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The App in Brick & Mortar Retail Warfare May 8, 2011

Posted by David Dirks in Solving Business Problems, Strategy.
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While online sales continue to grow at a healthy pace each year, they still only account for a fraction of total retail sales. Is brick & mortar retail on a march to eventual oblivion? Is there something to be said for the in-store buying experience? Is there any hope for traditional brick & mortar retailers in an increasingly online world?

Smart retailers have long learned to integrate their online strategy with their brick & mortar strategy. They use the websites to drive traffic into their stores using the flexibility and the quick cycle times it takes to implement new sales program on the web.

However, the real ringer for brick & mortar retailers is the rise of mobile applications. Mall owners are just now focusing their digital efforts on creating apps that can steer shoppers to their tenant stores. They are basically welding a Groupon-like strategy to the fast moving mobile application world.

Mall owner Simon Properties is currently offering the mobile app Shopkick in many of its malls. Shopkick offers special deals in tenant retailers, some of which are exclusive to Shopkick members. Simon is also considering just buying an mobile application company just to insure they always have access to cutting edge technology. It seems to make sense on a lot of fronts.

It just seems that mall owners, like many others, were slow to grasp the value of mobile applications in their business model but better late then never.

While many associate mobile apps with gaming and clever utility tools, its real value is in providing a more level playing field for brick & mortar retailers who are looking for an edge that drives foot traffic to their stores.

One interesting note about apps is that they are not searchable using engines like Google or Bing. Apps are close-ended and only use the internet to move data around. Not surprising that Google has been investing heavily in the application market (Android anyone?) knowing that increased use of applications cuts into their traditional world wide web search business.

The strategy direction for retailers, large and small, is in mobile applications. Small retailers who are able to utilize apps like Shopkick or develop their own apps will have the advantage over those who continue to ignore the opportunities within mobile applications.

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