Mobile in retail 2011

Mobile Commerce Report 2011 Mobile in Retail The consumers’ perception of the HotShopper pilot and Opportunities and challenges for brand owners and retailers1. Mobile Commerce Report 2011: Mobile in Retail

Mobile Commerce Report 2011 Mobile in Retail The consumers’ perception of the HotShopper pilot and Opportunities and challenges for brand owners and retailers2. A cooperation between: Mobile Commerce Report 2011: Mobile in Retail Mobile Commerce Report 2011: Mobile in Retail 2.

Table of ContentsTable of Contents01. Executive summary 402. Introduction 603. Trial background 804. Vocabulary 1005. The consumers’ perception 12 of the HotShopper pilot 5.1. Mobile phones are already a part 12 of many consumers’ shopping experience 5.2. HotShopper: well received as a concept 12 5.3. The scanning experience must be improved 14 5.4. More integration requested 14 5.5. Mobile apps for other kinds of shopping 16 5.6. Conclusion: Consumers want integration on 17 three levels but where does it start?06. Opportunities and challenges for 18 brand owners and retailers 6.1. A new marketing tool with many advantages 18 6.2. Why are mobile apps so interesting for brand 18 owners and retailers in the FMCG-sector? 6.3. Potential barriers for brand owners 21 and retailers07. Extended packaging information 22 requires an effort 7.1. Standardized and non-standardized 22 information 7.2. Cooperation and standardization 23 – competitive advantages08. Are you ready to get started? 2409. Contributors to the report 2610. About us 28Mobile Commerce Report 2011: Mobile in Retail 3. 3.

01. Executive Summary Executive Summary Mobile phones are becoming part of the shopping experience. Even in a small country like Sweden, we see around one million SMS users in grocery stores every day of the week. When smartphones become ubiquitous, mobile internet access will change how consumers shop for groceries. In order to see what opportunities exist for using the These three needs open interesting opportunities for brand mobile phone to enhance consumers’ shopping experi- owners as well as for retailers, since mobile apps are a ence, we ran a live mobile commerce trial at ICA Maxi comparatively cheap way to communicate directly with the Lindhagen Hypermarket Store in Stockholm in September consumer. Mobile apps also move the store closer to the 2010. In the trial, 35 consumers equipped with a Android- consumer, by being present even if the consumer is else- based Hot hopper mobile app scanned Arla dairy products S where than in the physical store – and gives “retail” a much in order to find more detailed information about ingredi- wider scope compared to what it has been up to now. ents and additives; to get inspiration for recipes; and to get We will see – and have already seen - some industry play- special offers, among other things. ers moving relatively quickly into mobile apps and extended In summary, the respondents were convinced that a product information. Cooperation around distribution of HotShopper type of service would soon become reality. packaging content would already now improve cost ef- They immediately recognized the relevance for their daily ficiency, and early standardization would improve scalability shopping: Simply put, they perceived the information in the of solutions. phone to be better than on the package. One important focus of the HotShopper-project has been Consumers in the study expressed the following shop- to enable brand owners, retailers, mobile operators, soft- ping experience needs: ware developers, service and solution providers and organizations to work together. The project has clearly shown that 1. A need for integration of all information this is possible, and that collaboration gives good results. In in the grocery store: packaging, and addition, standardization and the use of widely-spread and price info, self-scanning, special offers, future-proof technologies are often both cost-efficient and loyalty cards and payments. sustainable ways to go. It is now up to the parties in each industry to move forward with standardization and collabo- 2. A need for better integration of grocery ration in relevant areas. shopping into everyday life: scanning ads at home, writing shopping lists, in- store shopping convenience, and using recipes in the kitchen. 3. A need to extend the shopping convenience and control provided by the Hot- Shopper app beyond grocery shopping.4. Mobile Commerce Report 2011: Mobile in Retail

02. Introduction Introduction What are the opportunities for using the mobile phone to enhance consumers’ shopping experience? And how can we benefit from the fact that the mobile phone is already a part of many consumers shopping experience? Europeans shop for grocery products 3-5 times a week life not being affected by the internet. Many analysts predict on average – and for other things only once per week. that internet in mobile phones will become just as perva- Among Europeans who do grocery shopping, around sive as it now is on computers. Given that we have already 30% were daily SMS users already in 2008. Even in a small seen this happening in other markets (notably Japan where country like Sweden, this is translated to around one million roughly 70% of all mobile phone owners now access the SMS users in grocery stores every day of the week. We have internet on a daily basis), we agree with this prediction. seen in different studies that some of that mobile commu- When smartphones become ubiquitous, mobile internet nication takes place in stores, meaning that good in-store access will of course affect the grocery shopping experience. coverage for mobile phones has been an important matter But rather than just letting consumers bring their own mo- for retailers for several years already. Given that the mobile bile internet experiences into the store, should the retailers phone has become a natural part of everyday life for a large take a more active part in this? And if so, what can they do majority of people, having bad in-store coverage means to actively enhance the shopping experience? Those were having fewer customers. And with in-store mobile phone the questions we had when entering into the HotShopper coverage, customers also communicate with other family trial. Not only did we find very compelling reasons for retail- members about their actual shopping, possibly increasing ers to take an active part in the in-store mobile experience, sales even more. we were also able to witness first-hand how consumers So, it is important to understand that the mobile phone is by downloading a multitude of apps (small mobile phone already an integrated part of the grocery shopping experi- applications) that are directly related to all various walks of ence, and it is already affecting sales. What we are seeing everyday life – shopping included – are now actively taking now in Europe is the explosive rise in popularity of a new part in transforming the very foundations of the internet generation of “smartphones” that are fundamentally built itself. We are witnessing the rise of an internet where eve- around having mobile internet access (such as the iPhone ryday mobility is becoming the fundamental focus for app and Android phones like the Sony Ericsson X10) and mobile development: An internet where most if not all mainstream internet access increasingly integrated into everyday life. usage is focused on what we do differently in different loca- For a majority of European consumers, the internet is now tions. This fact will of course have implications on and give a used on a 24/7 basis, meaning that there are few walks of lot of opportunities for retail business.6. Mobile Commerce Report 2011: Mobile in Retail

03. Trial background Trial background Ericsson Research and GS1 Sweden/ECR Sweden have together with Arla Foods and ICA Sweden – both representing ECR Sweden – run a live mobile commerce pilot in a relatively new ICA Maxi Hypermarket Store in Stockholm, ICA Maxi Lindhagen, in September 2010. The purpose of the trial was to explore if and how mobile phones can facilitate shopping of consumer goods, primarily grocery products. A prototype system for extended packaging, i.e. retriev- on barcode scanning with the help of the camera of the ing extended product information via the mobile phone, mobile phone. was developed especially for the trial. The trial has been evaluated by an external research In the trial, 35 consumers tried out the HotShopper mobile institute. As the study was limited to a small number of app in the ICA Maxi Lindhagen-store during a time period consumers living in the same type of housing area in of two weeks per individual. All participants were given Stockholm, it was decided to use a qualitative method SonyEricsson Xperia X10 phones pre-loaded with the Hot- to evaluate the trial. The research institute conducted a Shopper mobile app and instructed to scan Arla products number of studies with the consumers that participated in the dairy department of the store. in the trial: pre-study, shop along, post-study and focus The consumers involved in the test were young couples groups. It is not possible to make statistical conclu- (20-30 years old) and families with children at home (25-55 sions from the study, as the population was limited to years old). The participants were rather frequent mobile 35 consumers. Instead we have obtained an extensive phone users but not all of them had used smart phones understanding from a consumer point of view about how prior to the test. The group comprised a mix of men and mobile apps can enrich the shopping experience today women with different levels of education and income. All and in the future. consumers were frequent customers of the ICA Maxi Lind- This report covers a summary of the consumer studies hagen store and were members of ICA’s loyalty program. as well as analyses carried out by the project team on how The technique used in the HotShopper app is based mobile in retail may affect brand owners and retailers.8. Mobile Commerce Report 2011: Mobile in Retail

Fig: 1 Examples of screenshots from the HotShopper app. The HotShopper app consists of the following main features: Find Find information of a product’s contents, e.g. ingredients, additives and eco-labelling information Inspire Get inspiration from recipes as well as some other information about the products Share Share your experience with family and friends through Facebook updates Save Find special offers Avoid Avoid a certain additive 9.

04. Vocabulary Vocabulary 4G is the fourth generation of mobile network standards, also referred to as LTE (Long- 4G Term Evolution). The next evolutionary step of mobile technology allowing data rates above 100 Mbps. The player that provides the content to the mobile app, for example brands providing Content provider product information, recipes etc. FMCG Fast Moving Consumer Goods. HotShopper The prototype mobile app developed for the trial presented in this report. Software installed on the mobile phone that interacts with the network to deliver a Mobile app service to users. Barcode scanning using the camera on the mobile phone and software to decode the Mobile barcode scanning content of the barcode. Mobile Internet Refers to access to the internet from a mobile devise such as a smartphone. Everything you can do with a mobile phone. In this report we mainly focus on apps and Mobile services mobile web, but mobile services are for example also SMS and voice (i.e. the basic function of being able to talk in a mobile phone). A wireless short-range communication technology that has an operating distance of a NFC few centimetres (simply hold two devices close to each other). NFC can be used for both – Near Field Communication communication and identification. Service provider The player that offers the mobile service to the consumer, e.g. a retailer or a brand owner. Shopper A consumer in the purchasing situation, for example in a grocery store. A smartphone is a mobile phone that offers more advanced computer ability than an Smartphone average mobile phone. In this trial a smartphone specifically means a phone that uses the HotShopper app and scans a barcode. 10. Mobile Commerce Report 2011: Mobile in Retail

05. The consumers’ perception of the HotShopper pilot The consumers’ perception of the HotShopper pilot When testing a prototype or a new concept, it is often more interesting to include a smaller population of test pilots rather than a big one. A small population makes it possible to go into depth into a number of key issues and considerations. This chapter aims at summa- rizing the results of the HotShopper trial from the point of view of the participating consumers. What were their opinions? Did they find the information that they received in the app useful? Would they like to use a HotShopper-like mobile app if it became reality? In which situations? 5.1 Mobile phones are already a part of many empowered to make the right choices: Empowered to be consumers’ shopping experience in control and confidently making active choices, while still getting a good price. When testing a prototype software system “live” on With smart phones increasingly being perceived as easy- normal consumers, the rule of thumb in the market research to-use internet in your pocket devices, respondents in our industry is that everything that can go wrong in fact will study overwhelmingly saw the smart phone as fitting quite go wrong. And even if users are able to actually try out the naturally into shopping activities. The more advanced re- system on their own, they are quite often more interested spondents in the trial were in fact already building their own in talking about things that the testers are not interested in – service in a similar vein to what we tested with HotShopper, such as the colour or shape of the mobile phone rather than by using a combination of different apps already available. the app they were supposed to evaluate. Only rarely does They are building this “service” piece by piece as the needs not only the system work as intended, but the users also occur and they look for specific apps to fill specific needs. focus on what the testers are interested in finding out. But it turns out that smart phones are not exclusively The HotShopper trial is one of those rare success cases. for advanced users. Even the users of more basic mobile phones in the trial easily adapted to the smartphone mind- Although respondents had to use another phone than their set and were surprisingly able to take advantage of the own during the trial, this turned out to be very little of an HotShopper functions. issue. Many already had a smart phone and those who did not yet have one had already grown accustomed to seeing 5.2 HotShopper: well received as concept other people using smart phones everywhere and in all kinds of situations. The general perception of smart phones The respondents were convinced that a HotShopper among the respondents was that they were easy to use and type of service will soon become reality – in fact already that they set a standard for what one can do with a phone. within a year. They immediately recognized the relevance for their daily shopping as they perceived extended product Grocery shopping today involves balancing a lot of infor- information delivered though the mobile phone as adding mation. Even purchasing a single banana means making value, compared to similar or same information available decisions about origin, pesticides, ecologic standard, fresh- elsewhere (on package, through advertisements, etc.) ness, fair trade and so on. In such mildly stressful everyday Simply put, they perceived the information in the phone situations consumers feel an even stronger need to be to be better than on the package. Not only was it easier to 12. Mobile Commerce Report 2011: Mobile in Retail

“The best result you can wish for in a focus group discussion is that respondents sponta- neously have a lot of ideas of how to improve the service they have tested. This means that they have fully accepted the basic service they tested and already to a large extent integrated it with their daily routines. And this is exactly what happened with HotShopper.” HotShopper focus group moderatorread due to its generally larger size but it also became more ents already received personalised offers from ICA in their valuable since it was structured in a standardized way. It was mail boxes. The concept of receiving these in the HotShop-easier to find what one was looking for and the extended per app was perceived as a considerable improvement. information not available on packages was useful. Not only would the offers not be forgotten at home. Offers All respondents that we talked to in fact perceived could also be considered in the actual shopping context benefits from using HotShopper, although they represented and compared with alternatives.several different types of shopper profiles: Structured and unstructured shoppers; fast and slow shoppers. They also found different benefits depending on the type of shop- “Suggestions of new recipes are just great whenping activity: Routine shopping, complementary purchases you are standing in the store both hungry andand shopping for special occasions. clueless of what to buy.” Thus, individual preferences in shopping styles, lifestyles Mita, 43and ambitions determine which functions are found to be most valuable and/or most likely to be used. So whereas health conscious respondents feel strongly about Avoid and “I liked it a lot and I tried to scan all the productsFind for avoiding additives, those with allergies want to avoid in the section to find a good offer. It felt a littleharmful ingredients. But interestingly, both organized shop- like a treasure hunt.”pers and unorganized shoppers would like to benefit from Jenny, 29increased organization of their shopping. And both organized and unorganized shoppers had a unanimous interest in using the recipes of the Inspire part of HotShopper app to gain There were naturally some issues as well. Many were more inspiration about what to cook and, consequently, what concerned about battery consumption – and this gripe is to buy. New recipes not only created a chance of breaking something we see in basically all smart phone related stud-the boredom and routine, it also saved time normally spent ies. Some who had previously never used touch screens trying to think of something new in a stressful and sometimes also had some initial usability problems, but managed to uninspiring situation. In fact, the recipes functionality in the overcome them. Touch interfaces have a learning curve, HotShopper app had no downsides at all! but our study shows that this is not a barrier for adoption Also the Save function of the app was tried out and was and that touch interfaces are intuitive to use once one gets appreciated by most consumers in the trial. Most respond- used to the concept. 13.

05. The consumers’ perception of the HotShopper pilot 5.3 The scanning experience must ning acceptable, it was still too slow to replace self-scanners be improved in an everyday stressful shopping situation. Scanning barcodes with the phone camera was somewhat awkward. More uniquely related to the HotShopper app, how- It takes time, feels imprecise, demands practice and is ever, were barcode scanning issues. Some comments were dependent on in-store lighting conditions – and there is no related to the novelty of using one’s phone for scanning; “guiding red light” as with the self-scanning systems. One other shoppers might wonder what you are up to. While should however bear in mind that the HotShopper trial was using self-scanners is established as being an alternative a test and that the prototype used was not an optimal solu- way of shopping and paying for ones groceries, scanning tion in terms of ergonomics. It is also important to point out with a mobile phone does not carry an obvious interpreta- that new technology, such as Near Field Communication tion. Some respondents wonder if other shoppers think (NFC) may improve usability and ease to use. they might be doing something suspicious like trying to find something especially cheap (indicating that the per- Based on the speed of scanning with the SonyEricsson X10, son scanning is poor) or maybe gathering data for some respondents thought they would use the mobile phone experiment. But respondents realized that this novelty mainly for extended product information on specific prod- phase would soon fade away and did not see this as a ucts, whereas today’s self-scanners are viable for scanning barrier. of all intended purchases – indicating that some optimiza- However, the self-scanning system was used as a point tion of this technology may still be needed. On the other of reference for many, and in this comparison the phone hand, if the speed and ease of scanning was the same, was seen to be lacking somewhat in ergonomics and most respondents said they would prefer to use their own scanning speed. phone – especially if scanning using the mobile phone shows more information. “It was too difficult to juggle two devices at the same time, the self-scanner and the phone.” Mita, 43 5.4 More integration requested Many of the requests and wishes for future development When scanning, the phone has to constantly be taken out of HotShopper were related to the issue of integrating dif- of/put back in pocket/handbag. Self-scanners have a prop- ferent functions into the mobile phone. er handle, and in comparison the phone was regarded as a Even those who have assembled some of the HotShop- bit unwieldy to use and harder to grip. Some also expressed per functionality using other apps in their phones request fear of forgetting the phone in the shopping cart. While extended integration – and they see opportunities rather most respondents found the speed of mobile phone scan- than problems if the retailer makes the integration. For 14. Mobile Commerce Report 2011: Mobile in Retail

HotShopperFig: 2 Typical functions that people wanted to integrate. most, this opportunity was expressed as a chance to inte- throughout the day, and not just when in the store. grate the self-scanning system now available in many gro- With the spreading ubiquity of the internet, we have cery stores, and every product in the store (not just Arla), as seen consumers becoming increasingly well-informed and well as the ICA membership card. But also payment as well demanding. As the internet makes information available as the integration of money saving offers into HotShopper to consumers wherever they are, this seemingly makes it where seen as good opportunities rather than intrusive natural for the grocery store to also be available to consum- functions. And as most grocery shopping ultimately is ers wherever they are! for food to be prepared, integration and management of In this trial, the HotShopper app would save location recipes was seen as very important, preferably combined information whenever the scanning function was used. What with a shopping list function. Respondents thought that a we saw when the information came in astounded us: Almost phone based shopping list would not only replace scraps half of the scans where from locations outside of ICA Maxi of paper one writes when planning purchases, it could also Lindhagen where the trial was performed! There were scans automatically align planned purchases with store layout from all over Stockholm – in fact there even were some scans to avoid unnecessary running back and forth in the store; from the south of Sweden! and ultimately it could coordinate purchases with other Further analysis led us to the conclusion that these scans family members. Although Facebook had been integrated where following the everyday micro-mobility of the respond- in the app in the Share function, this was not seen as useful ents, with clear scanning peaks not only at ICA and other – instead communication functionality should be focused stores but also at home and possibly at commuter stations. on the family, such as shareable shopping lists, and possibly We were witnessing how respondents were already in- user profiles so that needs of different people could be met. tegrating HotShopper into their everyday activities, already performing some of the activities they had expressly wished “I would like to add a shopping list function so it for: Scanning products at home to look at recipes when would be easier to keep track of what to get. It cooking, scanning in other stores for comparison, possibly would be good if it was structured according to scanning in a 7-Eleven store on the way to work in order to the layout of the store.” start thinking about what to go shopping for in the after- noon. And so on. Jenny, 29 What respondents then really where asking could be interpreted as an invitation for the grocery store to enter their Why then, this need for integration? The answer partly has everyday mobile life. Rather than having an internet that to do with a wish for a convenient way of having every- replaces physical stores with online shopping, we saw the thing at hand when needed. But more uniquely there was complete opposite. An app that complements and enhances also an unspoken need to make grocery shopping and the presence of the physical store by mobilizing the store and the grocery shop itself a more integrated part of activities making it integrated in the respondents’ everyday mobile life. 15.

05. The consumers’ perception of the HotShopper pilot 5.5 Mobile apps for other kinds of shopping The normal shopping procedure with home electronics seems to be that research is done at home, before going However, consumer shopping needs are not limited to to the store. However, due to the fact that the consumers a single grocery store: Many respondents also wanted and do not always find the information about various models expected the HotShopper app to work across all grocery objective, there was an in-store need to check for model stores, and not just those in the ICA chain. specific details and comparisons as well as getting explana- When asked about how it would be to use a similar app tions for technical terminology. when shopping for other goods than groceries and what those situations would be, respondents at first found it a “I would like to be able to simply compare two bit difficult to adjust to the idea given that the design of TVs that stand next to each other. Why one the trial had been very focused on groceries. But when costs 5 000 SEK and the other 12 000 SEK when prompted with shopping examples most respondents soon I can’t see any difference in the picture.” warmed to the underlying idea of feeling more in control of Bengt, 52 one’s purchasing behaviour. Furthermore, smartphone users among the respondents were already using their phones to When shopping for plants at places like Plantagen, there enhance shopping via the browser or specific apps – and was a need to get watering instructions and other info thus found the mental step-up to a more integrated solu- related to how plants should be treated. tion relatively easy to take. Allergens were high on the list when shopping for For clothes shopping at places like H&M and MQ, re- cosmetics, together with animal testing info; and a spondents suggested checking for country of origin, specific HotShopper-like app could provide guidance in drug dyes and other chemicals used, and Fair Trade certificates. stores in general when staff was not available, as well as Many thought that care instructions would be practical sorting through all the fine print and possibly also check to read on the phone, as well as getting inspiration about for harmful combinations of drugs. matching apparel. “I would like to be able to check if a particular “I would like to get help when choosing be- item is available in my size in this store and if tween different pills for headaches.” not, where I could find it. It would save time Tova, 22 looking for a clerk.” Mita, 4316. Mobile Commerce Report 2011: Mobile in Retail

5.6 Conclusion: Consumers want integration on three levels – but where does it start?To sum up, we see three distinct areas of improvement that consumers are looking for:1. First of all, respondents expressed a need for integration of all information in the grocery store: From packaging information, via price info and self-scanning to special offers, membership cards and payments. 2. Secondly, consumers express the need for better integration of grocery shopping into everyday life: From the ability to collect offers at home, write shopping lists and get inspiration for evening meals during daytime, to being more in control over one’s activities in the grocery store, to using recipes in the kitchen.3. Thirdly, and finally, there was also a need – albeit not as readily obvious to respondents – to extend the shopping convenience and control hinted at by the HotShopper app into just about every other category of shopping. Given the overwhelming response to the HotShopper app in this trial, it may be easy to conclude that grocery chains can build their own branded apps without feeling pressure of competition. However, as the most common reference to similar apps among our respondents was the Pricerun- ner type of app, it may well be that price comparison apps could take this space if grocery chain apps are late or do not live up to expectations. Furthermore, some respondents were already aware of independent barcode scanning apps – and it may well be that user generated barcode information could become good enough or even better than what manufacturers or chain stores provide, thus obviating the need for chain branded apps if they are too slow in coming. 17.

06. Opportunities and Challenges for brand owners and retailers Opportunities and Challenges for brand owners and retailers The summary of the consumer studies presented in previous chapter clearly show that the consumers believe that mobile apps enrich their shopping experience. The HotShopper app was mainly focused on extended packaging, but there are also other areas of interest for the consumer, such as shopping lists and self-scanning. This chapter aims at treating opportunities and challenges for brand owners and retailers from a more general point of view. Why are mobile apps so interesting from a business perspective? How can mobile apps improve the communication with the consumer? Which areas for improvement can be noticed? 6.1 A new marketing tool with or the retailer has decided to disseminate a message or an many advantages offer, it can be immediately communicated to consumers, who receive it at the moment it has been produced. There Mobile marketing is a rather new marketing tool are in practice hardly any delays for distribution. – especially the use of mobile apps – and has a number of A more strategic advantage, in particular for retailers, is advantages compared to traditional marketing possibilities. that a mobile app can move the store closer to the con- Mobile apps give the brand owners and the retailers the sumer, by being present even if the consumer is elsewhere possibility to communicate directly with the consumer. It is than in the physical store. The consumer can shop, or look a marketing tool that is very efficient for building customer for information, 24/7, from home, on the way to the physi- loyalty, in particular if combined with other marketing tools cal store or being anywhere where he can be connected. such as loyalty programs and direct marketing or advertising. Consequently, it gives “retail” a much wider scope compared A mobile app is available for the shopper at the very to what it has been up to now. moment of truth – when she is in the store, in front of the shelf, with the product in her hands. A mobile app can add value to the physical product and makes it possible for the 6.2 Why are mobile apps so interesting for brand owner to communicate aspects that are hard to com- brand owners and retailers municate on the packaging. An example of this is extended in the FMCG-sector? packaging information such as the explanation of what a certain additive really means. The retail environment has developed enormously over the years, especially since self-service stores were Mobile apps are comparably cheap. It does not require introduced more widely on the market. Brand owners an enormous marketing budget to develop a mobile app. and retailers have together gained a lot of experience and Also, the apps are distributed via for example App Store or insights about consumers and, more lately, about shoppers. Android Market free of charge. One should however not The most skilful business partners know rather well how under-estimate the fact that apps need to be maintained. to meet the needs of a certain target group, in a specific Maintenance often costs both in terms of money and category, in a shop of a certain format. The knowledge is brain effort! based on a lot of experience gained from “trial and error” Mobile apps are fast and efficient. Once the brand owner in the stores. However the technical knowledge developed 18. Mobile Commerce Report 2011: Mobile in Retail

“I used it to find out if there are any additives in some yoghurt. I would also like to use this to scan baby food for our 8 months old son.” Ola, 32over the years has also contributed to the progress. The in- to information printed on the packaging. One example troduction of barcodes made it possible to achieve point of could be clear and accurate information about additives. It sale data deriving from the scanning of products at check- can also include inspiration, such as recipes. Mobile apps outs. More recently, the development of loyalty programs including extended packaging give the brand owner a has generated the possibility to learn more about shoppers, possibility to communicate a message which is limited in not at least in terms of individual shopping patterns. time. This may in particular be of importance during a situ- There are already many different marketing tools avail- ation where a product recall is needed, or where the brand able for brand owners and for the trade, with various levels owner for other reasons would like to communicate directly of sophistication. There are however two major constraints with the consumers about the contents of a product. The linked to traditional marketing tools. First, they only com- HotShopper trial furthermore showed that the extended municate with the consumer at one (or a few) physical packaging part of the mobile app can be a great help for place at the time (e.g. at home in front of the TV, in the mail the staff in the store when replying to product requests box, or at the store). Secondly, they only permit one way from the consumers.communication. A global GS1 publication from 2009 has identified a Mobile phones can in theory be used by businesses to number of consumer touch points, i. e. places where the reach consumers anytime, anywhere and this fact funda- consumers interact with the store (for example pre-store mentally changes the possibilities for brand owners and planning, outside store, in aisle/at shelf, at checkout and retailers to do business. usage at home). All these touch points represent an oppor- The HotShopper trial clearly showed that not only tunity to communicate via a mobile app and thus to enrich consumers, but also retailers and brand owners appreciate the shopping experience for the consumer. The business the possibilities given by extended packaging. Extended perspectives of the functions may, in addition to extended packaging can give the brand owner the possibility to pro- packaging, include for example coupons and discounts, vide additional and more in-depth information compared loyalty programs, advertising and promotion. 19.

06. Opportunities and Challenges for brand owners and retailers Consumer Touch Points Places where the consumers interact with the store. Coupons and discounts: Advertising and Promotion: Mobile coupons and discounts can be directly linked to The mobile phones encourage more efficient and direct the shopping situation or even to a certain location. They communication with the consumers as the ads are sent appear on the mobile screen at the moment when the directly to the mobile phones. Mobile advertising also shopper scans the barcode (or another tag) and give the includes the possibility of location based advertising and, retailer the opportunity to for example give the shopper in particular if combined with loyalty programs, advertising an individual “3 for 2”-offer. Using mobile phones is cost ef- targeted to certain groups. ficient as they can be used to capture, manage and redeem coupons and discounts. Payment: With mobile phones, there may in the future be a ubiq- Loyalty programs: uitous possibility to make payments anywhere, anytime Mobile phones can provide more personal services and be including at retail check-outs. used in a more tailor-made way to communicate with the individual loyalty program members. The benefits and the possibilities with the loyalty programs will be able to ex- Self-scanning and Self-checkouts: pand when combined with the possibilities of the mobile The combination of self-scanning and self-checkout with smart phones. Offers that are restricted in time or to a cer- the help of the mobile phones transfer the human effort tain shopping location can be distributed to the consumer currently made by the store to the consumer. One mobile via the mobile phone. The consumer is getting more and device instead of two will consequently reduce the stores’ more mobile so why only reaching the consumer when need to invest in and administer scanning equipment. Social media: Social media is already considered to be a significant marketing channel. It may be of higher importance in businesses other than groceries, like durable or lifestyle products. Social media give, just like the mobile apps, brand owners and retailers the possibility to communicate directly with consumers. The possibility of combining the she is doing her weekly shopping in her favourite store? two by integrating social media into the apps will lead to Maybe you would like to attract her to visit the store of many new and highly interesting into the apps will lead to your retail chain in the village where she spends her vaca- new and highly interesting applications. tion? Or to tailor make a communication to the consumers who intend to buy a certain category? Or even a specific brand? You can also build in functions like voting in order Store location, in-store navigation and shopping-list: to encourage a two-way communication with your loyal Store location, which can help the consumer to find the consumers. Or why not using the possibility of a quick stores in a certain area where a certain product is stocked, research to find out what your consumers think about a can increase the possibility of driving traffic to the store. In- new product, a new commercial or something else that store navigation, which facilitates for the consumer to find engages the consumer and make them feel being a part a product in the store, may together with a shopping-list of your brand? Mobile phones will replace physical loyalty function build customer loyalty and encourages repetition of cards when combined into one function. This will most a purchase. The best results for using store location, in-store likely decrease the likelihood of the consumer forgetting navigation and shopping-list functions will be achieved if to bring her “card” to the store. these mobile apps are combined with other functions. The number of retail related mobile services will continue to increase. Exactly what kind of services are difficult, even impossible to foresee. What we know is that there will be infinite combinations and possibilities available.20. Mobile Commerce Report 2011: Mobile in Retail 20. Mobile Commerce Report 2011: Mobile in Retail

6.3 Potential barriers for brand In-store coverage is another possible barrier for efficient owners and retailers use of mobile apps. In-store coverage is suboptimal in many stores, and can also vary from operator to operator. In this pi-The competition in the mobile app world is fierce. lot, signal strength and data bit rates were measured before There is a magnitude of shopping apps currently available the test to ensure good coverage. In order to ensure good in the different app stores, and there are more to come. service performance it is vital that the store provides good One obvious restriction with mobile apps is that the posi- coverage. This is not just important for mobile services like tive benefits that evidently exist will only become reality HotShopper. Various studies reveal that consumers already if and when the consumer decides to download your app. today use their phones in-store for voice calls and for send-However, if combined with other marketing tools, the possi- ing SMS. Shoppers expect that the mobile phones will work bility that the consumer decides to download and use your inside the store and good in-store coverage can be seen as app actively will increase. a hygiene factor for retailers. A possible barrier with mobile apps is that questions Retailers need to investigate their particular situation and, about the integrity of the consumer may arise if using infor- if required, either put pressure on the operators to improve mation about individual consumer patterns as a basis for the in-store coverage or invest in an own solution that your communication. In the HotShopper trial, it became evi- provides good coverage for all shoppers.dent that the integrity issues were not a matter of concern for the consumers that participated in the trial. Three other problematic issues that came up during the trial were the somewhat awkward handling of the phones, “I would not mind getting the offers in my the scanning ability and the fear of running out of batteries phone. ICA knows everything about my habits when scanning. anyway.” Roger, 47 As for the handling of the phones, a shopping cart holder for mobile phones could be one solution to improve the The integrity issue was rather widely discussed a couple usability of mobile phone scanning.of years ago, but less so nowadays. Many experts believe When it comes to the scanning ability, fully developed it is partly due to the fact that the consumers are so (non-prototype) apps, improved cameras and potentially used to making fragments of their daily lives public via also NFC-tagging will increase scanning speed considerably.Facebook and other social media. Others claim that the Finally, as for lack of batteries, a solution could be consumers are ready to make a trade-off between private to offer “quick charging” power outlets in-store free of integrity and good offers. No matter what reason, it is charge, i.e. the possibility to charge a phone for a couple important to remember that many companies have far of minutes in order to be able to complete the shopping from the same relationship with their costumers as ICA trip. Phone chargers are currently being standardized after has with theirs. There may furthermore be legal aspects pressure from the European Union and this will eliminate that have to be considered. A piece of good advice is the need of using adapters for different phone models. therefore to think cautiously through how and when The battery problems is a general issue for the whole mo-to use facts and figures about the consumers when bile phone industry, implying that there is a high motiva-communicating with them and to ensure that there is tion for finding improved solutions and that development consumer consent. is continuously ongoing. 21.

07. Extended packaging information requires an effort Extended packaging information requires an effort What are the implications of extended packaging information from a business perspective? How will the information reach the consumer? Can the retail business benefit from standardization? There is clearly a desire from consumers to obtain extended packaging information via their mobile phones. There are also from a business point of view many advantages of using mobile apps as a part of the marketing mix. It is most likely that extended packaging in many cases will be the basis of the content in the retail mobile apps that are and will be developed. 7.1. Standardized and mitted by the Internet application providers (e.g. Google, non-standardized information Microsoft, eBay), or by the brand owners and retailers that have developed own mobile apps (e.g. ICA, or Arla Foods). The HotShopper trial has shown that the consumers find it attractive to receive and read product information – One normally differentiates standardized information (e.g. extended or not – in the mobile phone. This requires that product name, manufacturer name, product image and the product information that is available for the consumer ingredients) from non-standardized information (e.g. pro- is univocally correct. Any divergence can result in irritation motional, advertising, price comparisons). It is plausible that in the best of cases but have disastrous consequences for the non-standardized information will continue to flow in the individual consumer in the worst of cases. The negative many different pipes. The price of a product is, for example, impact on the brand can in all cases be substantial. All hardly ever set by the brand owner and it varies from one information about the products that is available in the apps retailer to another. There are however many advantages of should therefore be quality checked. This could initially having standardized information stored in one standard- mean an investment both in terms of time and in terms ized data pool and to have this standardized information of budgetary resources. However, the disadvantages of quality checked. providing incorrect information are much bigger than the Standardized brand data delivered by Internet applica- initial efforts that are needed for the quality checks. tion providers is in many cases not directly provided and The information included in a mobile app currently reach- controlled by the brand owners. The information comes es the consumer in many different ways. It can be trans- from multiple sources (e.g. manual data entry by consumers or by the Internet provider, searches on the internet, retailers’ information, etc.). Some of these sources provide inaccurate or malicious information. Consumers, brand owners and Internet providers are likewise very interested in connecting to accurate sources of trusted data. “In a world of increasing transparency, inaccurate and incomplete product information reduces consumers’ trust in Brands and Brand owners.” Source: GS1 US/Cap Gemini B2C Work Session22. Mobile Commerce Report 2011: Mobile in Retail

App provider App App provider provider App App provider provider App provider App provider App App provider provider App App provider provider App providerContent provider Content provider Content provider Content provider Content provider Content provider Content provider Content provider Content provider Content provider Content provider Content provider Standardized Technical Interfaces Standardized Technical Interfaces No standardized standardized interfaces No interfaces Info broker Info broker A few info brokers A few info brokers Standardized Technical Interfaces & Business agreements Standardized Technical Interfaces & Business agreements App provider App App provider provider App App provider provider App provider App provider App App provider provider App App provider provider App provider Fig: 3 Non-standardized solution requiring direct Fig: 4 Standardized solution with a few central info brokers communication between all content providers and standardized interfaces. and all app providers. It is in this context that GS1 has been given the task from cost-inefficient solutions affecting both the industry and the FMCG-industry to be the actor that enables the distri- the consumers in disadvantageous ways. bution of quality checked and correct brand information in Going forward, a number of key questions have to be an efficient and secure way. taken into account. There is clearly a need for extended packaging information from a consumer point of view. It would be possible • How will the content be distributed in a cost- in theory that each and every brand owner provided the efficient way? By whom? extended packaging information to each and every app • How to secure that the infrastructure behind provider that asked for it. However, there is another option the mobile app becomes scalable and easy to which would be more suitable in practice. GS1 Sweden develop further? has already a business service in place, Validoo™, that quality checks and distributes item information from the More specifically, the problem is the technical integration brand owner to the retailer. This system can be extended of many sources of content through non-standardized to include also other standardized information such as interfaces, see figure 3. If each solution requires a different information about ingredients or the level of carbon dioxide data format, this will be both costly and cumbersome and emissions. if each added content provider has new interfaces and GS1 can thus be the actor that quality checks and dis- requires integration, there will be a need for direct com- tributes extended packaging information in a standardized munication between a content provider and the provider way. It is however up to content provider (a brand owner or of the mobile app. This process will not scale. sometimes a retailer) to decide what content to distribute There is also a business aspect as it is both time-con- and to which parties. suming and expensive to make agreements between all individual app providers and content providers. 7.2 Cooperation and standardization One way to address these questions is that a resolution – competitive advantages service (an “info broker”) keeps track of where content is located and is capable of directing apps to this content. (see Fig: 4) As with all newly launched products and services, some players within the mobile service industry will be the A solution like the one described above needs to be stand- fast movers. It is often the case that the early movers do ardized so that all actors involved are capable of communi- not have time to wait for a standardization process to be cating with each other. Preferably, standardization should adopted. They simply prefer creating their own solutions cover data formats (how the product data is encoded), and to reach the market among the first. There are of course communication interfaces (how data is transported in the advantages connected to being a fast mover and new network). This is an urgent need and something that needs innovative solutions can also inspire others to follow. The to be dealt with before extended packaging can become reverse of the medal might though be fragmented and really successful. 23.

08. Are you ready to get started? Are you ready to get started? Or maybe you are already there but would like to take the next step? Hopefully you have found useful information in this report that will help you with your strategic decisions when considering how to use mobile apps in your business. Other mobile commerce projects Important focus There are also many other mobile commerce projects that One important focus of the HotShopper-project has been to are run in different countries all over Europe (and in the rest enable brand owners, retailers, mobile operators, software of the world). There is a lot of insight that you can take part of developers, service and solution providers and organiza- by studying these projects. Some of the information can be tions to work together. The project has clearly shown that found at: this is possible, and that collaboration gives good results. In addition, standardization and the use of widely-spread and future-proof technologies are most often also both cost- www.gs1.org (The global web page of GS1) efficient and sustainable ways to go. www.gs1.eu (The web page of GS1 in Europe) It is now up to the parties in each industry to move for- www.ecr-all.org (The web page of ECR in Europe) ward with standardization and collaboration in relevant areas. If you are a brand owner or a retailer: talk to your national GS1 or ECR organization about collaboration and ways to share information efficiently right down to the consumer. Collaborate with other stakeholders to fully understand business and consumer issues and to create a value chain where all can benefit.24. Mobile Commerce Report 2011: Mobile in Retail

09. Contributors to the report Contributors to the report Project Team Other contributors Michael Björn Ericsson ConsumerLab Ylva Heivert ICA Cecilia Gyldén GS1 Sweden/ECR Sweden Mats Hvalgren ICA Jakob Saros Ericsson Research Jeremy Morton GS1 Sweden Karin Wollbrand Ericsson Research Bo Raattamaa GS1 Sweden Peter Ripp Arla Foods Marika Stålnacke Ericsson Research Steering Committee Gerhard Bley O. Kavli Consumer Research Christofer Elofson ECR Sweden The field work (pre- and post-interviews, Peter Jansson ICA Maxi Lindhagen shop along and focus groups) was performed by: Andreas Keymer ICA Augur Marknadsanalys. Leif Olausson Arla Foods26. Mobile Commerce Report 2011: Mobile in Retail

Literature and articles PhotosMobile in retail – Getting your GS1 (2009) Olof Holdar retail environment ready for mobile DesignMarknadsföring i mobilen Jonas Marking (2010) Cab Reklambyrå 27.

Mobile Commerce Report 2011: Mobile in Retail About us GS1 Sweden is a part of a global not-for-profit organization that develops global standards for the identification of goods and services. GS1 helps businesses and organisations to improve the efficiency of their supply and demand chains by adding useful information to any exchange of goods or services. Our standards and services include barcodes, eCom standards and EPC, our standard for RFID. Around 10 000 companies and organizations in various businesses are currently customers to GS1 Sweden. www.gs1.se Ericsson is the world’s leading provider of technology and services to telecom operators. Ericsson is the leader in 2G, 3G and 4G mobile technologies, and provides support for networks with over 2 billion subscribers and has the leading position in managed services. The company’s portfolio comprises mobile and fixed network infrastructure, telecom services, software, broadband and multimedia solutions for operators, enterprises and the media industry. The Sony Ericsson and ST-Ericsson joint ventures provide consumers with feature-rich personal mobile devices. Ericsson is advancing its vision of being the ”prime driver in an all- communicating world” through innovation, technology, and sustainable business solutions. Working in 175 countries, more than 90,000 employ- ees generated revenue of SEK 203.3 billion (USD 28.2 billion) in 2010. Founded in 1876 with the headquarters in Stockholm, Sweden, Ericsson is listed on OMX NASDAQ, Stockholm and NASDAQ New York. www.ericsson.com ECR Sweden is a joint trade and industry body that aims at making the grocery sector as a whole more responsive to consumer demand and promotes the removal of unnecessary costs from the supply chain. ECR Sweden organizes projects in order to explore new areas of working together and deepen existing experiences in order to fulfill consumer wishes better faster and at less cost. www.ecr.se

Mobile in retail 2011

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