Millennials are a powerful demographic for retailers. Today, there are around 80 million millennials in the U.S., representing 25 percent of the population. Accenture estimates that millennial shoppers’ annual spending will reach $1.4 trillion by 2020. Within a few years, millennials will “truly come into their own” in terms of spending power, accounting for 30 percent of total U.S. retail sales.
This has profound implications for retailers. Reaching the millennial market will be essential to their success. It’s no secret that many traditional brick-and-mortar retailers are struggling. Department store J.C. Penney announced that it was shuttering 140 stores, along with Macy’s, Sears, Kmart, CVS, The Limited, American Apparel and others. However, this isn't because shoppers are no longer interested in visiting physical stores. In fact, brick-and-mortar retail represents more than 90 percent of total retail sales. Consumers like “to see, touch, feel and try out items" and appreciate the instant gratification of taking items home that day, rather than waiting for packages to be delivered.
What today’s consumer wants is a retail experience that integrates the physical and digital worlds. More than 90 percent of consumers use their smartphones while shopping in retail stores. They still want the brick-and-mortar shopping experience, but also want the convenience, information and perks that digital experiences offer.
Many retailers have been relatively slow to embrace the mobile ecosystem, but this grace period is over. A mobile app that provides real utility and enhances the shopping experience is a must have. There are four key pillars to consider:
The primary purpose of any retailer interaction is to provide information, and a mobile app must be able to do this in ways that aren't possible in physical retail. Often when consumers whip out their phones in-store, they're comparing prices and/or looking up information about a product. If a retailer’s app doesn't provide this information, the shopper will look elsewhere. The information should include inventory availability and shipping options, as well as recommendations for adjacent products, bundles and promotions in a manner that's contextually relevant.
Millennials actively use social media to learn about new products and special deals, as well as use messaging apps to solicit feedback from peers when making purchasing decisions. Retailers can connect with this audience and enhance their in-store experiences by integrating messaging platforms and social media into their apps. Incorporating social media breadcrumbs inside the physical store can enhance in-store conversion rates, while also creating a tighter bond with the brand by making customers brand ambassadors amongst their peers.
Retail apps that include loyalty programs can be an effective way to engage users, as we’ve seen from the overwhelming success of Starbucks’ app. However, millennials are price-sensitive shoppers who say that price has the greatest influence on their purchase decisions, above quality, brand, store and availability. Given this proclivity, the traditional spend-based approach to loyalty is no longer as relevant. Instead, retailers should pursue peer-based, multidimensional loyalty programs that reward shoppers for their influence and engagement with the brand.
Waiting in a long line to pay is the most frustrating part of the in-store shopping experience. Mobile apps are an opportunity for retailers to improve the in-store experience by offering a seamless checkout. By integrating Retailer Pay and/or offering self-checkout in mobile apps, stores can allow customers to skip the lines, providing greater convenience and satisfaction. It's these types of experiences that not only provide utility, but also enable retailers to distinguish themselves from their competitors.
Retail is a dog-eat-dog-world, and retailers concerned about keeping up need to be smart about their mobile app strategy. A mobile app isn't a box to be checked, but rather a channel that should be integrated as thoroughly as possible into the in-store, as well as overall brand, experience. Consumers are already using their phones as they shop. The challenge facing retailers today is to ensure that when they pull out their phones, it’s the retailer’s app they open.
Amitaabh Malhotra is the chief marketing officer of OmnyPay, an integrated platform for payments, loyalty rewards and offers that encourages consumers to use their mobile phone for all aspects of the buying journey.
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