Private Label Buyer
The Private Eye

The Digital Handbook

April 10, 2012

PE_In-Body.jpgThe use of mobile shopping apps is definitely on the rise, experts agree. Also, mobile technologies and social networks are supplying consumers with a wealth of information and capabilities, which includes viewing prices and promotions and comparing products across a wide variety of channels. The trend toward more sophisticated use of smart phones is clear. According to the Pew Research Center, 25 percent more cell phone users employed their devices to access the Internet in 2010, compared to the previous year.

At the retail level, the picture has changed dramatically during the past year, according to John Caron, senior vice president of marketing, for Quincy, Mass.-based Modiv Media.

“A year ago, the possibility of people scanning products and shopping in-store with a mobile device was just an idea,” he says. “Today, it’s commonplace. For example, Stop & Shop enables shoppers at 50 of its locations to use their smart phones to scan, save and buy groceries in the store. A year from now, we’ll look at these numbers and laugh at how small they are because we are going to see a massive explosion of mobile commerce and transactions.”

At Salisbury, N.C.-based Food Lion, the use of mobile apps is worth the expense and investment required.

“We focus our efforts on making the shopping experience easier for customers so they can get the products they need every day at low prices,” says Benny Smith, a spokesman for the company. “Our mobile apps provide them with more options. They give them easy access to weekly specials along with the capability to build and manage virtual shopping lists, download recipes or locate the closest Food Lion store.”

Shoppers that use a store’s mobile apps tend to buy more private label products, experts agree. They also tend to be the most loyal shoppers and will spend more with that retailer during each visit. Hard numbers are hard to come by, though, says Carrie Chitsey, founding partner of Austin, Texas-based 3Seventy.
“There aren’t enough stores that have rolled out their own mobile apps and that promote white label products to verify that this is driving more private label sales,” Chitsey explains. “In addition, a unique coupon code is needed to track this behavior.”

Still, consumers that use mobile apps show an increase in loyalty and redeeming offers. So if a store wants to promote private labels, mobile apps offer a great way to get consumers to purchase these products, she adds.

How will retailers pay for the technology? The beauty of mobile apps is that shoppers pay for the devices, says Caron.

“Retailers simply need to figure out how to deliver a mobile experience that justifies the opening of an app when shoppers walk into the store,” he notes. “Retailers must determine if they want to deliver a rarely used tool (store finder, mobile circular) or an experience that changes the way the shopper engages the store. The former is a waste of time and money. The latter is a game changer, when done correctly.”

DIGITAL COUPONS
The use of digital coupons is one growing trend reported by both retailers and vendors. According to Smith, digital coupons are an effective tool for inducing trial and sales for private label products. “Many retailers distribute eCoupons through email messaging, social media, mobile apps and websites. Online sampling programs allow these retailers to collect data from consumers in exchange for a free sample of a private brand product.”

To build an application and integrate the POS needed to accept mobile coupons is not easy, cautions Chitsey. Yet, the costs far outweigh the increased revenue a store will see. “The key is to work with a company that owns all facets of this process to develop the application. For this process to be effective, a store needs a mobile partner that can provide SMS (a text messaging service), mobile web, QR and mobile apps.” Stores also should provide customers with coupons in multiple formats to cover the wide range of smart phones used by customers, she adds.

QR CODES
The use of QR codes also is on the rise, experts agree. In a recently released report, Atlanta, Ga.-based NeoMedia Technologies Inc., says that QR codes will dominate the retail scene in 2012. “While mobile barcodes will continue to gain traction—thanks to increasing smart phone penetration, greater consumer awareness, as well as brand confidence and understanding around mobile barcodes—QR codes will continue to dominate 2D symbology, becoming the most utilized by marketers across all sectors,” the report states.

Retailers are using QR codes on signage and print materials for everything from sweepstakes entries to product education pieces, adds Smith. “QR codes can be found on packages, on shelves, on displays, in newspapers, at events, and even on t-shirts and other promotional materials for private brands,” he notes.
Not everyone is sold on the concept, however.

Jeff Sterling, senior vice president of sales and marketing, at King of Prussia, Pa.-based AFA Foods Inc., counters, “We believe that only a small percentage of consumers are actually utilizing QR codes on a regular basis. There is plenty of room for growth, however. The important thing is to continue to change the content so consumers keep coming back.”

Caron says that QR codes offer a good way to engage shoppers. “However, it comes down to what’s behind the code. If I scan a QR code and go to a non-mobile-enabled homepage, you’ve lost me. If the QR code is engaging or drives value in the shopping experience, then it’s worthwhile.”

QR codes are just one of the ways that mobile marketing can be integrated into advertising campaigns to reach desired consumer segments, according to Mark Donovan, senior vice president of mobile, for Reston, Va.-based ComScore. “For retail marketers, understanding which consumer segments scan QR codes, the source and location of these scans, and the resulting information delivered, is crucial to developing and deploying campaigns that successfully utilize QR codes to further brand engagement.”

SOCIAL MEDIA
Modiv Media recently unveiled Modiv Social, a coupon sharing solution and enhancement to Modiv Mobile. It enables retailers to offer shoppers a coupon wallet experience that aggregates coupons from a variety of sources (web, retailer, mobile, digital) and allows shoppers to share select mobile coupons via Facebook. Going beyond simple sharing, Modiv Social enables retailers and brands alike to track, monitor, manage and analyze the lifecycle of a socially shared coupon, as well as identify “shopping influencers” and reward those who share these coupons.

New social media platforms such as Pinterest (a photo-sharing website) and Google+ (a competitor of Facebook) are gaining popularity with customers, according to Smith. Retailers need to stay abreast of such social media trends to determine where their customers are going and the best way to engage them and create brand loyalty, he adds.

COUPONS
Coupon to Card/ID is another innovation that retailers should investigate in 2012, according to Suzie Brown, executive vice president of sales and marketing, for Livonia, Mich.-based Valassis. This system lets retailers extend targeted offers to their frequent-shopper-card customers, thus motivating them to purchase private label products and make purchases in specialty departments around the perimeter of the store (e.g., deli, floral, produce, prepared meals).

“Coupon to Card/ID can be used by retailers to promote higher spend (bigger baskets) in-store, such as ‘save $5.00 on a $50.00 purchase,’” she explains. “A retailer also could use this as a way to support reward offers to select customers (e.g., a $5.00 thank-you offer) or to support customer service via a $2.00 offer loaded to their card.”

Looking ahead, new technology is available to help retailers sell more private label products and increase overall store sales in the process. At the same time, increased use of mobile devices and social networks by the buying public provides a golden opportunity to more readily connect with current and potential customers. It is up to retailers to use this technology in an innovative way.

Taking a broader perspective, Chitsey says “augmented reality” will change the way people behave in retail and connect with the online world. “Retailers now have an opportunity to set the tone and gain market share with the proper ‘augmented reality’ applications,” she explains. “We also will see the rise of mobile payments and mobile wallets by the end of 2012.” This has the potential to increase digital coupon usage and drive revenue for major retailers, she adds.