

Retail is moving to mobile POS

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Mobile self checkout in happening

Using your own mobile device is the new self checkout lane §  Apple §  Wal-Mart §  Sears §  Tesco (EU)

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Other Key Considerations

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In-aisle promotions

Embracing the mobile shopper in action §  QR will continue to have slow growth §  NFC is early, developing and expensive §  Gathering shopper info is key

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User reviews

Reviews are the number two mobile action Reviews on the mobile site will draw traffic Expect to see more effort in gathering legitimate reviews

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Social and mobile shopping

Social sharing is actually happening §  Coupons §  Purchases §  Wants §  Advice

Hashtag is the new URL… Social is driving traffic to even small stores that embrace mobile

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What about mobile payments?

It’s really early in the game! A solution in search of a problem? The Digital ID dilemma… A fight over fees

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Retail and Internet sales tax

Sales tax is the showrooming secret trigger – for consumers!

3 bills currently in front of Congress to charge national

online sales tax

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Amazon plans on Internet taxes

Added 18 Distribution Centers in 2012 §  40 total in the US

Stopped fighting and agreed to pay

taxes in several states already The bet is on same day delivery vs.

same day pickup

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Event the USPS is testing same day delivery (starting this month in San Francisco)

An old dog learns new tricks

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What now? Steps you should take today

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Be Transparent

It’s impossible to fight smartphones and search Consumers are looking at prices – Stores must also

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Price Match

Price matching is evolving as the dominant strategy Match now to keep the sale Build out unique offerings

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Leverage Mobile Communication

Communication is king: SMS, email, PUSH Talk to the customer outside the store

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Experiment with Digital Coupons and Payments

Invest in digital coupon experiments now Developing real integration takes time

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The future is now

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Search

The search starts here…

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Context

Mobile meets the store…

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App

Mobile enhances the store…

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Coupon

Sealing the deal…

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Payments

Closing the loop…

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In Conclusion

Bottom line – this is all possible today! §  Growth continues - differently §  Consumers have the power §  Integrate strategy across channels §  Keep a big picture view of mobile §  Build a mobile and tablet strategy

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Questions?

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