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1. MVENTUR MEMO Q1 2013: RETAIL
SELLING SMARTPHONES: RETAILERS NEED TO START WITH
THEIR YOUNG, MULTI-CHANNEL CUSTOMERS
“Every sofa, bus, train is a shop front as people are looking at their
phones.” - CEO of mobile phone retailer, Carphone Warehouse, Andrew
Harrison
The future customer journey will be defined by how youth interact with
retail today. If retailers want to remain relevant in a multi-channel world,
they need to engage these change agents.
Retail: it’s not just about the store anymore.
The store is a pitstop in the customer’s journey. The modern customer’s
journey isn’t linear like it used to be. Rather than a journey punctuated
by a definable end-point, it’s a process involving multiple consultations
with peers and online reviews. Youth are calling their peers for advice
and checking video reviews on their smartphones while in store.
Retailers need to build around youth behavior and redefine how they
deliver this experience.

2. Meeting customer expectations is no longer enough
People don’t buy alone: shopping is a social process.
Churn, brand and purchase decisions don’t happen in isolation but as
the result of long term consultation and influence. 66% of youth
purchase handsets based on what their peers not what brands or ad
agencies said (source The Mobile Youth Report). Similar percentages of
youth call friends or family to consult about their purchase (source Pew).
The end-to-end retail experience plays a crucial role in defining which
brands youth recommend and ultimately buy.
Youth are the key market influencers, shaping demand for new handsets
across all markets but winning youth means going beyond store
displays, promotions and advertising. What youth seek today is a retail
experience that exceeds expectations.
The difference in satisfaction levels between the best and worst retailers
according to the ACSI is only a factor of 20% (between Nordstrom &
Walmart). Whereas the difference in recommendation between the best
and worst retailers based on NPS data is a factor of 300%. Amazon’s
ranks #1 in terms of customer experience and NPS because it doesn’t
focus on meeting expectations and satisfying customers but delivering
an experience that exceeds all and drives recommendation.
Going Multi-channel
Retailers need to redefine their offering from being a destination for the
purchase process to being a partner that supports it.
Retailers need to provide a seamless mutlichannel experience that
connects the online and offline journey. Data shows that while less than
15% mobile phones are sold online, 70% of purchases began online
(source Carphone Warehouse). Data from the 2013 Mobile Youth Report
shows that 65% of the purchases that started online began on a
smartphone. Half of all searches for the iPhone 5 on the CPW site, for
example, were made from the mobile phone.
This means that online retail isn’t about selling phones but about
curating the customer journey. While 4 mobile phones are sold in the
high street for every 1 sold online, offline sales are heavily dependant on
the online component.

3. Traditional offline retailers face a significant online challenge from 2
areas:
1) Showrooming: The growth in customer showrooming behavior
popular with youth shows that retailers not geared towards a multi-
channel delivery end up becoming the physical front end for online
competitors. Youth often research products in store before taking
purchases online, both to check product reviews and to compare prices.
According to latest data from Pew Research, 50% youth match prices
online, and more look up reviews on their mobile phone.
2) Upstart Advantage: New entrants have been able to redefine retail
from the bottom up to better suit the modern customer. Retailers geared
towards multi-channel delivery, like Apple, are able to turn showrooms
into a positive brand experience and a generator of both
recommendation and revenue. Some retailers have improved their
customer engagement practices, increasing showrooming and in-store
purchases. In recent ACSI surveys, Apple ranked #2 (behind Amazon) in
terms of customer satisfaction. Apple’s ability to re-engineer retail
beyond traditional confines has enabled it to become the most profitable
retailer per square foot in the US ($6000/sqft vs $3000 next placed
retailer Tiffanys). Apple understands that retail isn’t just about selling
boxes but supporting the customer in the discovery and education
process.
“There’s no better place to discover, explore and learn about our
products than in retail. It’s the retail experience where you walk in and
you instantly realize this store is not here for the purpose of selling. It’s
here for the purpose of serving. I’m not even sure “store” is the right
word anymore. They’ve taken on a role much broader than that. They
are the face of Apple for almost all of our customers.” Tim Cook, Apple
CEO
RESEARCH
Research needs to step out of the retail store and into the retail process.
The retail process begins with discovery and goes through various
stages of education. Smartphones, stores, websites, social networks
and apps are tools of the retail process. Research needs to look into
how young people use available tools to move from discovery to
education and finally to action.

4. The retail process is also a social process. Young people repeatedly
consult their peers in each stage of the process. Consultations might
happen in the store, over the phone or in the 3H (homes, hideouts and
hangouts) of young people. Store intercept interviews can not reveal all
factors influencing a customer. Research needs to step into the young
person’s world. Ethnographic research will help reveal the customer
motives involved in the the retail process.
Retailers with the best insight will win. The closer the retailer gets to the
customer across the whole journey, the more insights they will gain, the
more leverage the retailer has both with the customer and the supplier.
MARKETING
Retailers need to curate rather than create stories about their products.
The largest source of product information for customers is other
customers. Customers no longer walk into stores looking for information
to help them decide on a purchase; they now walk in with a more
complete product story in mind. People go to the store to buy a phone
knowing which model to buy a full month before the purchase.
The best way for retailers to address this is not by creating and pushing
more content about the products into different online and offline
channels. With the multitude of product reviews and hauling videos on
YouTube, retailers should focus instead on curating the different stories
customers already have out there to help the discovery process. From
the point of view of the customers, these videos are more trusted.
CULTURE
Multichannel is a customer-led movement.
Customers today are more empowered because of technology. That
means brands need to give control over to customers.
Retail needs to move beyond shifting boxes and looking at how it can
help customers connect with each other seamlessly. Traditional retail is
a siloed environment characterized by walled processes; retail channels
(e.g. offline vs online), experience (advertising vs in store) and
marketing (e.g. traditional vs social media).

5. Retail should not be an isolated function within the business. Retail is
where marketing, customer service and innovation come together. It is
also a Frontline where brands can nurture, educate and empower Fans.
Retailers like Amazon have embraced this seamless, unwalled
experience, prioritizing customer over official reviews and favoring
customer service over traditional advertising as a key to driving
recommendation (NPS).

6. About MVentur
MVentur is the world’s first youth mobile consultancy.
We have 2 roles:
1) Advisor to our clients
We oversee marketing plans, act on advisory panels and consult our
clients. Find out more about our consultancy work.
2) Commercial think tank for the mobile industry
We promote progressive marketing ideas that help mobile companies go
beyond advertising. Read more about our youth mobile opinion pieces.
www.MVentur.com