Retailers and Consumers Embrace Mobility toIncrease Customer Experience

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Summary of Findings

IntroductionBackground and Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Report Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

A Look at Consumer Use of Mobile TechnologyWho Responded? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7What Type of Phones Do Consumers Use? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7What Features Do Consumers Seek for Their Mobile Phones? . . . . . . . . . . . . . . . . . 7Who Pays for All This? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8How Do Consumers Typically Use Their Phones? . . . . . . . . . . . . . . . . . . . . . . . . . . 10Do We Use Our Phones To Make Purchases? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Future Devices Consumers Want . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Currently, Where are Retailers with Mobile?Which Platforms Are Currently Supported (and Which Ones Going Forward)? . . . 14How and When Will Retailers Engage the Customer with Mobile? . . . . . . . . . . . . . 16What Future Development Can We Expect? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Where are Vendors in Their Response?What We Hoped to Learn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Which Platforms Do They Support for Consumers? . . . . . . . . . . . . . . . . . . . . . . . . 19Which Platforms Do They Support for Store Associates? . . . . . . . . . . . . . . . . . . . . 19Web Functionality – How Much is Lost? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Where Do Vendors Stand on Consumer Applications? . . . . . . . . . . . . . . . . . . . . . . 22

Conclusions

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5

contents

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This report is a summary of a much moredetailed study that can be found atwww.ihlservices.com. That being said,here are a number key findings that arecontained in this summary.

• This is a study with a high concentra-tion of smartphone users, the verypeople that retailers and marketerswant to reach with their mobileefforts. Seventy-seven percent (77%)of those surveyed indicated that theyused a smartphone. This is in contrastto data for the US population as awhole, for which less than 25% use asmartphone.

• Texting is near universal and is seenas the faster and more reliable emailas there are no spam filters for texting.Ninety-seven percent (97%) of allrespondents claim that they havesent or received text messages ontheir mobile phone in the last 12months.

• There is essentially no differencein the percentage of texting usebetween the youngest members ofthe sample (teenagers) and the 46-55year-olds. There is likely a differencein volume of texts, but no differencein terms of number of plans. We sur-mise the 46-55 year olds are usingtext as a way to communicate withtheir kids.

• Standalone GPS is an endangeredspecies. Sixty-six percent (66%) of allsmartphone users have used the GPSapplication on their phone in the past12 months.

• The Apple iPhone could likely doubleits market share when released on

Verizon or some other carrier. 56%of current smartphone users areseriously considering the iPhone astheir next device. Current marketshare for iPhone from other studiesshows at less than 25% today. 44%are seriously considering an Android,which should also see increasedshare. And only 24% are consideringa Blackberry and 10% a WindowsSmartphone for their next device.

• 52% of smartphone users in the studyhave paid for an additional application.65% use their smartphone to updateFacebook.

• Security is a real concern, however,with cell phones being lost or stolenmore than any other electronic device.44% have accessed their bank accountfrom their smartphone, but very fewhave a strong password on theirphones.

• 35% of smartphone users havereceived and/or redeemed a couponthey have received via text message.

• 41% have checked competitive priceson their smartphones while in a retailstore either with Amazon, Red Laser,or other comparison engine.

• Outside of work, we love to use ourphones for entertainment options.Sixty-three percent (63%) of mobilephone users have used their phoneto check on show times or exploredining options.

• It’s good to be a scanner company asmobile phones are issuing in a newgeneration. 54% of all retailers sur-veyed indicated that within 12 months

they will have the ability to not onlydeliver coupons electronically to theircustomers’ mobile phone, but also toscan the coupon into the POS directlyfrom the mobile phone’s screen. Thiscapability requires an optical scanner,a device which currently only has a2% penetration in US POS lanes.

• Your boss wants his reports on hisiPhone. While Blackberry (52%)is the most common platformsupported by retailers for theirmanagement team today, this isquickly shifting to the iPhone andiPad for the future. Today only 19%of retailers support the iPhone and10% the iPad, but 12 months fromnow that rises to 60% for iPhone and47% for the iPad. Once again a similarjump occurs for Android, from 14%today to 33% in one year.

• The biggest mismatch betweenwhere Consumers see their nextphone and retailer’s and vendor’splans to support them resides withWindows Mobile. Fifty-three percent(53%) of retailers and sixty percent(60%) of vendors claim they will beproviding support for Consumer’sWindows Mobile phones goingforward, yet only 8% of Consumersplan to make a Windows Mobilephone their next purchase.

SUMMARY OF FINDINGS

4

Background and ObjectivesFor this report, IHL partners with RetailConnections in an effort to truly understandhow consumers, retailers and vendors arecurrently utilizing mobile phones anddevices. Additionally, the authors striveto anticipate how those same groups willlook at mobility in the future.

Several recent studies have shown thepenetration of cell phone usage to be inthe 90% range of the total U.S. population.Standard cell phones are not only capableof making and receiving calls, but also ofdoing the same with text messages. Manyof these standard cell phones can alsotake, send, receive and store pictures andvideo. Smart phones not only do all of theabove, but also act as music libraries andweb portals, while allowing users to begeo-located and continually connectedto multiple email accounts. Clearly, retailersand technology vendors have a vestedinterest in understanding consumers’useof these devices and developing strategiesto leverage the technology. With so manyretailers facing steep competition fromall sides, the ability to put discounts,special offers, and other key informationdirectly into the hands of core customersis rapidly become a differentiator in themarket. To best understand how to lever-age this, retailers and vendors must firstunderstand how consumers currentlyuse their mobile devices.

In addition to understanding consumeruse, this study also seeks to quantifywhat retailers and technology vendorsare currently doing with mobility, as wellas where they see the technology goingin the future. Retailers can utilize the datato measure their own perceptions againstwhat their customers are anticipating, aswell as what other retailers are considering.

Vendors, for their part, will be able toutilize the data in the survey as a tool togauge the most likely areas of investmentby retailers.

This study presents findings in three sep-arate categories. The first category, uponwhich the bulk of the report focuses,addresses the consumer side of mobile.Following that, we examine what vendorsare currently doing in terms of theirmobility offerings. Finally, we take a lookat what retailers are doing today, with aheavy emphasis on where they anticipatespending their mobile IT dollars in the future.

The survey used as the basis for this studygenerated a tremendous amount of data,and this study presents an overview ofthat data, along with several key findings.A more comprehensive report will bepublished by IHL in November 2010,and it will include additional insight intospecific consumer behavior.

Report MethodologyThe data for this study were obtained byperforming a web-based survey), theinvitations for which were distributedthrough IHL and RetailConnections duringthe August-September 2010 timeframe.The survey was then distributed virally,through contact lists, Facebook, andother social media. All told, we were ableto use 570 responses. Respondents wereoffered the opportunity to win an iPad(one entrant drawn at random from poolof all respondents) and were notified thatevery completed survey would result in amonetary donation to a sponsored charity,RetailROI (www.retailroi.org). The time-frame of the survey allowed for it to beconducted after the release of the iPhone4, Droid X and during the Droid 2 release,allowing for responses from consumers

using the most advanced consumertechnology.

The survey consisted of a variety of questions.All respondents answered 10 consumer-centric questions. There were an additional10 questions for anyone identified as aretailer, and an additional 10 questionsfor anyone identified as a vendor. Thetopics covered included:

Consumer/General Questions• Demographic Information –

Gender, age range• Current cell phone and plan –

Type of device, who pays for the plan,length of contract, etc.

• Past and Future use of phone –texting, GPS, payment, etc.

• Future purchase considerations

Vendor Questions• Current mobile offerings –

Applications, platforms• Functionality• Future applications and functionality

Retailer Questions• Retailer demographics –

Vertical, annual revenue• Current mobile offerings –

Applications, platforms• Future plans

When the response timeframe expired,we set about compiling and analyzing thedata. The key summary points from thedata are delivered within this document.Additional detailed analysis work iscurrently underway, and the results ofthat effort will be made available by IHLin a more comprehensive report to bepublished in November 2010.

INTRODUCTION

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Who Responded?In order to get an understanding of whowas using mobile phones and how theywere using them, we asked some standarddemographic questions of the surveypool. Data were collected from everyonefrom teenagers to those past retirementage. The responses indicated that theaverage respondent was a 46 year-oldmale who uses a smartphone and whopays for his own plan. We didn’t want tolimit ourselves to that characterization,however, since we wanted to paint asbroad a picture as possible of the demo-graphics of the respondents. That said, amajority of the respondents (57%) weremale, and a heavy majority (66%) werebetween the ages of 36 and 55. The Under25 and Over 65 crowds each representedjust 2% of total respondents.

WhatType of Phones Do Consumers Use?Of note here is the fact that men hadmore smartphones than women (86% to64% respectively), but further analysissuggested that mobile behavior has moreto do with the device itself and not thegender of the user. That said, other IHLstudies have given a clear indication thatwhen it comes to IT, men tend to be morerapid adopters in a given situation.

What Features Do Consumers Seek forTheir Mobile Phones?We also wanted to find out what kinds offeatures consumers chose to be includedin their mobile phone plans. For instance,heavy texting is often associated withteenagers, with recent surveys suggest-ing that one third of teenagers sendgreater than 100 texts per day (one ofthe authors is a first-hand witness to amiddle-school student who was found tohave sent over 900 texts during the firstmonth his parents had texting added totheir plan). Fully 94% of all respondents

indicated that texting was part of theircurrent plan. Texting is essentially thenew, faster email, and from a businessperspective it has a several positive at-tributes. Texts can more often be sent orreceived in areas with minimal signalstrength, and communication can bequicker than email as fewer steps areinvolved in the transmission and deliveryprocess. Further, a text message alwaysmakes it to the recipient, whereas email

often gets caught in Spam filters and isnever seen. It seems as though a vastmajority of cell phone users are nowutilizing texting as part of their cell phoneplan. In our survey, we were surprised tosee that texting plans were every bit ascommon for the 36-55 age demographicas they are for the youngest age groupin the survey.

26–35

36–4546–55

56–65

Figure 1 - Age of Respondents

2% - Under 25Over 65 - 2%

15%15%

31%35%

A LOOK AT CONSUMER USE OF MOBILE TECHNOLOGY

Figure 2 - Phone Type by Gender

Male 15% 85%

Female 36% 64%

Overall 23% 77%

Gender Standard Cell Phone Smartphone

7

Additional findings regarding serviceplans show that 80% of users have emailincluded in their plans, 78% are able tobrowse the internet, 48% have videotexting and 45% can view video. Seeingthe raw numbers in terms of computingability should both amaze and give pauseto readers. Think about it…email and theinternet truly went mainstream less than15 years ago, and today 78% of peopleare surfing (or at least have the abilityto surf ) the internet on mobile phonedevices. For those who might be suspecton the role mobility will play in retail,they discount it at their own peril. To putit in proper perspective, who would havethought fifteen years ago that Amazon,who had just opened their doors forbusiness, would be a willing participantin (indeed, an enabler of ) competitiveprice checking while their customer wasstanding in the brick and mortar storeof a competitor?

By now, we’ve all heard a version of thejoke that says, “The iPhone/Droid/etc. isgreat, so long as you don’t want to makea call.” In the distant past (say the 1990s,early 2000s) cell phones were used formaking calls from places where landlinephones were not available or convenient.Today, while such calls are certainly stillmade and many Americans have eventransitioned to landline-free homes, it isclear that much, much more is expectedfrom phones. More detail for this andother sections will be available in theexpanded version of this report, availablein November 2010.

Who Pays for All This?Having all those features can cost somedough, so we asked the respondents“Who pays for your current cell phone

plan?” Fifty-nine percent (59%) claim thatthey pay their own cell phone bill, while50% reported that their employer pays atleast some of the bill (many respondentshad two (or more) cell phones; one forbusiness and one for personal use).Whether or not the business pays has noimpact on the use of text messaging as94% of all users have texting in their plan.Where separation occurs however, is inthe additional plan features. Fully 95% ofrespondents whose businesses pay forcell service utilize their mobile device tosend and receive email. Video texting andmobile video are relatively close as planfeatures, regardless of who pays the bill.

However, additional separation is seenbetween business and personal planswhere Mobile Web is a feature. 92% ofbusiness-paid plans include the ability tosurf the internet, compared with just 68%of personal accounts. The bottom line isthat email access is the driving feature forbusiness-paid plans, but the users enjoythe texting, mobile web, and entertain-ment benefits of the plan for their ownpersonal use.

A LOOK AT CONSUMER USE OF MOBILE TECHNOLOGY

Texting

Email

Mobile Web

Video Text

Mobile Video

Figure 3 - Features Included in Mobile Phone Plan

94%

80%

48%

78%

45%

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How Do Consumers Typically UseTheir Phones?Nearly every respondent sent or receiveda text message in the 12 months prior tothe survey. While it is not surprising thatthe least text friendly group were thoseover the age of 65, it is a bit surprisingthat the Under 25 crowd did not have thehighest rate of response. In fact, 99% ofthose from 36-55 in our study said theyhad sent or received a text messagewithin the last 12 months, making thatage range the most text-friendly.

As seen before, email is pervasive, as isthe use of phones for GPS navigation.The numbers are so high in fact, that wewould declare standalone mobile GPSunits as an endangered species. A clearbenefit of utilizing phones for GPS is theability to receive a location name viaemail or text, search for informationregarding it utilizing a mobile browser,and then mapping it on the internal GPSapplication. In fact, 66% of consumerrespondents reported having used theircell phones as GPS devices.

When it comes to going out on the town,many people utilize their browsers andinstalled applications to check on movieshow times as well as investigate diningoptions. This would highlight the impor-tance of small, independent restaurantshaving a web presence suitable formobile surfing. Since 63% of thosesurveyed utilized their phones for thispurpose, the impact of not having a webpresence is clear; if a consumer doesn’tknow a restaurant is there or can’t find it,they certainly won’t dine there.

Perhaps the most interesting findingregarding usage by age, is the fact thatadults in the 36-65 age range showedsome of the highest overall utilization of

the activities discussed above. Clearly,business users in that age range are likelyto be mid- to senior-level executives whotravel. This age range would also includemany who have lived and workedthrough the adoption of various tech-nologies in the workplace. The fact thatthese “older folks” might be slightly moreexperienced and adept at handling thetechnology (compared to those in theyoungest age ranges) should not beoverlooked by developers and marketers.

Given that “social media” is one of thehottest topics concerning smartphoneuse, we were interested in the social aspectof mobility, as well as the commerceaspect of engaging consumers throughthose social media formats. The term

A LOOK AT CONSUMER USE OF MOBILE TECHNOLOGY

Text

Email

GPS

Movies or Dinner

TXT Coupon

Download Ringtone

TXT to Charity

Figure 4 - Respondent’s Cell Phone Activity

28%

97%

79%

30%

14%

66%

63%

Figure 5 - Social Media Usage

52% 24% 2% 5%

Facebook Twitter MySpace Four Square

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“social networking” is freely bandiedabout in today’s press. One limitation ofthe term however, is that it tends tofocus attention only on certain sites orservices like Facebook, Twitter, etc.However, social connectivity has a muchbroader meaning and helps differentiatebehavior. Beside social networking sites,social connectivity can include the use of

GPS, user review sites such as Yelp,texting for communication or to donateto a charity, or even looking up movietimes or looking to make dinner reserva-tions through a site such as Open Table.

Before Foursquare, before Twitter, andbefore Facebook, there was MySpace.In a stark reminder that what once wasbig will not always be big, MySpace goesvirtually untouched by mobile users inthe survey. Clearly Facebook’s 500 millionworldwide users enjoy staying up todate while on the go, as 52% of the totalsurveyed population has utilized the sitefrom their mobile device. The heaviestusers of Facebook were under the ageof 55. Only a quarter of those over 55had accessed Facebook on theirmobile devices.

Do We Use Our Phones ToMake Purchases?Another aspect of consumer behaviorthat we wanted to investigate was how

consumers engaged in commerce withtheir mobile devices. The results over-whelmingly indicate that consumers areready and willing to use their mobiledevices for more and more activities,but it must be convenient to do so.

More than four out of ten consumershave used their mobile devices to

conduct competitive price checks of aretailer’s offering. This places intensepressure on retailers to have adequateinventory at a competitive price, and tohave those inventory levels and pricesavailable online for consumers to find.Furthermore, bricks-and-mortar retailershave the added burden of having toconsider changing the way in which theydo business. For instance, they mighthave to allow their sales staff to “deal”with a purchase-ready consumer whohas found a better price from thecompetitor down the block. This mayenable the consumer to complete atransaction in a timelier manner; theydo not have to go home, review prices,then make a decision. This can work ina retailers favor by perhaps eliminatinga portion of the traffic that is merelywindow shopping.

For those that travel, 44% have utilizedtheir device to check in on a plane orsubway. This helps to highlight the

conveniences that consumers arelooking for with their mobile devices.

One issue often raised surrounding thequestion of paying via cell phone is thequestion of security. However, it wouldappear as though security isn’t too bigof a concern for consumers as fully35% of respondents reported having

accessed their bank account informa-tion from their mobile device. One ofthe authors does all of his bankingonline and through his mobile phoneincluding paying all recurring bills. Notonly is it now an expectation that bankswill always provide this service, but theease and convenience of banking thisway far surpasses any question ofsecurity.

Interestingly, after spending severalhundred dollars for a smartphone,consumers are 50% more likely todownload and install a free app fortheir mobile device than pay for an app.While this may be in response to all ofthe digital noise that consumers arecontinually bombarded with, it couldalso be in response to some lack offear regarding an infected or unsafeapplication, that maybe somehowtheir phone isn’t like their PC. Of course,this is a tough way to learn that youget what you pay for.

A LOOK AT CONSUMER USE OF MOBILE TECHNOLOGY

Figure 6 – Types of Mobile Phone Financial Transactions

Paid withPhone

Paid for Movie Accessed BankAccount

CompetitivePrice Checked

Free App Paid App Checked In forTravel

6% 9% 35% 41% 66% 40% 44%

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Future Devices Consumers WantFull Disclosure: Sometimes after a study isconcluded, questions you wish that youhad asked come to mind. While we did askfor future cell/smart phones under consid-eration for the next purchase, we failed toask for specifics regarding brand andmodel of current phones used. That said,we were still able to quantify the devicesthat consumers are considering for futurepurchase.

The clear leaders here are iPhone andAndroid, with 49% and 40% (respectively)of survey respondents considering themfor their next device. Certainly there issome overlap here as there are likely con-sumers who enjoy a particular cell carrierwhich the iPhone is not currently a part of.While rumors abound as to the next net-work that will land the iPhone (Verizon ismost often mentioned), at the time of thiswriting no definitive announcement hadbeen made. However, it seems a foregoneconclusion that eventually iPhone willmake a debut on another network outsideof AT&T. The question will then becomehow many iPhone users will migrate toAndroid devices on Verizon’s advertisedsuperior network, or how many Androidusers will happily embrace the newlyavailable iPhone. Perhaps in part, ananswer to that lies in the fact that of thoseconsumers that are considering anAndroid, 57% are considering an iPhone,while 48% of those considering an iPhonealso would consider an Android purchase.

Research in Motion’s Blackberry deviceshave long been the dominant player insmart phones due almost exclusively totheir best in class email service. However,it would seem as though the power of theiPhone, and increased email efficiency andfunction, has made huge headway againstRIM’s long established dominance. Fully 61%of those considering Blackberry are consid-ering an Android. Likewise 51% of those

considering Blackberry are consideringthe iPhone.

What seems even clearer is that HP/Palmwill have to take drastic steps to makethemselves a viable option going forward,as a mere 1% of consumers surveyed areconsidering them for future purchase.While not quite as dismal, Windows mobile

phones are not highly desired byconsumers. In fact, consumers find theprospect of purchasing a Windows phoneon par with purchasing a standard cellphone, as only 8% of those surveyed areconsidering either for their next purchase.Also a challenge is the simple fact thatover 57% of those few consumers that areconsidering a Windows smartphone areconsidering either an Android or iPhoneas well.

Whatever the future purchase considera-tion, it seems evident that Apple, throughits iPhone, is on track to one day becomethe market leader. Whether or not thecompetitive push that Apple is receivingfrom Android can continue, or if and whenthe iPhone becomes available on Verizon(or T-mobile), remains to be seen.

A LOOK AT CONSUMER USE OF MOBILE TECHNOLOGY

iPhone

Android

Blackberry

Windows

Standard Cell Phone

HP/Palm

Figure 7 - Next Phone Under Consideration

8%

49%

22%

40%

8%

1%

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In terms of what retailers are doing, thisstudy sought to determine what currentplatforms were supported, what futureplatforms were under consideration,and what key functionality retailers werelooking to leverage to engage their cus-tomers. Perhaps the greatest opportunityfor retailers in terms of mobility is alsothe greatest challenge; truly engagingcustomers beyond the occasionalinformational text or coupon.

The original pool of 570 respondents wasreduced to 66 respondents who identifiedthemselves as retailers. These 66 answerednot only the initial 10 questions thatconsumers were asked, but an additional10 questions which touched on demo-graphics (retail segment, annual revenue),mobile applications (types alreadydeployed and how they are deployed),platforms (current & future), andconsumer-oriented mobile.

Which Platforms Are CurrentlySupported (and Which OnesGoing Forward)?It seems everyone truly does have “anapp for that”, since the vast majority ofretailers already support iPhone/iPodapplications. What’s truly amazing aboutthat level of penetration is the fact thatwhile only 25% of the cell phone marketis comprised of smart phones, only 28%of those smart phones are iPhones.This means that the leading platformsupported by most retailers is for a devicethat commands only 7% of the market.Blackberry, which still has the largestshare of the smartphone market isonly supported by 40% of the retailerssurveyed. Android, while much newerthan either of the previously mentionedplatforms, is already supported by50% of retailers.

Clearly, retailers see Apple’s platformas being around for the long haul, asincreases in support are forecast for alldevices. Additionally, Android makes asignificant jump from 50% support to aplanned support of 79%. The 18 pointincrease in Blackberry support probably

reveals a realization of deficient support,rather than a true belief in the futuresuccess of the product. While it wouldseem obvious that Blackberry hassignificant challenges ahead, it stillrepresents such a significant portionof the market (particularly in businesscircles) that it is unlikely to disappearaltogether.

CURRENTLY, WHERE ARE RETAILERS WITH MOBILE?

Figure 8 - Consumer Mobile Platform Support

85%88%

55%72%

50%79%

40%58%

10%14%

23%23%

18%23%

43%53%

23%35%

5%2%

iPhone or iPod

iPad

Android

Blackberry

Symbian

HTML 5

WAP

Windows Mobile

Windows CE/7

OtherCurrentFuture

14

Prior IHL research indicates that providingassociates with better tools is a key priorityfor retailers. The retail IT communityclearly recognizes that a successful storeexperience goes beyond having greattools. There is a critical relationshipbetween the tools themselves and theability for them to be both accessedand utilized properly. Databases full ofinformation can be great, but they areabsolutely useless without the correctinsight into how to make the informationcontained within them actionable.

From the figures above, it is clear that asignificant portion of retailers see thepotential for Apple mobile products toplay a key role in accessing that informationand delivering actionable customerservice within the store. Recently, therewas a LinkedIn discussion which focusedon the “cool factor” of sitting down at afive star restaurant and having the full winelist presented in visual form on an iPad.Additional utilization of this technologycould include the ability to see additionalcolor/style combinations at a soft goodsretailer, or to show a digital photographof what a room would look like after aparticular paint was selected at a hardgoods retailer. All of these examples aretaken from currently available softwareproducts, the idea of making themavailable to store associates on thefloor with a modern, sleek, and userfriendly device simply makes goodbusiness sense.

Management platforms and storeassociate platforms are of course closelyrelated. That said, a true managementplatform would also allow managers toaccess key back office functions. The abilityto view, adjust and modify upcoming

employee schedules, see inventory data,and track specific sales data from thesales floor can only be viewed as apositive. It would appear as though theincreased investment in supporting thatactivity reveals a realization of somethingvery simple. In fact, IHL has been pleadingwith vendors for years to engage in thepractice of walking around and seeing

their technology in use. This helpsvendors to see what works in real worldapplications and what doesn’t. Thesame is clear for retailers; enable yourmanagers to be on the front lines wherethey can engage the customer as wellas work with the store associates ondelivering exceptional service.

CURRENTLY, WHERE ARE RETAILERS WITH MOBILE?

Figure 9 - Store Associate Mobile Platform Support

42%67%

11%44%

26%41%

47%52%

5%4%

16%11%16%15%

42%41%

26%22%

11%11%

iPhone or iPod

iPad

Android

Blackberry

Symbian

HTML 5

WAP

Windows Mobile

Windows CE/7

OtherCurrentFuture

15

How and When Will Retailers Engagethe Customer with Mobile?There is often talk of utilizing variousmedia to ensure that retailers have apresence in their customers lives. Themost successful retailers take it to thenext level and actually engage theircustomers. Survey results indicate thatthere are numerous ways retailers areattempting to make that engagement.

While the to-be-released extended versionof this study will examine the abovegraphic in greater detail, perhaps thenumber one takeaway here should bethe mobile screen coupons. Fully 54% ofretailers plan to offer this within the nextyear, while 70% will have the capabilitywithin 2 years. The importance of this isthe fact that if the coupon contains a barcode, it will need to be read by an opticalscanner, a device that currently only hasachieved a 2% rate of penetration in retail.This foretells a potentially massive increasein the number of scanners that will needto be installed in order to leverage thenew method of coupon delivery.

What Future DevelopmentCan We Expect?While the potential benefits and requisiteplans to use mobile to engage the customerare obvious, and while we have previouslyencouraged the act of enabling retailmanagers to have more floor time, oursurvey also revealed the applicationsfor which retailers plan to focus futuredevelopment. This goes beyond thequestion of device or platform, insteadfocusing on specific functionality thatretailers hope to achieve. This is importantbecause while customer engagement iskey, these functions go to the heart ofthe retailer’s operations, both at the storelevel and throughout the supply chainand home office functions as well.

CURRENTLY, WHERE ARE RETAILERS WITH MOBILE?

Figure 10 - Management Mobile Platform Support

19%60%

10%47%

14%33%

52%50%

0%0%

10%3%5%

3%19%

27%14%

10%10%

7%

iPhone or iPod

iPad

Android

Blackberry

Symbian

HTML 5

WAP

Windows Mobile

Windows CE/7

OtherCurrentFuture

Coupons on Mobile Screen

Text Coupons

Regular Bar Code

2D Barcode

RFID for Payment

Consumer Self-Checkout

Competitive Pricing

Figure 11 - Consumer Engagement Methods and Implementation Plans

16%

25%

22%

21%

9%

38%

47%

22%

23%

17%

18%

9%9%9%

16%

9%

22%

17%

8%

8%7%

2%

7%Already Use

Next 12 Months12-24 Months

16

For Business Intelligence/DecisionSupport, retailers are clearly seeking waysfor those vast databases to be leveraged onthe floor, in the field, and throughout allaspects of the supply chain. That said, BI hasthe highest percentage of retailers whoclaim to have absolutely no plans to its use.

Fully one-quarter of the respondingretailers revealed that they already had amobile POS application deployed. Withan additional 35% planning to undertakethat capability within the next 2 years(with 22% planning it within 12 months),clearly M-POS is an area that is ripe forexpansion. More than three-quarters(78%) of the retailers surveyed anticipate

having M-POS within the next 3 years.There is clearly significant advantage tohaving associates who are able to walkthe floor, assist customers with decisionsor selections, and then close the sale onthe spot. Some might argue that thiswould be an affront to the labor force, asstores would look to decrease the numberof paid employees by eliminating cashierpositions, but we believe that a morelikely scenario would be what we see inretail applications of self-checkouts.

Namely, stores would utilize the newfoundmobility of associates in an effort toprovide greater, more efficient andeffective customer service.

From a consumer’s perspective, there arefew things more frustrating than tryingto find a sales associate on the floor.Once one is found, inquiring about theavailability of a different color/size/etc.of an item (or even the correct price ofthe item) can generally result in a wildlyinefficient process that involves movingfrom one end of the store to the other,perhaps interrupting the checkoutprocedure at a POS terminal, and theassociate having to fend off other

customer requests or questions during theprocess. How many sales have been lostor negatively affected by this process?While we don’t have an answer, we wouldask the reader to consider his/her ownexperience with such activity, andwhether or not it affected future trips tosaid retailer. By enabling associates ormanagers to handle this process on thefloor, with the customer engaged, in atimely manner, customer satisfactioncan only increase, as will sales.

CURRENTLY, WHERE ARE RETAILERS WITH MOBILE?

Figure 12 - Consumer Engagement Functionality Plans

FutureFunctionality

Alreadyin Use

Next 12Months

12-24Months

24-36Months

No Plansto Use

BI/DecisionSupport

Mobile POS

Inventory Lookup

Price Lookup

12%

25%

16%

16%

30%

22%

30%

35%

14%

13%

20%

22%

8%

20%

12%

8%

36%

22%

24%

22%

17

Full Page Template.qxp 5/14/2010 2:31 PM Page 1

What We Hoped to LearnAs mentioned in the Methodology sec-tion, survey respondents who identifiedthemselves as a mobile application ven-dor were asked an additional 10 questionsupon completion of the consumer survey.We found 55 individuals who identifiedthemselves as vendors, and we wanted toglean information on three topics fromthem. We wanted to gain insight intowhat platforms are and will be supported,the functionality that is currently attained,and what current and future consumerapplications will (or will not) be supported.

Which Platforms Do They Supportfor Consumers?Each mobile device brings with it adifferent set of challenges for configuringapplications to run properly on thedevice. The interesting thing to note hereis the level of disconnect that appearswhen one compares the Consumer’splans for their next phone with the Vendor’splans for supporting Consumers in thefuture. Simply, Consumer expectationsfor use of Blackberry and Windows smart-phones are way overmatched by theVendor’s investment in those platforms.Windows certainly has an opportunity togain significant market share if Microsoftcan find a way to translate the popularityseen here to the consumer facing side ofmobile business. The fact that 21% morevendors support iPhone than do Blackberryis a further indicator of Blackberry’sperceived decline.

Which Platforms Do They Support forStore Associates?Vendors currently show Windows Mobile asthe preferred platform for Store Associates,and there is nowhere near the mismatchbetween Retailers and Vendors goingforward as there is between Consumers

and Vendors. Interestingly, Blackberry’sstrength is matched fairly well betweenVendors and Retailers for Store Associates.

While this is truly an area for deeperanalysis in the expanded version of thisreport (available November 2010), it isplainly obvious where the heaviest areaof Windows Mobile investment is.

Business Intelligence, Mobile POS, andClienteling applications underscore thefact that Windows Mobile has the potentialto remain strong in business settings, ifnot in the minds of consumers. Clearly,the areas of support reveal the focus onthe two of the prevalent themes intoday’s retail environment; investment inBI applications and giving floor associatesaccess to all of a retailer’s technology tools.

WHERE ARE VENDORS IN THEIR RESPONSE?

Figure 13 - Vendor’s Current Phone Platforms - Consumers

66%70%

34%53%

38%77%

45%60%

21%13%

24%30%

14%17%

62%60%

41%37%

14%13%

iPhone or iPod

iPad

Android

Blackberry

Symbian

HTML 5

WAP

Windows Mobile

Windows CE/7

OtherCurrentFuture

19

NewYork’s big show starts on Saturday this year!We’ve brought together retail’s most prominent thinkers forrevealing discussions on store technologies, business intelligence, PCI and security issues, IT Forecasts for 2011,Wall Street’s view and engaging the consumer’s mobile device.

Other speakers currently include:

Ed Rennemann - CIO, Crate & Barrell

VirginiaWright - VP Application Development, Kohl's

JohnMitchell - CIO, Pep Boys

Lori Schafer - Co-Author“Branded:How Retailers

Engage Consumers with Social Media and

Mobility”

Kevin Sterneckert - Research Director, Consumer

Centric Retailing,Gartner

Lee Holman - VP Product Development, IHL Group

Jim Crawford - Executive Director,GREC

Cathy Hotka - Retail Diva, Cathy Hotka & Associates

Greg Buzek - President, IHL Group

Retail Orphan Initiative | www.RetailROI.org | info@RetailROI.org | +1.615.591.2955

Retail ROI Super Saturday - PwC Auditorium,ManhattanSaturday, January 8, 2011 • 9:00am – 3:30pm

Registration is free to retailers. Sponsormoney generated at the event benefits the Retail Orphan Initiative, a retailer-ledcharity that funds feet on the street charities helping vulnerable children.To get on themailing list, drop a note tocathy@cathyhotka.com.To seemore about the Retail Orphan Initiative, visit www.retailroi.org.

DeborahWeinswigManagingDirector,Retailing,Citi InvestmentResearch

Timothy KasbeCIO, Sears HoldingCorporation

Jeff RosterVP Global IndustriesRetail, Gartner

Joe SkorupaGroup Editor inChief,RIS News

Steve BozzoCIO 1-800-Flowers

Jon KuboCIOWet Seal

Austin GutweinHoops of Hope

Evan SchumanEditor,StoreFrontBackTalk

Research Event

To Register for this event, go towww.retailroi.org/SuperSaturday2011.aspx

Ensuring that associates are able to fullyleverage technology on the floor alsoencourages store management to movebeyond the back office and interact withboth the customers and employees. Froma basic service and business standpoint,it is wise to enable your highest paid,most trusted store personnel to beactively engaged on the front lines.

What is noteworthy here is the increasedattention that store associate mobilityfor the iPad and iPod/iPhone is seeingfrom vendors. While some analysts haveexpressed doubt and confusion with theinfatuation many have with those devices,it is clear that they really are game changers.Vendors see these devices as having astrong, continued, and real presence inretail formats. Lest anyone think thatApple is the only player, clearly vendorsare hedging their bets with equalattention being directed towardsAndroid devices.

Web Functionality – How Much is Lost?Anyone who has used a mobile site orapplication for which a full site exists knowsthat a there is generally some limitationto the mobile version. IHL sought toquantify what percentage functionalityvendors expected from the solutions thatthey supported.

Not surprisingly, all activities showed adegree of degradation in service, butactivities were able to gain close to 60%functionality of the full version. It wouldstand to reason that retailers would liketo see the most improvement in theMobile POS area, as we see that as anarea with explosive growth potential inthe coming years.

WHERE ARE VENDORS IN THEIR RESPONSE?

Figure 14 - Vendor’s Current Phone Platforms – Store Associates

50%65%

36%47%

23%63%

32%47%

9%14%11%16%

9%9%

61%65%

43%44%

9%9%

iPhone or iPod

iPad

Android

Blackberry

Symbian

HTML 5

WAP

Windows Mobile

Windows CE/7

OtherCurrentFuture

Figure 15 - Web Functionality, Full Site vs. Mobile Site

Activity Percent Functionalityof Full PC Version

Business Intelligence

B2B

Knowledge Management

Merchandising/Inventory

Mobile POS

Clienteling

Time & Attendance

Overall

61%

64%

69%

62%

53%

61%

57%

57%

21

Where Do Vendors Stand onConsumer Applications?Through this survey we also sought tosee which consumer mobile applicationsvendors already supported, and whichones they planned to in the future.

As we looked at this data, there were tworesults that caught our attention. First,when looking at Geolocation, RegularBarcodes, RFID and NFC Payments, as well asConsumer Self-Checkout, there are virtuallythe same number of vendors that haveno plans to support those applicationsas those who expect to support themin the next 12 months. It would seemas though we are entering a period of

distinct differentiation where vendorsare going to focus on their core offerings,and perhaps not invest extensive, if any,capital into entering new areas.

The second noteworthy result is a littlemore confusing. While it is clear that socialmedia is a constantly changing landscape,the fact that almost 20% of surveyedvendors have no plans to engage insupporting consumer applications in thatarea seems quite high. On the flip side,the 46% that already support socialmedia make it the 3rd most supportedactivity. And to be fair, within the next12 months, fully 81% of vendors plan tohave social media support.

WHERE ARE VENDORS IN THEIR RESPONSE?

Figure 16 - Mobile Applications for Consumers

Already Use Next 12 Months 12-24 Months 24-36 Months No Plans To Use

46%

21%

44%

50%

48%

15%

34%

21%

22%

21%

35%

38%

30%

23%

24%

35%

41%

29%

30%

28%

0%

0%

4%

7%

7%

19%

9%

25%

13%

21%

0%

4%

4%

0%

0%

0%

3%

8%

9%

7%

19%

38%

19%

20%

21%

31%

13%

17%

26%

24%

Social Media

Geolocation

Local Search

Read Regular Barcode

Read 2D Barcode

RFID for Payment

Coupons on Mobile Screen

Coupons by NFC/RFID

NFC Payment

Consumer Self-Checkout

Activity

22

2011SummitsConferences a

nd

s Fourth Annual Business Executive SummitRetailConnections’ signature Summit has grown and prospered every year and now stands as the premier industry event that draws up to 100 senior retail executives for an extraordinary two days of intense yet casual networking and learning. This congenial congress of Presidents, CEOs, CFOs, COOs, CMOs, CIOs, SVPs and VPs from across the enterprise serves up a wide range of perspectives. Summit workshops, roundtables, general sessions, receptions, dinners and golf give rise to fresh thinking and new relationships. A peer-to-peer, senior management share group experience.

s Second Annual Fresh ForumFew product categories in all of retailing today offer more profit potential and safety scrutiny than Fresh Foods. Do it right, and even small improvements have major impact on top line revenues and more importantly, bottom-line profits. RetailConnections’ second annual Fresh Forum will bring together retail leaders in the perishables area, government officials and other thought-provoking presenters to explore key strategies for success in Fresh.

s Second Annual Retail Mobile Executive SummitThe mobile revolution is well under way. Consumers leverage wireless devices to shop for lowest prices, instantly access product reviews and order/pay for goods at the touch of a button. These changes are revamping fundamental areas of retail operations, from marketing through the supply chain. This groundbreaking Summit will explore the many sides of the mobile retailing revolution to reveal opportunities to exploit new shopping trends and bolster profits.

s Second Annual Business Executive Summit WestRetailConnections, whose signature Summit is held annually in south Florida, will host the second annual Business Executive Summit West in 2011. This version of the popular winter event was a smashing success in its first year, with considerable growth evident for 2011. Summit West will bring together senior executives from across the retail organization. This mix of Presidents, CEOs, CFOs, COOs, CMOs, CIOs , SVPs and VPs creates an unusually charged two days of learning and networking. Attendees will hear fresh perspectives and come away with new business ideas and industry friends. Summit West features workshops, keynotes, roundtables, elegant receptions, dinners and golf.

s Regional Forums And Executive Dinners In addition to its four major Summits, RetailConnections hosts regional executive dinners and forums in major cities throughout the year on a wide variety of cutting-edge topics relevant to senior-level retail executives.

The must-attend premier retail event lineup for the year!

Feb 27– March 1 Fairmont Turnberry Isle Resort & Club Miami, Florida

May 16 – 18Renaissance New Orleans Pere Marquette Hotel New Orleans, Louisiana

June 2011

October 2011

Throughout the year

About RetailConnections: RetailConnections, LLC, focuses on live events that bring top management executives together for learning and sharing. The company also has a communications arm that creates out-of-the-box concepts and collateral for getting your message and deliverables in front of the executives you most want to reach.

For information on sponsoring any of these or other senior-level RetailConnections events, contact Tia Potter at tia@retailconnections.biz or LuAnn Hallberg at luann@retailconnections.biz. For information about speaking at or attending any of these or other senior-level events, contact Denise Power at denise@retailconnections.biz. For any questions, contact Marc Millstein at marc@retailconnections.biz or 914-620-5947.

2011RCcalendarAd.11.10.indd 1 11/3/10 9:36 PM

CONCLUSIONS

The data delivered from this survey (and which will be exploredfurther in IHL’s upcoming expanded study), yields several keyresults. Perhaps the most important result is the least quantifiable.It is the distinct realization that consumers, vendors, and retailersalike recognize the power that mobility has as a tool. Like alltools, it is truly as effective only as the artisan, craftsman, orworker who wields it.

As a new tool, there will be many successes and failures in thecoming years. As any avid iPhone user knows, for every earth-shattering, astounding app, there are three or four forgettableones. But, it seems clear that those who take bold, decisiveaction and embrace the power of mobility will reap greatrewards. Those who choose to ignore it will certainly sufferas smartphones, tablets, and other mobile devices becomemore and more pervasive in our connected culture.

24