You can’t get your hair cut on the internet

 

Paul Skeldon, Mobile Editor, InternetRetailing, investigates how the iPhone has (and hasn’t) changed the retail world.

TEN YEARS after the introduction of the iPhone and the biggest draw at this year’s Mobile World Congress in Barcelona was the relaunch of Nokia’s iconic 3310 handset. You know, the one that had ‘Snake’ built into it. We may well be living through the era of ‘post truth’, but we certainly aren’t in a world of post-irony just yet.

The irony that post-hipsters are embracing these old school icons a decade after the iPhone came along doesn’t mask the fact that the iPhone, and the smartphone and tablet revolution that it ushered in, has completely changed not only ecommerce but the whole of retail. Any swing back to old-school handsets – however ironically – isn’t going to undo that.

Let’s put that into some sort of context. Back in 2007 when the iPhone came along, the best you could hope for was a Nokia N91, complete with a spinning 4GB hard drive that might, if you were lucky and in central London, connect to the web. If you were lucky enough to achieve this you’d buy an annoying ringtone – Crazy Frog, anyone? – or some sort of ‘wallpaper’ to put on the small screen. This, in 2007, was m-commerce.

This year, shoppers are set to spend £27bn via mobile devices, according to the Centre for Retail Research (CRR) in a January survey for vouchercodes.co.uk, accounting for 40p in every pound spent online.

By 2020, two thirds of all online purchases will be made on a mobile device, accounting for a staggering £43bn spent in the UK alone, according to ‘The Mobile Mandate’, a new report from OC&C Strategy Consultants, Google and PayPal UK published last month.

While these stats are impressive – particularly given the fact that they have come from pretty much zero in just 10 years – they hide the true magnitude of what the introduction of the iPhone actually did those few short years ago. Rather than first cannibalise then kick ecommerce up a gear, the smartphone has fundamentally altered retail as we know it – and it isn’t all good news for retailers.

Martijn Bertisen, Sales Director at Google UK, adds: “Mobile technology continues to be one of the key drivers in transforming the retail industry and consumer shopping experience. Consumers are increasingly relying on their smartphones for information around shopping and locations in moments that matter: the ‘I want to know…’, ‘I want to go…’ or ‘I want to buy…’ moments. With a plethora of searches, each showing an intent or a behaviour, there is a great opportunity for retailers to offer useful products and information, just when shoppers are looking for it. As consumers become accustomed to this way of shopping, retailers need to respond by providing a swift and seamless online service – and the best way to do this is by putting mobile at the heart of their marketing, loyalty and ecommerce strategy.”

SPEED, SERVICE AND EXPERIENCE

This, however, is only part of the picture. What the iPhone and the avalanche of technology it inspired has caused is an ever-rising demand among consumers for customer service and customer experience that is starting to slip way ahead of what any real-world retailer can deliver.

“As technology becomes more revolutionary, customers are increasingly expecting retailers to invest in new phenomena, such as artificial intelligence (AI), augmented reality (AR) and virtual reality (VR), so they can enjoy a more personalised shopping experience,” says Nick Black, CEO of Apadmi. “More than a quarter would like to see retailers incorporate AI into shopping apps that could remember previous purchases and recommend products and deals based on their shopping history.”

Apadmi’s own research finds that almost a third of consumers (29%) believe retailers should invest more in augmented and virtual reality platforms. One of the main reasons why they want these features is because they could allow them to see how big or small items are before buying them (33%). Nearly one in three (29%) said they would use AR to see how to use a product before they bought it, while a quarter would use AR to preview product customisations, such as different colours or designs, before purchase.

“While consumers are more willing to shop via a retail app than ever before, retailers need to do more to offer the kind of personalised and interactive experience they expect.

“Augmented reality and artificial intelligence are reshaping the shopping experience and how consumers can interact with brands,” says Black. “The possibility of a more personalised shopping experience and a chance to ‘try before you buy’ excites customers and, as our research suggests, those retailers that invest in these technologies are likely to put themselves ahead of the competition.”

We are already seeing the beginnings of AI being used with the likes of Amazon Echo, IBM’s Watson and Google’s various forays into in (and Siri… lest we forget!), but they are very much research projects and so far many retailers have not yet managed to embrace these technologies in any meaningful sense.

That would be fine, were it not for the growing impatience and demands of the consumer. Just as the faster their phone connects to the web, so the more impatient they become for downloads, and the more they expect from retailers in terms of service, experience and engagement.

Ocado has implemented an AI solution to prioritise email enquiries, Travis Perkins – which owns Wickes and Toolstation – is using it to also understand customer intent and prioritise customer service and in the US Taco Bell is using Chatbots – AI that answers text messages – to handle FAQs from customers. But these are the rarities.

However, all is not lost. “What is happening isn’t that far removed from old school retail,” says Guy Chiswick, CEO, WebLoyalty. “Before online, John Lewis was the gold standard in customer service: well trained staff, who knew what they were talking about, quality goods and competitive pricing. The iPhone has just inspired consumers to now expect this from all retailers – online and in the real world, through every channel.”

Which brings us to the big question: has the decade of the smartphone killed the high street? “The smartphone has undoubtedly had an impact but it won’t kill off the high street but it will change it,” says Chiswick. “Let’s face it, you can’t get your hair cut on the internet and you do actually have to go to Starbucks to drink your coffee.”

In Chiswick’s view, the way consumers now use smartphones is precisely what could save the high street. “Department stores, all stores in fact, could be ripe to host concessions from online pureplays, to act as collection points and places to hang out and shop and socialise all at once,” says Chiswick. “The space will be used and while ‘traditional’ stores are struggling, the likes of Amazon are looking for physical locations. It will change how it looks but it will still have life.”

This is the legacy of the smartphone’s first ten years. How people shop has changed dramatically and multichannel, high street and pureplay retailers have all seen a shift in how they operate. The mobile phone is what makes the proposed Amazon Go store work, it is the key to things like Uber, it is what will reshape the high street, it impacts delivery expectations, how we pay for things and how we interact. Yes, it puts a huge pressure on retailers to meet increasing demands and expectations, but it also revolutionises and rejuvenates. We have a generation coming through who know no different. The first ten years of the iPhone have been fascinating; the next ten will be even more interesting.