Digital Retail & In-Store Loyalty
Across most services and industries we have seen a shift towards digital models for content acquisition and delivery. In terms of the coupons market, two key factors have driven the switch towards digital channels: firstly the advent of the mobile wallet, and secondly the increasing popularity of eCommerce as a sales channel for consumers, rather than traditional bricks-and-mortar retail.
However, we see increasing concern from traditional retailers who in many cases are losing custom to almost purely online retailers, such as Amazon. Over the past decade, eRetail has accelerated to the point where, in 2013, more than $1 trillion in physical goods sales alone were made online.
Figure 1: Online GMV (Gross Merchandising Value) of Selected Retailers, 2015 ($bn)
Traditional Retailers Move Online
Traditional bricks-and-mortar retailers have attempted to defy this trend, with these providers seeking to shift some of their sales to online channels, the aim being to retain, as well as attract, new customers.
As the ease of use of online shopping, coupled with the expedited shipping seen with the likes of Amazon Prime, has motivated users to utilise online channels, retailers have been pushed into making their services accessible via the Internet, which has led to new, mixed business models. One particular example of this is Home Retail Group’s Argos business, which was traditionally a catalogue retailer suppling homeware, electronics, and leisure products from individual stores. With the shift to online retail, Argos found itself in direct competition with Amazon.
Figure 2: Argos’s ‘Fast Track’ Service
As a result the retailer has moved to a mixed channel approach, offering customers the ability to reserve products online to be collected in-store, or to have them delivered to an address on the same day. This move has proved successful for the business, with online sales now accounting for almost 50% of total sales made (June 2016). The model is interesting as it allows customers to pick up orders almost instantly, instead of having to worry about being at home to receive deliveries.
In-Store Loyalty Also Goes Digital
Alongside the shift towards online channels, retailers have also sought to make use of mobile and connected devices whilst customers are instore. With the use of coupons and promotions, for example, retailers are not only seeking to attract new customers but to also build on customer loyalty.
Whilst more traditional loyalty schemes require users to carry a physical card with them, retailers are seeking to expand into digital channels, through engaging with customers via social media and making use of an online presence. The deployment of bots, artificial intelligence applications which can interact with consumers via social media and messaging applications such as Facebook Messenger, will increase this engagement exponentially moving forwards. We have already seen companies such as Domino’s Pizza and Iceland Air utilise this strategy. Meanwhile, mass adoption of social media has spawned a number of dedicated coupon aggregators operating within the coupons space, including Coupy in India and PennyCat in North America.
Beacons Shine a Light
The use of in-store beacons is an increasingly popular method of coupon delivery, with US retailers includingMacy’s and Target rolling out the channel amongst thousands of stores. Other regions are now adopting the format, with Singapore shopping mall 313@somerset launching beacons at the beginning of November 2016. This follows previous launches of beacons products in India, the Philippines, and Malaysia.
There is a pronounced trend from brands and retailers to offer coupons which are based around location-aware delivery mechanisms, be it NFC(Near Field Communication), Wi-Fi or GPS. Brands have recognised that coupons with a location element typically enjoy far higher redemption rates than those without, particularly in the form of impulse purchases.
Essentially, beacons allow an omnichannel approach to retail marketing, with consumers able to receive targeted coupons delivered to their smartphones whilst they are in‑store or walking close by.
Beacon technology defines the location of a smart device using BLE (Bluetooth Low Energy, or Bluetooth Smart) signals.Thus, if a consumer with an enabled smart device, with Bluetooth switched on, is in the proximity of a beacon transmitter,the transmitter will recognise the device and can push pertinent content and information to that device.
The range of beacons can be adjusted so that some messages are pushed to apps/devices whenever a customer enters a store, whereas others will only appear when a consumer is in a particular aisle or in front of a particular display.
Mobile & Online Coupons- An Expanding Market
The Mobile & Online coupons market is set to witness significant growth over the next 5 years, with Juniper Research forecasting the number of coupons issued via mobile and online channels to grow by more than 60% by 2022, increasing from 224 billion in 2016 to nearly 363 billion in 2021.
Figure 3: Total Number of Coupons Issued Split by Region, 2021: 362.6 bn
Author: Research Analyst – Lauren Foye