If this past week has demonstrated anything, it’s that many shoppers are now fully embracing multi-channel shopping. According to Kara Swisher, it all started on Thanksgiving Day (aka Mobile Thursday). [“Mobile Thursday? Smartphone Shopping Is Still Tiny, But It’s This Year’s Big Online Buzzword.” Wall Street Journal, 23 November 2012] She reports:
“In what has become an annual holiday tradition, those who keep track of these things have started in on touting just how digital the holiday shopper has become, whipping out all manner of buzzwords to do so. Last year, it was Cyber Monday — this year, it’s turned out to be Mobile Thursday. What’s next? Social Network Saturday? … And, indeed, the Mobile Thursday phrase got some big laps around the track, with numerous online shopping surveys — coming out faster than you can buy that new tablet — using it in their flash reports.”
Swisher declares that “Apple iPads go well with pumpkin pie.” Since she’s talking about Mobile Thursday, she might well have substituted iPhones for iPads. Traditionalists (and some employees) are already lamenting the fact that retailers like Walmart started Black Friday on Thursday evening. Traditionalists certainly can’t be happy that retailers are suggesting that people push themselves away from the Thanksgiving table and start shopping by phone. Swisher calls this “couch commerce.” Traditionalists might be encouraged by the fact that the number of people participating in Mobile Thursday turned out to be “a very small number.” Swisher, however, reports that the number of participants is “fast-growing … with overall sales reaching $500 million for Thursday.” She continues:
“Still, for now, no one seems to break out actual mobile sales figures, which are clearly still a fraction of the totals. … According to IBM’s Benchmark report, for example, online sales were up 17.4 percent over 2011 on Thanksgiving Day, noting that ‘big winners were retailers who connected customers with personalized deals across multiple screens including PCs, smartphones and tablets.'”
Retailers don’t really care whether an order is placed on a mobile device (like a smartphone or tablet) or on a more traditional device (like a laptop or desktop computer); which makes the distinction between Mobile Thursday and Cyber Monday meaningless. Swisher goes on to report some statistics about Mobile Thursday provided by IBM (more on IBM below). Those statistics include:
“Mobile Traffic: The number of consumers using a mobile device to visit a retailer’s site reached 25.3 percent, up from 66.2 percent over 2011.
“Mobile Shopping: The number of consumers using their mobile device to make a
purchase increased to 18.3 percent, up 65.3 percent from 2011.
“Mobile Email: Smartphone and tablet shoppers responded to email deals from retailers, with emails opened on mobile devices jumping 23 percent on Thanksgiving Day over 2011.
“Couch Commerce: In the evening hours, consumers shifted from shopping through their smartphones at the dinner table to buying through their iPad on the couch. At the end of the day the iPad drove more retail traffic than any other device with traffic reaching 10.7 percent versus the iPhone at 9.1 percent and Android at 5.8 percent.
“Social Shopping: Shoppers referred from Social Networks such as Facebook and Twitter increased in evening hours generating .63 percent of all online sales on Thanksgiving.”
Swisher reports that mobile devices also played a large role on Black Friday as shoppers brought their smartphones with them into stores — “presumably irritating sales clerks everywhere.” The irritation came from the fact that many shoppers were using brick-and-mortar stores as showrooms for products they would later purchase online. For the most part, shoppers involved in showrooming were young. In previous posts, I’ve pointed out the fact that there is a growing bifurcation in shopper demographics. Older shoppers and younger shoppers have very different tastes and are more likely to shop differently as well. Shelly Banjo writes about a family named Ultican that demonstrates how shopper bifurcation is affecting the retail landscape. [“Shopping’s Great Age Divide,” Wall Street Journal, 26 November 2012] The parents in the family have never made a purchase using their phone, they do, however, make purchases online; but, during the holidays, the parents prefer walking through the mall “sipping caramel frappuccinos and admiring the festive” decorations. “Their children,” Banjo reports, “are a different matter. Ranging from age 10 to 27, the offspring mostly ignore the holiday décor, and instead peer into their smartphones, comparing prices, looking for deals and seeking friends’ advice about potential purchases.” Banjo continues:
“Retail chains are struggling with how to respond to families like the Ulticans, hoping to capture the attention of the so-called Millennial generation, ages 16 to 34, but fearful that moving too fast will alienate baby boomers. The 79 million people who make up the Millennial generation wield $200 billion in annual spending power. While that is only a sliver of the $3.4 trillion that baby boomers spend each year, analysts say, retailers need to try to nab those younger shoppers now, because their spending is likely to rival the boomers’ as early as 2020 and they already exert a disproportionate influence on their parents’ spending decisions. Moreover, during the holidays, shoppers age 25 to 44 plan to spend the most of any age group, about $820, according to the NRF. But shoppers aged 45 to 64 are also heavy spenders, planning to spend about $760.”
It is not difficult to understand why manufacturers and retailers want to understand the differences between the age groups so that they can plan accordingly. The best method they have for gaining that understanding is analyzing big data. That’s where IBM is trying to help retailers. “So, you might be wondering,” writes Arik Hesseldahl, “how IBM gets all this info.” [“How IBM Is Watching How You Shop Online,” Wall Street Journal, 23 November 2012] Certainly it comes as no secret that our movements through the World Wide Web are being closely monitored by companies like IBM. It’s really not a sinister plot to destroy your privacy; it’s an attempt to influence your purchases. As Hesseldahl writes, “It’s all part of [IBM’s] strategic play in the world of big data, essentially helping companies make more sense of the huge troves of data they’ve gathered that were previously being ignored.” He continues:
“Smarter Commerce is the area of IBM devoted to helping retailers better understand that data so they can come up with improved ideas concerning how to sell more stuff. Where they gather that data is the IBM Benchmark. It’s a cloud-based digital analytics platform that soaks up digital information about how consumers respond to different ways of selling things online, 24 hours a day, seven days a wee
k, all year long, from 500 different online retailers. IBM won’t name them — they joined the network under condition of anonymity — but Big Blue says the companies that participate include about half of the companies named on the Internet Retailer Top 100 list. A lot of the technology comes from Coremetrics and Unica, acquisitions IBM made in 2010.”
As I’ve pointed out in past posts, manufacturers and retailers spend a lot of money on marketing and much of it is wasted because those receiving the information aren’t really very interested in what is being offered. That is why targeted marketing is gaining traction. Targeted marketing allows manufacturers and retailers to get more bang for their buck and it helps consumers because they receive marketing material that is better suited to their lifestyles and tastes. Hesseldahl concludes:
“Last year, I talked about all this with Craig Hayman, IBM’s VP of the WebSphere, Application and Integration Middleware Software Division of the IBM Software Group. One quote from that conversation sticks out in my memory; it bears repeating here:
‘If you think about consumers, and you think about the amount of technology that they have at their hands, to reach out to read reviews and talk to friends and families, they’re incredibly empowered. There’s not one purchase decision that they make that is not impacted by some element of social networks. What does that do to the companies that have to deal with that by offering the best products and services, and you see companies are struggling to do that: To make the right offer at the right time with the right price. When they do it well, we all talk about how it went well; and when they do it badly, we talk about how annoying it was.’
“Now you know. Not only are retailers and your credit card companies watching you shop, so is IBM.”
Clearly, what Hayman was describing was targeted marketing (i.e., making the right offer at the right time with the right price). Banjo’s article makes it crystal clear that Baby Boomer’s don’t want to see the same offers as Millennials. In fact, they won’t even be looking for offers in same places or in the same way. That’s why multi-channel marketing and fulfillment have become such hot topics in retailing. Swisher concludes, “We’ll see if Mobile Thursday becomes Mobile Holiday Season, which would be a big deal — but it’s winning so far in the pundit stakes. Until we get actual numbers, here’s a chart about the whole thing from eBay:”
Banjo agrees that “technology plays an increasing role in the generational shopping split.” Christine Barton, a partner at Boston Consulting Group, told Banjo that “Millennials are 2½ times more likely to be early adopters of technology than older generations, serving as a leading indicator for retailers of what is likely to become mainstream. Millennials are more likely than older shoppers to check out brands on social networks (53% versus 37%) and use mobile devices to read reviews, research products and compare prices while shopping (50% versus 21%), according to a recent BCG/Barkley report.” Banjo goes on to report how some companies, like Macy’s, are adapting to this changing business landscape of bifurcated shoppers and multi-channel sales. This year may very well prove to be the year that manufacturers and retailers realize that they need to adapt or they will likely lose market share go out of business.