Report: Why retailers should get a mobile shopping app

This post is the first of two, based on research conducted by Oyvind Henriksen for his Masters Dissertation project at University College London. The research revolved around the usage and appeal of mobile apps in fashion retail.

Firstly we will look at the retailer’s side; what are their needs and the benefits of a mobile app.

Suppose you are the manager of a small chain of fashion retailers like Albam Clothing, founded by fashion entrepreneurs James Shaw and Alastair Rae. This ‘mini-chain’ consists of 3 Stores in London (one pictured below) and an online store. They are praised for sourcing mainly from the UK and their style, which focuses on the basics rather than the latest fashion trends. They have a well designed website, which is well in line with the design of the store, a classic minimalism. However they are yet to embrace the mobile marketing and sales channel.

Using our research, we will answer the following questions in this blog post:

  1. What does a fashion retailer, like Albam, do about the rise of mobile technology?
  2. Does it make sense for them to get a mobile app? If yes, what are the reasons and what would it need to do?

The research method used in the project was based on Ash Maurya’s prescriptions for a ‘lean’ startup, from his book ‘Running Lean’. Maurya advocates customer interviews with open questions, to make the potential customer talk about their pain points. For this project, Oyvind and Michael did dozens of interviews with store managers of fashion retailers, in both London and Norway. These are the three main results:

Mobile apps are becoming more and more common in fashion retail and the adoption pattern is similar to websites in the early 2000’s.

Some fashion retailers are already looking for a mobile solution, or at least know they want mobile capabilities. However most store owners, we talked to, had assumed that getting a custom app for a store of their small size was impossible, given their restricted budget. However, this is in line with the usual pattern of technology adoption by non-technical retailers. 2011 was still early in the technology adoption lifecycle, before mobile commerce could be seen as mainstream. Industry experts agree that in year 2012, this will change. The year 2012 is expected to change this.
In 2011, mobile apps have already been widely accepted by iPhone users. However holders of smartphones with different operating systems were still lacking a similar user experience. According to market research company Nielsen, there are now 45million consumers that use shopping apps on their phones.

Regular customers are the most important customer group for many fashion retailers.

Regular customers were important to almost all the stores in the interviews; many stores said they would never survive without them. Only a few stores said that ‘footfall’ (visitors walking by) were more important than regular customers. Richard Blunt, I.T director of Jaeger clothing UK, stated recently that his company has 50% loyal customers and that they aim to give them “the best possible experience in every channel.” A mobile app is targeted at loyal customers, in order to give them the best possible user experience.
So why would a fashion retailer want to get a branded app?

These were our hypothesis, why fashion retailers would want an app:

  • Improve engagement with regular customers.
  • Appear to be an innovative brand.
  • Send promotions with offers and new products to regular customers.
  • Increase sales through the app.

The interviewees that owned smartphones themselves mostly agreed that regular customers would use such an app, but they did not intuitively understand how the app could help the retail business. Through the interviews it became clear that increased sales are more important than engagement with regular customers. The need to be an innovative brand was not evidenced in the interviews. Regarding engagement, stores were largely satisfied with the use of other methods, namely Facebook and e-mail newsletters, to send promotions. However, when the retailers were shown the possibility of messaging the customer base, closely linked with a new sales channel, all retailers saw the potential.
The question why smaller fashion retailers would strive to get a mobile commerce app can be answered from several perspectives. Increasing sales is obviously very important, as it is the foundation of any business. Fashion retailers, as well as small chains, are facing high fixed costs for property and staff. On the other hand, the mark-up on fashion items for boutiques can be relatively high, allowing them to make a significant profit on each sale made. Mobile commerce represents a lucrative sales channel with low additional fixed cost.

In conclusion, fashion retailers have a lot to gain from mcommerce.

Next time, we will discuss our research on, why shoppers want their favourite fashion brand to have a shopping app.