Originally run March 22, 2011

For several years now, RSR research has conducted an annual survey asking retailers to identify the role that eCommerce (and its related digital channels) plays within their enterprise. Each time, virtually all retailers tell us they expect more revenue to ultimately come from the online channel than they did just 12 months earlier. Yet in our most recent report, After the Storm: Connecting with the New Online Consumer, retailers told us their biggest challenge to realize these goals moving forward resides in their ability to keep up with evolving consumer behavior. This means mobile.

The proliferation of new digital channels, brought on mainly by shoppers’ rapid adoption of personal mobile devices and their willingness to use them in ways few retailers could have predicted just a short time ago, has brought about the need for a genuine redefinition of what shopping really looks like — and could look like in the very near future. Do retailers get mobile commerce? We’d like to think that in theory, they do. As we’ve learned, retailers — in aggregate — clearly understand that the trend of customers using mobile devices to shop is not going away.

The sources of revenue in retail have changed, and they continue to change. Whole swathes of retail categories are moving to new channels as the primary transaction point — consider digital media like books and music as a prime example — and even in cases where this is not happening, how shoppers discover and select products is being fundamentally changed by new channel opportunities.

These shifts are changing the cost structure and even the fundamental strategy of retailing. RSR has long called this a transformational shift. However, until the customer recently embraced mobile devices as shopping tools, it has been somewhat easy to ignore. When revenue from other channels for a store-based retailer amount to about as much as a flagship store might generate, it might feel a little premature to call for a rethink of the retailer’s business model.

That is all about to change. Is 2011 the tipping point year, when it becomes accepted that revenue and shopping behaviors driven from new channels will have a fundamental impact on how primary channels operate? Very possibly — our survey respondents certainly seem to expect some major restructuring in the channels that collect transactions in the very near future.

In fact, if more than a quarter of a company’s revenue comes from online (an expectation revealed in the full report), and potentially half of that is via mobile, a store-based retailer has some serious questions to answer about the number and location of their stores in the very near future. And where are these mobile sales happening? At a shelf? At your shelf? Or a competitor’s

The Mobile Frontier

As we’ve seen, retailers get mobile in theory. But getting it in theory and getting it in practice are two very different things. Have retailers done the necessary research to build relevancy? How about infrastructure? Do they know what’s required to offer customers exciting an mobile shopping experience?

In late 2010, RSR also participated with RIS News in a cross-channel study of RIS News’ readers. One area where retailers showed particular aggressiveness was consumer mobile. This year’s eCommerce benchmark shows little deviation from that intent. Retailers made impressive strides in the last year — 44% of respondents report that they have added buy merchandise, register/redeem gift cards, and check order status via mobile just in the last year.

Clearly, investments in mobile capabilities have only just begun. If the adoption plans that retailers share here give any indication, this coming year will indeed be the year that mobile investments reshape how consumers interact with retailers — 44% of respondents say they have budget to create shopping list functionality on consumer mobile, 38% believe they will implement the ability to receive coupons and offers, and another 31% say consumers will be able to redeem these coupons and check loyalty status by the end of next year. Another 31% have put the ability to use barcodes to check price or availability on the longer-term wish list.

As a result, we believe that retailers clearly get the need to be in customers’ hands via mobile devices; whether through enhanced mobile sites or applications that offer a reason and incentive to download for regular use is a brand-personal decision and subject to an entirely different conversation. From the results of our research, the overall understanding is there. But there is a long road that must still be traveled, and 2011 will most certainly tease out who is navigating this understanding best.