North American retailers are taking dead aim at mobile technologies — and m-commerce in particular — as they seek to arrest growing customer defections and close their own technology gaps.
This story first appeared in the February 15, 2012 issue of WWD. Subscribe Today.
The swing towards Internet-based and Internet-assisted retailing is ubiquitous in the report from the National Retail Federation’s NRF Foundation and KPMG LLP to be released today. Covering 247 retail executives from 135 companies, the study, titled “Retail Horizons: Benchmarks for 2011, Forecast for 2012,” says that 40 percent of respondents ranked increasing m-commerce sales among their top-five strategic initiatives for 2012, 15 points higher than the 25 percent who chose it last year. An increase in online sales rose to 85 percent of respondents, up from 83 percent last year.
Seventeen percent of respondents indicated they were already using mobile point-of-sale technologies in their stores while an additional 33 percent intend to invest in emerging technologies for handheld devices in the next 18 months, still leaving half without coverage and no plans to implement it. Customer Internet access was available from 37 percent of respondents, with 11 percent planning it in the next 18 months and 53 percent with neither coverage nor plans to offer it.
For the first time in the study’s history, online marketing trumped in-store marketing in popularity. Eighty-six percent of respondents used their Web sites or online presence to sell merchandise and services versus 81 percent who relied on in-store efforts. In the 2011 study, the figures were 82 percent and 91 percent, respectively.
“Clearly, the retailers who master the one-to-one customer approach, and who also leverage the full potential of e- and mobile commerce platforms, will be in a much stronger position to gain wallet share,” said Mark Larson, KPMG’s global head of retail.
Nearly three in five respondents — 59 percent — identified new customer acquisition as one of their top-five strategic initiatives for the year, up from 55 percent in 2011 and higher even than the 55 percent who put customer retention and reactivation on their top-five lists. That’s not surprising given an erosion in customer retention. In 2010, 70 percent of those surveyed retained more than 40 percent of their customers, but that figure dropped precipitously to 53 percent this year, with defection rates rising proportionately. The percentage of organizations with customer departure rates of more than 40 percent stood at 59 percent this year, more than twice the 27 percent rate registered in 2006, a clear indication of the increasingly selective nature of the plugged-in consumer and the fleeting nature of customer loyalty.
In an effort to reverse the trend, 82 percent of the retailers surveyed identified customer service strategies as among their top-five strategic initiatives for the year, up from 73 percent a year ago.
In more encouraging developments, one-third of respondents reported an increase of more than 5 percent in same-store sales last year, up from 21 percent in 2010, while 63 percent reported gross margin was greater than 40 percent of sales, up from 40 percent.