Why Legacy Retail Brands Must Adopt a More Robust App-Based Strategy

Feb 08, 2018
By: Marissa Camilli

The post-holiday headlines say it all. Some commentators are calling it Mallmageddon.

The Decline of Bricks and Mortar Retail

In recent weeks, Sears Holdings announced the closure of 64 Kmart stores and 39 Sears stores, Macys added another 11 locations to their ongoing program of store closures (which could see upwards of 100 stores pulling down the shutters) and Walmart recently laid off thousands of workers following the closure of 63 Sam’s Club outlets.

Note: This terrible start to the year for retailers comes on the back of a disastrous 2017 with more than 7,000 large retail outlets in the US closing their doors.

And it’s not just an American phenomenon. The British high-street fashion retailer New Look recently announced upwards of 60 store closures and the department store Debenhams (which has been in business since 1778) are currently examining their options following a gloomy trading period over the festive season, which could see profits 30 percent lower than expected.

It’s not that people aren’t buying anymore, because (amid all the horror stories) there is some real good news coming out of the retail sector, it’s just that they are not getting into their cars and driving to the malls, retail parks and city center shopping destinations like they used to.

The Good News

Instead, consumers are flocking to their smartphones and tablets, where a new breed of mobile-savvy retailers are more than happy to take their money.

Forget standing in line, struggling in cramped changing rooms and fighting with surly shoppers and store associates to find the best bargains. Companies like Amazon are investing in Artificial Intelligence and Augmented Reality (the company recently secured a patent for a “smart mirror”) to improve your shopping experience from home, work or just about anywhere.

Tears of Joy at Boohoo

UK-based online retailer Boohoo is testimony to how the retail world is changing. Following a buoyant festive trading period, a lucrative tie-in with reality TV star Kourtney Kardashian and a boom in plus-size clothing, Boohoo has doubled its revenue with sales of £228 million (approx. $312 million) in Q4, 2017. Much of Boohoo’s success is attributed to its appeal to price conscious, younger shoppers, who are more than happy to make purchases via their smartphones and take their style inspiration from social media. The company estimates that upwards of 70 percent of its sales now come from a mobile device.

Agile, mobile-savvy retailers like Boohoo are clearly setting the standard for modern retail practices in the digital landscape. The company can add hundreds of new products to its store every single day and has the capability to identify new trends and have new items designed, manufactured and in-stock within two weeks. There cannot be many “legacy” brands that can compete in the agility stakes.

Retail Apps are Booming

While the app market as a whole is currently undergoing a sluggish period of growth (six percent in 2017 compared to 11 percent in 2016), retail apps are soaring in popularity, with a 54 percent growth spurt in 2017 on the previous year.

Note: The app category with the second highest growth in 2017 was music and video with streaming services continuing to disrupt the way we consume entertainment products and taking more market share from “traditional” and online retailers of physical products.

Interestingly, one app category that has seen a significant downturn is gaming, perhaps highlighting the fact that smartphone technology is no longer the sole preserve of tech-savvy millennials with time on their hands.

Further Reading: App Usage through the Ages – Targeting Older, More Lucrative Users

Developing New Business Models

The fact is, many legacy brands are caught up in the problems of their “old school” business models and, as a result, may struggle to find a home in the mobile environment. Meanwhile, many younger consumers don’t feel the same connection to the retail outlets their parents and grand-parents shopped at.

Perhaps most worrying for traditional retail stores is the fact that technology trends tend to be more eagerly adopted by older generations following early adoption by their kids than the other way round. Consider how quickly social media usage jumped from something exclusively used by college students to their parents’ generation (the average age of a Facebook user in the US is 40). Then compare how many younger people have adopted the older generations’ habits – like reading a daily newspaper.

If legacy stores want a slice of the smartphone retail revolution – they need to get some skin in the game now. This might mean rebranding certain areas of their business and testing new strategies to appeal to new demographics. Yes, legacy brands might have history on their side – but this counts for very little when hardly anyone under the age of 30 has ever stepped foot in one of their stores and bought something.

Prime Retail Location

Of course setting up shop via a smartphone app is easier said than done. Consumers still have to seek your app out and be motivated enough to download and activate it. With retail apps in such high demand – competition for engagement is going to be fierce.

Pre-loading your app on specific devices or networks is one strategy which guarantees awareness (at the very least).

A pre-loaded app becomes a “geographic” feature on a new smartphone, in much the same way as a flagship store is (or once was) in the prime retail location. It invites the consumer to enter a store and browse (half the battle). The rest is up to the retailer in terms of how they merchandise their app store and manage promotions. Just like in “real world” retail, app-based retail is all about the detail and therefore this is not the kind of business opportunity that should be developed as a sideshow to the main event. In the not too distant future your app could become the main event with your bricks and mortar stores playing a supporting role (click and collect, returns, etc).

Join the smartphone retail revolution today

Talk to an advisor at Digital Turbine about how you can set-up shop via a pre-loaded app and join the smartphone retail revolution today.

Marissa Camilli
By Marissa Camilli
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