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04/01/2012

What's your App-titude?

As consumers embrace mobile apps on their smart phones and tablet devices for more than just fun and games, grocery retailers are examining ways to deliver messages effectively.

Similar to the early days of the commercial Internet a decade and a half ago, the nearly 1 million mobile apps available through stores operated by Apple, Google and Microsoft are impacting all walks of life. The Pew Internet estimates 35 percent of American adults now use smart phones, and experts say the number is growing rapidly as the 83 percent of adult cell phone users trade up to devices with expanded functionality.

About half of smart-phone owners use their phones when they shop, up from about 30 percent a year ago, according to New York-based WSL/Strategic Retail. The firm's recent Buzz to Buy 2.0 report suggests shopping apps are among the top five most-popular app categories with 46 percent of app users downloading shopping-related options. The apps let them learn of special deals, product information or where products can be found in store aisles. Among those using smart phones when they shop, 56 percent say they compare prices, 53 percent take photos of products and 46 percent search for coupons and discounts, the study suggests.

With new apps being developed all the time, grocery shoppers have more choices than ever before and capabilities are expanding. While digital coupons and price comparison tools are the most heavily used features, shoppers also are using their smart phones to read customer reviews, access nutritional information and navigate their way through the aisles. Next they might make purchases via smart phone to eliminate waiting in checkout lines. The technology already exists to make it happen, experts say.

"Consumers today have more information at their fingertips and are comfortable redeeming coupons and making smart phone-based purchases," says Eric Anderson, a partner at Portland-based digital agency White Horse.

As mobile coupons become widespread, Hampshire, U.K.-based Juniper Research forecasts their redemption value will surpass $43 billion globally by 2016, representing an eightfold increase from a projected $5.4 billion in redemption value this year. To build loyalty, marketers should ask users to opt-in to receive mobile coupons and keep them relevant, Juniper Research suggests.

CHECKING OUT OPTIONS

Whether delivering coupons or product information, the challenge for retailers is to leverage these new technologies in ways that will improve sales in their own stores. Having a meaningful mobile marketing presence, however, requires more than just building an iPhone app and hoping existing and prospective customers flock to it. In fact, having an incomplete or substandard app available to download is comparable to leaving stale bread on the shelves.

About 14 percent of retailers surveyed in December 2011 said they had a mobile app for in-store use, and half said they plan to build apps this year, according to a survey conducted by Retail Touchpoints for Boston-based AisleBuyer. The company provides mobile apps for retailers, including a self-checkout application. One in four retailers said they plan to add mobile self-checkout apps this year, the survey indicates.

"Everyone feels the need to have an app," says Jason Gurwins, chief executive of Boston-based Pushpins Inc., which created an iPhone app that helps Foodtown, Giant Eagle and Shop ‘n Save serve up digital coupons and nutritional information. "If you are a large chain, you will without a doubt get downloads, but they are vanity metrics. Before you invest in building one yourself, ask are your shoppers really going to use the app?"

Pushpins is one of a growing handful of venture capital-backed technology startups offering digital coupons and other services to the grocery sector mostly through third-party applications. SavingStar, based in Waltham, Mass., provides apps that link to customer loyalty cards. Shoppers using SavingStar apps get cash transfers back to their checking or Paypal accounts in $5 increments after making enough qualified purchases.

SavingStar chief executive David Rochon, who also founded Catalina Marketing Corp. subsidiary SuperMarkets Online in 1995, believes stores can benefit both from branded apps and third-party networks like his.

"Having their own presence is something that retailers will clearly want to do," he says. "We can populate the apps with national content and do a lot of the marketing. It's the combination that works."

Beyond the iPhone

From Safeway to Whole Foods Market to CVS, retailers are increasingly investing in branded applications that provide everything from organic food recipes to prescription ordering capabilities. But many are discovering pretty quickly that not all app consumers own iPhones. Last November, Hy-Vee Food Stores, which operates more than 230 locations in the Midwest, released an iPhone app that helps shoppers find products in their stores simply by speaking the name of the item into their phones. The free app, which uses technology developed by retail navigation provider Aisle411, exists "as an extension of Hy-Vee's service philosophy by helping customers find products in the aisles," says media relations executive Ruth Comer. Hy-Vee customers with Android phones now are clamoring for a version that can run on their devices, she says.

Companies increasingly are creating separate versions of their apps for iPhones and Android devices in order to reach a critical mass of users.

Stores considering their own branded applications must account for the engineering investments associated with developing and maintaining apps on multiple platforms and marketing them.

Of course, stores that create mobile versions of their websites can reach customers no matter what type of smart phone they own. Mobile sites also are indexed by Google and other search engines. Walmart invests in both branded applications and mobile sites.

"Mobile websites are typically the first point of engagement with a customer and are focused on acquisition," says Paul Cousineau, vice president of mobile products for Walmart Labs. "There is a higher bar with apps, which are more about driving engagement."

San Bruno, Calif.-based Walmart Labs recently acquired Portland-based mobile agency Small Society, which created the original Starbucks iPhone app as well as apps for Whole Foods Market and Amazon. Last November, Walmart updated its iPhone app to allow shoppers to create lists by speaking into their device. The app also features manufacturer coupons for products available in specific Walmart locations. While some shoppers bring their iPads into stores, many use them at home to learn about product availability at any of Walmart's nearly 4,000 U.S. locations.

"You have to find a way to engage the consumer even if you only have part of their attention, more likely on a couch than at a desk," he says. "This offers a much-less-directed experience with big pictures that can be swiped across a screen."

The mobile road ahead

The next wave of apps geared toward grocery shoppers will move beyond digital coupons and product information to recommend purchasing decisions based on an individual's shopping history. Aisle411's technology, for instance, can recommend and locate a six-pack of cola after a shopper selects and scans a bag of chips. "We want to find a recommendation that's so relevant, you don't even think of it," says CEO Nathan Pettyjohn.


"In an industry that doesn't change fast, there is no question [retailers] understand and want to be a part of this revolution."

– David Rochon,

SavingStar

As consumers' expectations of mobile applications increase, industry veteran Rochon says stores will need to adapt and respond quickly. "In an industry that doesn't change fast, there is no question they understand and want to be a part of this revolution," he says. "Some are more sophisticated than others."

But having no approach, says Gurwins, might be better than a poor one. "You can't expect consumers to use something if the option in the analog world (e.g. the paper circular) is easier than the digital one," he says. "We want to re-invent experiences for mobile, not merely replicate them."

Brad Spirrison, who serves as managing editor of Appolicious.com and AndroidApps.com, also is a syndicated media and technology writer whose work has appeared in the Chicago Sun-Times, TechCrunch and The Huffington Post.

Shopping by the App

The following are popular apps for grocery retail.

Grocery iQ by Coupons.com

A pioneering grocery list creation app that remains a top seller in its category.

Coupon Sherpa
An all-purpose coupon app that also locates discounts for clothing, electronics, travel and other categories.

Grocery Gadget - Shopping List
A grocery list app that works on all major smart phone platforms including Apple's iOS, Google's Android, Windows Phone, BlackBerry and Nokia.

Red Laser Barcode Scanner and QR Code Reader
Owned by eBay, this app provides consumers the convenience of scanning items with their smart phones.

Shopkick
Inspired by "check-in" apps like Foursquare, Shopkick lets consumers earn rewards while shopping.

Scan It!
Modiv Media developed this app, which delivers personalized offers to mobile phones as consumers shop and lets them scan items for purchase to shorten checkout.

mPromo
AisleBuyer's retail app suggests related items when shoppers scan products, while allowing for self-checkout. The company uses an algorithm to spot fraud.