Shopping Shake-Up: 40% of Consumers Using Phones To Cut In-Store Deals

Black Friday? Who cares about lining up at midnight on Thanksgiving when you can cut your own deal a week earlier.

As retailers brace for the annual holiday shopping madness they confront not just very large crowds, but very large crowds armed with smart phones that alert them to comparison pricing, instant deals and better offers down the street.

Instore and online are merging. Consumers are using the tradeoffs to their advantage. The challenge for businesses is to figure out how to capture the interest and drive sales their way. Even Wal-mart is reporting that customers dont really care about the physical vs ephemeral distinction; they just want what they want at the best price, either to carry away or have delivered on time. All with a minimum of hassle.

This is causing changes in store layout, sales commissions, hours and inventory policy. You think you're stressed? Try managing the busiest period of the year with a customer based often better informed than your sales people. Traditional notions or labrynthine aisle configurations designed to lure shoppers to specific high margin products to be sold by staff hired and compensated to deliver turnover during certain hours may be obsolete in the face of consumers who have already priced and chosen what they want.

The situation remains dynamic. Claims that power has shifted to the consumer may be premature because technology has also given merchants the ability to project, price and manage based on data that enable them to react quickly. It is more likely that the contest is now more equal. But the notion of winning is one of perception. And it will go to the swift and the smart. JL

Ryan Kim reports in GigaOm:

Connectivity has shifted the balance of power to individual shoppers. The traditional ways that retailers and merchants reach out to users and how they expect them to discover, shop and pay are getting disrupted by mobile and social. And that’s forcing companies to react.

Venky Harinarayan, SVP of Walmart Global eCommerce and Head of @WalmartLabs, said that 30 to 40 percent of shoppers are now coming into Walmart stores armed with smartphones. That allows them to conduct searches right from the store and go looking for better deals.
Increasingly, smartphones are helping to blur the line between online and offline and it’s altering the way consumer relate to retailers.

“What is becoming clear to us and to the world at large is the difference between online and offline is largely in our head. Consumers don’t care about this, they care about getting products quickly with a great experience,” Harinarayan said at RoadMap. “That’s the future, people are walking in with smarter phones. We have to provide value to those customers.”

Venky Harinarayan, SVP of Walmart Global eCommerce and head of @Walmart Labs
Companies like Walmart are going to have to stay ahead of this new behavior. And they’ll need to rethink how they deal with social networks, where users are increasingly spending their time and learning about products. That’s prompting Walmart to think about building out a bigger presence on networks like Facebook and Twitter and also bringing some of those social experiences right into a store, potentially creating a social network tied to a physical location, Harinarayan said.

Jack Dorsey, co-founder of Twitter and Square, echoed some similar ideas in his talk at RoadMap. He said consumers are learning about products through social connections on Twitter, following their passions and interests. And he said Square is helping empower consumers to become merchants themselves, quickly turning an idea into a business.

“It’s amazing, (with Square) you’re in business right away. In terms of anyone being a retailer, anyone being a merchant, the line between consumer and merchant, the counter, blurs,” said Dorsey.

This is something that the entire industry has to grapple with. John Donohoe, the CEO of eBay, said he expects more changes in the next three years in commerce than in the last 15. The fact is that with mobile and social, consumers are much more savvy. They are equipped with the latest information and the latest prices whenever and wherever they go shopping. And with social channels, they are swayed by and discover product through their friends, not through ads.

This combination really remakes the commercial landscape, as top retailers will need to meet increasingly demanding consumers who are not going to settle for the status quo. Everything is going to be rethought at some point, whether it’s the way stores are laid out, the way users can pay, or how workers will be deployed in stores. And everything will be connected online and the best of online will come to offline and vice versa.

As Harinarayan readily admits, he doesn’t know what the future will look like exactly. But he knows it’s going to be dramatically different than today. That’s what mobile and social have done. They’ve created a new class of empowered consumers and retail will never the same.