Small screen, big business: retail in the age of the smartphone

31/01/2017
In brief
Il processo di acquisto sta cambiando. In Italia, il fatturato generato dal retail online ha superato l’anno scorso i 7.5 miliardi di euro. Le vendite dovrebbero salire nel 2016 a quasi 9 miliardi per poi superare i 10 miliardi euro nel 2017, con una crescita di quasi il 17% anno su anno. Il mobile commerce è una realtà con cui i Brand devono fare i conti, implementando strategie su misura, che prendano in considerazione la mobilità, le applicazioni e i social network. Sarà quindi inevitabile per i retailer allinearsi alla tendenza in atto, pena problemi seri sulle vendite e sulla propria relazione con i clienti.

Since 1927, the American magazine Time has honoured its “Person of the Year” with a front cover: among the politicians, scientists, popes, artists and various symbols, 1982 was the year of the personal computer (the start of the process of individual digitalisation that continues to this day with no end in sight), while 2006 was dedicated to “You”, meaning internet contributors. So could this be the year of the smartphone? An accolade of this kind would not be misplaced – partly because of the smartphone’s prevalence nowadays, but above all for the increasingly crucial role it plays in the relationships between people and communities, in the economy and the running of businesses, in entertaining billions of individuals, in the rising phenomenon of the Internet of Things, and – most importantly for our line of business – in global retail First of all, let’s evaluate it in terms of market size. The data recently released by analysts detailing the results for the first half of the year shows that after years of extraordinary growth, even the smartphone market has finally had to deal with the inevitable decline in sales: 2015 may well end up being its last year of double-digit growth. According to IDC, 1.44 billion smartphones were delivered last year, representing an increase of 10.4% over 2014. 1.5 billion units are forecast to be sold in 2016, up 5.7% from 2015. This single-digit growth is not likely to be limited to the current year: it is predicted to remain constant until 2020, when 1.92 billion smartphones will be delivered. Market trends indicate a gradual shift towards low-end products, with a subsequent reduction in the average sale price from $295 last year to $237 in 2020. This will be accompanied by the definitive establishment of certain markets which are currently defined as “emerging” in terms of smartphone ownership levels, such as India, Indonesia, the Middle East, Africa as a whole and the nations of Southeast Asia. Data released a few days ago by the American research company Statista tells us that by 2017, more than a third of the world’s population will use a smartphone at various times and for different reasons in their daily lives.

Alibaba's mobile commerce 2012-2016

Alibaba’s mobile commerce 2012-2016

The saturation of the market is not surprising, and calls for a disruptive technological innovation that will revive the fortunes of mobile hardware. From now on, the services and apps that we use will be increasingly important for the benefits and behaviours that they entail as we all contribute to the planet’s vast digital ecosystem. Apple is a fine example of this: iPhone sales are down, but at the same time the company has seen a significant growth (+19%) in platform-related services. In addition to the significant performances of various players (Google, Microsoft, Instagram and others) thanks to the constant development of their product range, it is also a good idea to look to the cloud computing market, where Amazon and Microsoft are increasing their respective market shares thanks to the pervasive nature of the medium. Last May, when commenting on PricewaterhouseCoopers’ study of global mobility trends, we highlighted the major impact of the smartphone on digital commerce processes from various angles: mobile commerce, of course, but also the phenomena brought about by the use of the medium in brand-customer relations, not forgetting the growing role of social media in the purchasing process. On the US market alone, B2C mobile commerce is valued at $84 billion, and similar sales volumes are found in China. According to the iResearch Consulting Group, however, the percentage of consumers in the latter country who made at least one mobile purchase in 2015 is just shy of 70%, as opposed to 46% for the US. And the statistics from Taobao (part of the Alibaba Group), China’s largest online shopping platform and the tenth most-visited site in the world, speak for themselves: ​​484 million mobile shoppers in 2015. Mobile Users Italia As for the use of smartphones in traditional stores, showrooming has become practically emblematic of this change: in Italy alone, 50% of consumers do it in retail outlets. Casaleggio Associati’s annual e-commerce report states that for 2015, mobile sales represented 22% of the total turnover of Italian retailers, a significant increase from 13% in 2014. This data is perfectly consistent with the exponential growth of mobile connections: Italy has over 80 million, 34% more than the country’s population. Two recent reports revisit the theme, with forecasts that will undoubtedly catch the eye of the European market. Their authors are comScore, an American company providing services and data for web marketing, and RetailMeNot, a marketplace that collects discount codes and offers from hundreds of online stores around the world. An analysis of the mobile landscape taken from comScore Mobile Advisor reveals the differences in smartphone adoption in Europe, as well as the use of apps and browsers in the purchasing process. France and Germany are the leading EU5 markets in terms of smartphone ownership: 80% in April 2016. Despite its relatively lower level of penetration, Italy had one of the fastest growth rates in the past year, with adoption increasing +13.4% over the year since April 2015. There was a considerable increase in the frequency of mobile shopping. In the United Kingdom, more than a third of users made at least one online purchase in April 2016. The UK and Germany saw the highest incidence of purchases via app at 59.3% and 52.1% respectively. According to RetailMeNot, total online sales in Europe amounted to over 185 billion euro. This number will grow by nearly 17% in 2016, reaching 216 billion euro. In Italy, the revenue generated by online retail last year exceeded 7.5 billion euro. Sales should rise to almost 9 billion in 2016 and over 10 billion in 2017, with a year-on-year growth rate of almost 17%. According to this study, although the growth in online retail will be accompanied by an overall fall in physical sales of -1.5% in Europe, traditional retail outlets in Italy, Spain and the Netherlands will post positive results (+0.4% for the first two and +0.2% for the third). The research shows that the key factors determining the success of offline stores are the integration of offline and online channels, careful planning in terms of the number and location of outlets, consistent levels of quality and price across all sales channels, and above all delivery services. 86% of consumers start their purchase via one channel and then end it on another, while 73% use their smartphone or tablet to start searching for the product they wish to buy. For Criteo, a leading multinational offering digital marketing services and technology, most companies will implement mobile commerce strategies in 2016, with applications and data structures designed for use on mobile devices. Retailers will therefore be forced to fall in line with the ongoing trend or suffer serious problems with their sales figures and customer relations. Small screen, big business: more than one option is a must.

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