How shoppers with smartphones are changing the retail landscape

On a traditional list of Christmas Eve activities, shopping wouldn't rank very high, given that most stores are locked up tight.

But in a reflection of how the world of Canadian retailing is changing, consumers with a hankering for the best post-Christmas bargain will be able to make their choice that night without doing anything more than tapping out an order on their smartphone or tablet.

'We really want to be ahead of the curve and be where the customers are.' — Thierry Hay-Sabourin

Future Shop's Boxing Day sale goes live at 8 p.m. ET on Dec. 24, and for the first time, it will be available on mobile devices.

Those who consider Christmas Eve should be reserved for more festive or religious activities may say "bah humbug," but for a retailer like Future Shop, which is seeing increasing visits to its website from smartphone and tablet users, it's more like "bring it on."

"We really want to be ahead of the curve and be where the customers are," says Thierry Hay-Sabourin, Future Shop's director of e-commerce. "We don't have a wait-and-see attitude. We really want to be there when we first start to notice a trend and act on it."

Future Shop started seeing a noticeable uptick in visits to its website from mobile devices about 18 months ago, which triggered the development of an iPhone app. So far this month, 11 per cent of website visits are from mobile devices, representing year-over-year growth of 184 per cent.

On the so-called Cyber Monday in late November (following American Thanksgiving), eight per cent of Future Shop's total revenue from sales came from mobile devices, up from 1.4 per cent in 2010.

"Sales and transactions coming from mobile devices are really exploding," says Hay-Sabourin, and Cyber Monday results bode well for mobile sales on Christmas Eve.

No turning back

Analysts talk about the "digital revolution" or "digital transformation" that is changing the retail world, as consumers use smartphones and tablets for everything from product research and price comparison in the store aisles to purchases.

Retailers in turn are developing mobile apps to provide product information, coupons, promotions or consumer ratings.

None of this is to say bricks-and-mortar retailers are about to go the way of the Eaton's catalogue. The total number of sales from mobile devices is still small. But the digital transformation doesn't seem likely to slow down.

'It all starts with the consumer wanting to take control of the buying process.' —Alain Michaud

"It's becoming more and more clear that this is a no-turning-back trend and a massive one," says Alain Michaud, a Canadian retailing analyst at PwC in Montreal.

What's more, it is a "digital transformation," in Michaud's view, that is being driven by the shoppers holding the smartphones or tablets in their hands.

"It all starts with the consumer wanting to take control of the buying process, so they want to be able to buy when they want, they want to know what other consumers are thinking about the product," says Michaud. "They want to be able to access inventory level, shop for the best price."

Those demands, suggests Michaud, send the ball firmly to the retailers' court.

"It's up to the retailers to make it happen because if the consumers are clearly showing that they are OK with shopping online, you have to make it accessible to them.

"So if you're a retailer now and you don't have a mobile strategy, I think it's time to get up to speed, [or] at least evaluate it."

In its 2011 holiday outlook survey, consulting firm Deloitte says that 20 per cent of Canadians plan to use mobile apps to help with shopping this holiday season, up from 14 per cent last year. The most common apps are ones based on location, such as GPS and store locators.

Don't be misled by small numbers

While those numbers reflect a trend, it's still very much a minority of shoppers who are using handheld devices, and sales via mobile are only a small fraction of total revenue.

But don't be misled by the numbers, suggests Jennifer Lee, Deloitte's senior manager for financial advisory services.

"The business case for mobile and e-commerce is not necessarily the small numbers that people are seeing," she says.

Research by Deloitte suggests that customer research, on their devices, about the products they might like to buy is driving spending in stores, and that the "multiplier effect" of that trend will double between 2010 and 2015.

"I think people should not underestimate the power of mobile when you look at it in the larger context because customers are searching this way," says Lee.

Still, while more Canadian shoppers may be interested in using their smartphone or tablet for shopping, they don't have the same options that exist in the U.S.

"We have very few Canadian retailers that have strong e-commerce sites versus the U.S. I think our biggest constraint is actually the retailers," says Lee.

"Nobody can fully justify the business case in Canada yet, which is why we think people are missing the multiplier effect, which is what is slowing the market down."

'Multi-channel' presence

Analysts talk about the "multi-channel" shopping experience, and the need for retailers to have a strong presence wherever customers might find them, whether that is in their store, online or via a mobile device.

Having a strong multi-channel presence limits the probability of a customer being lost to another retailer, says Lee, adding that "mobile is becoming more important in a multi-channel environment."

The interest in tapping into mobile apps extends beyond retailers to those running the shopping malls and centres who are eager to get more consumers in the main doors.

At the Holt Renfrew Centre in Toronto's upscale Bloor Street retail area, a promotion urges visitors to check in with Foursquare, a location-based social networking mobile app, for "giveaways from your favourite store."

'This is just part of a solid marketing program.' —Scott Harris

"We're trying to be ahead of everybody else," says Scott Harris, the centre's general manager.

While it's been a "slow start," as expected, Harris says the centre is "happy with the progress" so far.

Centre management isn't sure what else might be done in the mobile sphere, but it is seen as part of an overall strategy to appeal to potential customers.

As Harris puts it, "This is just part of a solid marketing program."

Privacy concerns

Foursquare depends on the consumer making a conscious decision to use the app, but technology also exists that would allow malls to track shoppers via their cellphones.

Two malls in the States tried out the technology last month, but quickly turned it off after a U.S. senator raised concerns over privacy.

"There's a line you shouldn't cross," says Michaud. "The success of any mobile strategy for a retailer is to gain the trust of the consumer. If the consumer feels tracked, I'm not sure it's a good strategy."

While privacy concerns may give some retailers pause for thought, others worry about costs that could be associated with introducing mobile services.

For small business owners, it could be "fairly expensive" to establish a mobile presence, says Corinne Pohlmann, vice-president of national affairs for the Canadian Federation of Independent Business.

"That's the biggest barrier in the movement to more mobile technology."

Some smaller businesses also pride themselves on the service they offer and the human connection they have with customers, she says.

Just because you don't have a mobile strategy doesn't mean you're going to lose your customer base, "given that so many of them are focused on that one-on-one touch," Pohlmann says.

"But at the same time, I think there are a lot of opportunities when it comes to using online services that small business can take advantage of."