Want to learn more about what SHIFT can do for you?
Contact partnerships@shiftretail.com or call 0800 302 9464

Want to learn more about what SHIFT can do for you?
Contact partnerships@shiftretail.com or call 0800 302 9464

Request a brochure

Insights

Is it time to kill the retail app?

As we investigate how businesses can keep their technology ecosystems as agile as possible, we explore if apps are as viable as statistics appear to show.

Icon read pink Read 11 mins
Is it time to kill the retail app?

Apps are like blue jeans: since their invention, they don’t seem to have gone out of fashion. There’s more money in apps than ever before – so it’s no surprise that businesses still consider creating their own, even though it’s over ten years since Apple opened the floodgates, and major players like eBay and Amazon started appearing on the App Store.

By 2020, Statista expects apps to make $189 billion (£147 billion) worldwide – a dramatic rise from the already astronomical $88 billion (£68 billion) recorded in 2016. What’s more, further Statista research found that in 2017, there was a 54% increase in consumer time spent using shopping apps. With numbers like this, it’s enough for any CEO to get cartoon-style dollar signs in their eyes.

Yet once you peel away the attractive veneer, the figures aren’t quite what they seem; in reality, app development might not prove profitable if you’re looking to explore the option as a new channel. In fact, it might be quite damaging to your bottom line.

Don’t fear; it’s not all bad news. There is a future-proof, cheaper and better alternative for omnichannel retail if you decide against building an app. The argument against developing an app is much more than a numbers game, and there’s a wealth of statistics that prove there are other, more accurate underlying trends characterising the app market that you need to take notice of.

Breaking down the numbers

Revenue is usually a great barometer for success, but in terms of user adoption, usage and interaction with apps, the landscape is shifting in an entirely different direction – one that doesn’t necessarily reflect well on retail.

Non-shopping apps skew the statistics. Apps do bring in big bucks, but it’s not retail giants powering this trend. During August 2018, the top three games on iPhone alone (Fortnite, Candy Crush Saga, Pokémon GO) brought in over $4 million a day in the US. Media streaming services (Netflix, Spotify, Amazon Prime Video), along with dating subscriptions (Tinder, Match, Zoosk) accounted for over half of the top ten non-game apps by revenue as per a survey by SensorTower last year.

Retail isn’t a big app category. While games accounted for a quarter of all available apps in May on iOS, shopping took a lowly 1.37% share – 20 places behind gaming.

Amazon is an ever-growing juggernaut. Amazon is the top app that millennials “can’t go without”, with 35% naming it indispensable in 2017 – more than previous favourite Facebook (29%), and more important than Messenger (18%) and WhatsApp (11%) combined. But given it’s a store that sells everything, why wouldn’t it be?

sm0017-retail-app-8

Amazon is now so huge that a comScore survey earlier this year found that people spent more time on it than the rest of the top ten retailers combined – influencing the aforementioned 54% rise in shopping app engagement. Its product range now accounts for 81% of all sales of FCMG, 65% of all apparel and accessories, and 75% of furniture, appliances and equipment in the US. On top of this, 78% of mobile access was spent in-app.

Mobile shopping does not just mean app-based shopping. Last year, mobile and tablet purchases on Black Friday in the US surpassed that of desktop for the first time, and it’s only set to grow. Yet this data is solely down to access via device – in reality, the vast majority of this came from the mobile web, not mobile apps.

Many people use apps once, then never touch them again. In a steadily-holding trend, apps used just once after being downloaded hangs at 21% in 2018, according to Localytics, which added: “There is still progress to be made to keep users from jumping ship before they see the value of your app.” With one in five people, the novelty can wear off quickly.

Some people don’t download apps at all. Despite app use being massive among mobile users – again, skewed by digital media streaming – comScore discovered in mid-2017 that just over half (51%) of them download zero apps per month. Getting people to see an app is one thing, but if they don’t open the store in the first place, there’s a different problem entirely.

The true cost of creating and running an app

In the minds of many, these statistics will still be dismissed by many successful app developers, and well as new app creators who believe they’ve got the perfect release for the current market. They’re not wrong, either: if an app is good enough, it’ll succeed, even if it’s late to market.

Yet for the most part, app success is hard to gauge, or even record. It all boils down to risk vs reward, but at a time when retail success is already strained, the time and effort spent getting an app to market – and then maintaining it when it’s there – could be a lot greater than you expect.

sm0017-retail-app-2

The wider price of development. Getting staff – either internally or externally – isn’t cheap. However, this team needs to be “always on”. It’s not a simple case of building an app, releasing it and letting it do its thing. You need staff on hand to:

  • Issue patches and fixes as bugs are found or when Apple or Google release new versions of their operating systems.
  • Duplicate functionality to the app as new features are developed for the website.
  • Customise the experience to different releases of operating systems, as well as the different operating systems themselves, i.e. iOS and Android (at a minimum).
  • Maintain a whole marketing channel for the app – one that’s separate to the marketing of the website.
  • Understand, create and deploy bespoke technology that integrates analytics, A/B testing tools, heat-mapping and other feedback technologies – something that can be incredibly difficult to achieve, using technology that is often inferior to established services for standard website testing.

As soon as you create potential barriers to a sale, your business has the wrong outlook.

The cost of an app to the user. While it’s been established that apps are often never downloaded by consumers, those that do take the plunge often do it after assessing a number of simple factors:

  • Despite bigger and better data packages than ever, mobile data is precious to users, and apps are now well known to drain this passively. Even games are “always on” even if they’re played offline, sometimes requiring connection with
  • Phone memory is also precious, and apps take this space up; many handsets are still restricted to non-expandable memory, most notably iPhones.
  • Time is money, and the act of going to an app store, downloading the program and waiting for it to install may take as long – if not longer – than a visit to the mobile site to buy the product there.

Simply put, as soon as you create potential barriers to a sale, your business has the wrong outlook. A true omnichannel company makes the act of buying a product or service as straightforward as possible, and expectantly consistent across all channels.

So, if you’re looking to capitalise on the native app channel without actually building one, what do you need to do?

That’s a wrap

If you plan to create an app that is just a downloadable version of your website, but with little-to-no added meaningful functionality, there’s simply no point, as this just moves time and money away from the necessary goal for any online business: improving the user experience of your mobile site.

If you have a poor mobile site, it could be tactically smart to make the short-term decision to build an app and mitigate those major issues – but the strategic, long-term project which underpins this should always be to fix the website.

At the other end of the spectrum, you might have an industry-leading mobile site, to which you want to introduce significant additions to enhance the experience – however, all improvements should target the largest number of eyeballs wherever possible – and that's your mobile site.

This approach doesn’t mean you have to neglect the potential of native app users. By utilising a wrapper – a native app that merely contains a window into your existing mobile website – you can layer on the minimal amount of functionality that is simply impossible to achieve on the web, without enormous investment both upfront and in long-term maintenance.

What might surprise you, however, is how far you can push the capabilities of the web – it’s a constantly evolving platform, that has come on leaps and bounds over the last few years, to the point where it has caught up massively with the hurdle-less simplicity that apps were once known for. For example, well-designed mobile-friendly sites in 2018 boast features such as:

  • Apple Pay / Android Pay
  • Offline support
  • 3D rendering
  • Gestures, such as swiping and pinching
  • Sensor integration, such as geolocation, gyroscope and the camera

sm0017-retail-app-5

The future looks even brighter for the web platform, too; APIs are currently being developed for Touch/Face ID, Bluetooth/USB integration and even Virtual Reality, truly closing the gap on the functionality that continues to be the sole preserve of apps.

This means the majority of your investment can go into your mobile site, where the majority of customers are, and the native applications become tiny, maintainable layers of additional functionality that enhance the user experience even more. Over time, as the web platform implements more native-only functionality, you can migrate more and more into your mobile site, making them available to 100% of digital customers, not just the small percentage using your native app.

A progressive frame of mind

The decision to focus on making a friendly, app-like interface for mobile sites is not new; in fact, two corporate giants have proudly reported the success they’ve had developing progressive web apps to deliver the experience their customers demanded.

The first, Pinterest, had a horrific reputation on mobile – something it reflected on in July, when its engineering team looked back on its first year using a Progressive Web App (PWA). As a result of its commitment to the mobile site – which more than halved its JavaScript payload – Pinterest enjoyed a 103% year-over-year rise in active users on mobile web; logins jumped by 370%, and new signups rose by 843%.

sm0017-retail-app-6

Meanwhile, Debenhams has seen double-digit growth since deploying its own Progressive Web App. Also focusing on speed has meant the new site has allowed customers to complete their session over three times faster than before.

Success stories are rolling in already, and from businesses that took a calculated risk with new technology to improve mobile service. And so we’re back with the initial question...

So, should I build a new app?

Put simply: probably not.

Businesses with successful apps should certainly continue to develop them, but possibly consider migrating more functionality to their mobile website. However, companies that are yet to appear on app stores must ask themselves five questions before taking the leap:

  • Is app development worth the cost, both initially and in the long term?
  • Will an app add a new revenue stream, or just partially cannibalise existing income streams?
  • Is there enough repeat custom to justify people installing it for regular use?
  • What makes an app markedly different or better than an improved mobile website experience?
  • Are customers asking for an app – and if they are, why do they need one?

Ultimately, if you have a fantastic reason for an app – and you absolutely have to build one to satisfy audience demand – do it. But strategically speaking, the most important bottom line is the ecommerce platform you have, which should be able to cover all elements of the omnichannel process, including web and native apps.

If you can’t create the exact experience you want with your website, an app may be for you – but in real terms, what business-critical abilities can only an app deliver your customers?

Insights

Data as a service: Now’s the time to prove its value to customers

Data is a privilege and not a right – and it’s now time to show consumers that you’re taking their data seriously by using it to help them, much like Uniqlo does.

Icon read pink Read 7 mins
Data as a service: Now’s the time to prove its value to customers

If you had concerns about the effect that General Data Protection Regulation (GDPR) enforcement had on your customer reach, it’s worth asking yourself why your customers might not have given the green light for you to keep their information.

Naturally, there were plenty of apathetic reasons why consumers may not have responded positively to your GDPR-themed marketing emails:

  • They only ever shopped with you once, e.g. signing up with the promise of a one-time discount;
  • Your email had a permanent residence in the spam folder from a lack of interaction or habitual deletion; and
  • As countless businesses simultaneously asked for permission to retain data due to GDPR, you were simply lost in the crowd.

But while these don’t seem to be particularly damning reasons for you to lose out on customer data, in reality, they’re among the worst of them all. Customers with no opinion of your brand, or any meaningful, long-lasting engagement with your company may as well be counted as consumers that actively don’t like you.

Consumers are more precious about their data than ever, not least because of horror stories on the Cambridge Analytica scale (despite, of course, this largely being information they’re willing to share through social media). But demonstrating that their data is being used by your company for good, helpful reasons – instead of just emails and other marketing efforts – is imperative to retaining it, as you not only build loyalty but, as several companies have shown, it can also enhance your product offering.

sm0009-uniqlo-3

Uniqlo by name, unique by nature

One such brand using data incredibly cleverly is Japanese fashion retailer Uniqlo, which continues to make waves in the UK. While its high-street presence continues to develop, it offered 11 stores in London alone by September 2018 – one for every year it had been on British soil. For the uninitiated, Uniqlo specialises in stylish yet simple, functional clothing, and its prices compete with H&M, Topshop and New Look – despite offering arguably higher-quality clothing. Queues often run out the door, whether it’s for a new store opening, or just another Thursday in February.

One major reason for its success is how Uniqlo has collaborated with designers and companies as diverse as Disney, Pharrell Williams, Lego, KAWS and Nintendo. As a result, its limited-run ranges sell out fast, but are regularly replaced with new alternatives, and at a rate more akin to TK Maxx than Asos – making visits to its website more regular than a monthly browse for its fans.

sm0009-uniqlo-2

Personal fawning aside – though there’s a lot to love about the company on an objective level too – it’s Uniqlo’s approach to customer data that truly enhances the experience.

As it mostly operates in the UK as an online retailer, the company is aware of the hurdles it faces when bringing a new audience on board, especially one that’s not used to its product sizing. Speaking from experience, Uniqlo’s men’s clothing tends to reflect US sizing rather than European, which may go against UK customer expectation that a Japanese clothing manufacturer would make smaller-than-usual clothing, reflecting its domestic market.

While it offsets its larger sizes by offering most products in XXS to XXL, its unique measurements will inevitably lead to increased returns. Luckily, it only stocks its own products, immediately making things easier when explaining its sizing.

Data as a service

Naturally, Uniqlo provides the industry-standard sizing chart. Yet for many of its core products, which use the same base sizing (e.g. T-shirts), it has harnessed the power of customer data from both successful and return orders, as well as reviews, to inform buyers of the best fit for them.

By using its “find your perfect fit” function, men are questioned over five simple stages:

  • Height and weight (with options for imperial and metric measurements);
  • “Belly shape”, from three options;
  • Shoulder broadness, again from three choices [hips for women, alongside bra size];
  • Age, as it “has an impact on how your weight is distributed”; and
  • Fit preference, with seven choices between “very tight” and “very loose”.

sm0009-uniqlo-1

The output is a bar chart featuring sizes ordered by similarly-built customers, splitting options between two sizes that worked for others, avoiding a hard and fast recommendation but always erring towards one over another. Furthermore, it remembers this data when checking the fit of other products.

What’s clear throughout is the transparency with which Uniqlo explains the process, pairing this honesty with a simple UI on both desktop and mobile. This approach makes shopping with Uniqlo easier and more personal, and also underlines its desire to satisfy customer needs, especially new users. What’s more, it endlessly refines this guidance as more data is gathered.

The immediate benefits to Uniqlo are threefold:

  • As Uniqlo collects more information, it constantly improves the accuracy of the data, meaning fewer returns and happier customers;
  • Users feel more confident to shop at Uniqlo due to the fact they’re treated as individuals, leading to return visits and happier customers;
  • Those who have shared data with the company know it’s being put to good use, on both individual and community levels, meaning they’ll happily keep sharing it, leading to happier customers.

If you work for the customer, the customer works for you

Presuming Uniqlo only has standard customer contact data (name, email address and postal address), alongside the exact fit of their customer – something that could be updated with future purchases if a shopper believes their body shape change – then it has all the information it needs to fully tailor outreach to that specific person, meaning it can better recommend something where the size is in stock, or may be more flattering to their build.

If you can mimic this transparent demonstration of the helpfulness customer data can bring them, they’ll be much more willing to share it with you. Be as up front as possible with why you want it, because if you aren’t, you’ll continue to shed your consumer insight on a base level, pushing your customer further away and into your rivals’ laps.

sm0009-uniqlo-4

Get a strategy to use data properly – and get it in the first place

Before you ask shoppers for their data, you need to make sure you have the tools and people to maximise their value. Now is most definitely the time to invest in data analysis, so you can evolve its value as you accrue more.

There needs to be a purposeful use for this important information before you collect it, and without data scientists and the appropriate in-house machine-learning algorithms to sift through and spot relevant patterns across vast amounts of data – as well as clever CRM strategies to leverage these trends to maximum effect – the data you have may be nothing more than a warm, fuzzy feeling.

Ultimately, your strategy must put the data’s function first. While it feels a bit clichéd to simply say you need to “know your audience”, it couldn’t be more important than in this data gathering exercise: you need to make it perfectly clear to customers that their data adds value to their relationship with your brand.

Common positives to consider in fashion, for example, include convenience, inspiration, sizing or even editorial content. Uniqlo uses its product range and partnerships as an inspirational factor, opting to focus its data use on ensuring people don’t fall foul of its individual sizing. It’s a simple combination, but one that clearly works for the retailer.

By keeping data use both transparent and simple, businesses can focus on other ways to satisfy their customers. Uniqlo isn’t exactly a golden child elsewhere; while it might have mastered a clever and unique approach to data use, it’s still subject to damning reviews for its customer service and delivery. While its “perfect fit” feature will undoubtedly help the company lower the frequency of orders that need returning, it still needs to find a returns policy that perfectly fits the expectations of its new and existing shoppers.