The Official blog of Dark Matter, Inc.

From: Wall street Journal, April 26,2011 Kris Hudson

Shopping malls, threatened by the rapid growth of online retailing, are experimenting with mobile applications to help consumers navigate their stores and parking lots and, in some cases, find sales and special discounts.

Simon Property Group Inc., the biggest mall owner in the U.S., offers Shopkick Inc.’s shopper-rewards app in about half of its 338 properties, and is developing its own app to offer group discounts.

Mall owner Westfield Group launched its mobile app at most of its 55 U.S. malls last year. Yet another mall landlord, Glimcher Realty Trust, is discussing a similar app it hopes to introduce in time for this year’s back-to-school season.

The industry’s efforts are just getting off the ground, and none of them are expected to entirely prevent malls from losing more shoppers to Web-based retailers. But mall owners view the apps as vital at a time when shoppers increasingly consult mobile devices like Apple Inc.’s iPhone to plan their excursions.

These mall apps now do little more than help shoppers remember where they parked, and provide store directories and movie times. Some of them also offer reward points for visiting certain stores. But some mall owners envision them doing more.

At a Citigroup Inc. conference last month, Simon Property Chairman and Chief Executive Officer David Simon said he would like his malls to emulate Groupon Inc., whose deal-of-the-day website has surged in popularity over the past year. The site uses email to promote group discounts offered by a range of merchants. Shoppers often have to visit one of the retailer’s stores to redeem the coupons they buy.

“What I’d like to figure out how to do—through acquisition or creating it on our own—is to create ‘Mall-on’,” he said. It would be “a loyalty program coupled with an offer program for the mall environment, where we have all of the retailer participation in the mall. …You could see us ultimately buy a technology-based company to facilitate that,” Mr. Simon said.

Mr. Simon didn’t elaborate, but a Simon Property executive said later that the Indianapolis-based company intends to flesh out its plans for the project in the next six months. Last year it assembled a digital-marketing group, led by Patrick W. Flanagan, a veteran of consulting firm Accenture PLC and ShopLocal.com, to oversee mobile apps and other online efforts.

Mall-focused apps are emerging as malls face their biggest challenge ever. Online sales still account for just a fraction of overall retail sales, but they are growing rapidly—gaining 12.6% last year to $176.2 billion—and are expected to increase at a compound annual rate of 10% through 2015, according to Forrester Research.

By contrast, sales at brick-and-mortar stores, excluding gasoline and vehicles, rose 3.7% last year to $2.37 trillion, according to the National Retail Federation. The trade group forecasts 4% growth this year to $2.47 trillion.

Whether mobile apps will help to slow the exodus of mall shoppers remains to be seen.

Shopkick, available in 161 of Simon Property’s malls, is among the leading mobile apps for shopping, with more than one million users. The mall owner and seven retailers, including Target Corp. and American Eagle Outfitters Inc., have signed up to offer shoppers rewards through the free app, which is accessible via the iPhone, as well as devices powered by the Android operating system. Simon paid to install transmitters in its malls that sense when a Shopkick user’s phone enters a store.

On average a Shopkick user gets 60 to 150 Shopkick reward points for visiting a participating store. The user can redeem 875 points for a $25 gift certificate from one of the retailers.

In October, Simon Property unveiled its own mobile app, which displays promotions from stores in its malls, publicizes events planned at the properties and helps shoppers remember where they parked.

Australia-based Westfield Group introduced a free app for the iPhone last year and for Research in Motion Ltd.’s Blackberry device last month that provides a mall directory, parking-spot marker and movie showtimes. The app, which it developed with mobile-app maker Simplikate, also allows users to create shopping lists. Westfield said it eventually wants to add product-search and you-are-here locator functions.

David Towers, Westfield’s vice president of digital business, declined to say how many shoppers use the app, except to say it is “in the six figures.”

“As far as working more extensively with retailers, that will come in time,” Mr. Towers said. “But before that happens, we have to build a critical mass of people using our app and [it] becoming a critical part of our shopper experience.”

Indeed, skeptics point out that the relatively small number of people who use mobile apps for shopping make it hard to generate much extra business with them. “It comes back to the fact that they still have relatively small bases of consumers using these things,” said Sucharita Mulpuru, principal analyst at Forrester Research.

That hasn’t deterred Glimcher, though its mobile app is still on the drawing board. The Columbus, Ohio, company, which owns 23 U.S. malls, said it envisions a free app that includes a parking-spot tracker, a map for navigating its properties and notices of promotions from participating stores. But the company hasn’t selected a contractor to develop and operate the app.

Below is a summary of what we see as the top ten overarching mobile trends of 2010:

1. Phones Keep Getting ‘Smarter’: Smartphone adoption continues to increase across the U.S. and Europe, with most markets surpassing 25-30% market penetration for smartphones. The proliferation of new devices hitting the market in 2010 – including the iPhone 4, Blackberry Storm 2, and Motorola Droid X – has given consumers strong smartphone options across wireless carriers that is helping this segment of the market gain traction.
2. iPhone Dominates Device Sales: The top two devices sold in 2010 in both the U.S. and EU5 were the iPhone 3GS and iPhone4, respectively. The #3 device in the U.S. was the Blackberry Curve, while the #3 device in the EU5 was the Nokia 5800 – XpressMusic.
3. Android Storms Smartphone Market: 2010 saw Google’s Android platform grab hold in the mobile marketplace in a big way. In the U.S. alone, Android’s share of the smartphone market jumped from 5% to 29% in just one year, and it leapfrogged Apple to become the #2 smartphone platform after RIM. The number of different smartphones running Android certainly helped accelerate this trend, as did the desire for many consumers on Verizon to opt for a smartphone with a strong app economy.
4. The App Ecosystem Blossoms: iPhone paved the way for the app ecosystem to emerge as developers create new and interesting apps for consumers every day. While most early apps were developed primarily for the iPhone, we are now seeing vibrant app ecosystems for Android, Blackberry and others.
5. Email Shifts to the Mobile Phone: 2010 saw usage of PC-based email decline, particularly among teenagers, and it appears that much of that email activity is moving to people’s mobile devices. While Blackberry was once in a league of its own in terms of email functionality, many other devices have since caught up, and consumers are responding. Email now exists across media and mobile devices will continue to be a growing part of that trend.
6. Location is Everything: Location-based check-in services like Foursquare, Gowalla and Facebook Places all entered the digital lexicon in 2010 and have begun to gain consumer adoption. Other GPS-enabled apps like Google Maps and Garmin have also proved to be among the most popular and widely downloaded.
7. Social Owns Mobile: Social media is one of the most prevalent and fastest-growing activities on the mobile phone. In the U.S. the number of mobile social media users grew 56% to lead all content categories, and in the UK Facebook accounts for 40% of all time spent on mobile sites.
8. Mobile Commerce Readies for Lift-off: Mobile commerce, or m-commerce, has yet to gain traction in a significant way, but as smartphone adoption accelerates, technology has begun to facilitate mobile transactions. The next phase in m-commerce will be the emergence of the “mobile wallet” with direct payments coming from the mobile device, with Starbucks leading the way among merchants in installing the technology for such payments.
9. iPad Redefines the Mobile Landscape: Apple’s blockbuster launch of the iPad in early 2010 set the stage for a completely new category of device to emerge, as several other tablets and e-readers hit the market by the end of the year. As a reasonably sophisticated computing device that is also mobile, the iPad has given new definition to the types of behaviors in which consumers will engage in the mobile environment. The iPad is also causing time-shifting in how and when consumers engage with content, with the iPad showing a high percentage of activity late at night as people wind down for the evening.
10. Mobile Advertising Market Takes Shape: As mobile media consumption increases, it was only a matter of time before the mobile advertising boom began to take shape. Apple got into the act with the introduction of the iAd, which has already attracted many of the top brand advertisers like AT&T, Citi and Disney. Expect to see more and better quality ad units alongside mobile media content in 2011.

You can see from this selection of highlights that 2010 was another outstanding year, and this year promises to shine even brighter. If you haven’t already downloaded the 2010 Mobile Year in Review, you can do so here. We hope you enjoy and that it gives you a few things to think about on your way to success in 2011…

Don Kellogg, Senior Manager, Telecom Practice Research and Insights, The Nielsen Company

As of December 2010, nearly a third (31%) of all mobile consumers in the United States owned smartphones, cellphones with app-based, web-enabled operating systems. But smartphone penetration is even higher among mobile users who are part of ethnic and racial minorities in the U.S. – namely Asian/Pacific Islanders (45%), Hispanics (45%) and African-Americans (33%), populations that also tend to skew younger. Meanwhile, only 27 percent of White mobile users reported owning a smartphone.

Although only 42 percent of Whites who purchased a mobile phone in the past six months chose a smartphone over a feature phone, 60 percent of Asians/Pacific Islanders, 56 percent of Hispanics, and 44 of African Americans who recently bought cellphones chose smartphones.

The competition between smartphone operating systems is a heated one. When it comes to the installed base, that is, U.S. mobile consumers who already own smartphones, it is a three-way tie between Blackberry RIM, the smartphone pioneer, Apple’s IOS, which revolutionized the smartphone and popularized mobile apps, and Android OS, the operating system created by Google which has been taking the market by storm.

Analyzing the preferences of those who purchased a smartphone in the past six months paints a different picture, however, one in which Android is clearly in the lead with 43 percent of recent acquirers purchasing an Android device, compared to 26 percent for Apple iOS and 20 percent for Blackberry RIM.

Apple’s iOs is the favorite among U.S. smartphone owners who are Asians/Pacific Islanders. Thirty-six percent of Asian/Pacific Islander who own smartphones have iPhones. On the other hand, RIM Blackberry is preferred by 31 percent of African-American smartphone owners.

You may not have purchased any Christmas gifts from your phone this year, but next year it’s likely you will.

The number of online shoppers making a purchase from their phones increased more than five-fold this season to 11%, according to ForeSee Results. But significantly more than that, 33% of respondents said they had used their phone to access a retailer’s site, many for the purpose of comparing prices or products. Likewise, barcode scanning and check-ins continued to ramp up over the holidays. ScanBuy, mobile barcode solution provider, estimates that between 30% and 40% of all smartphone users have downloaded a barcode-scanning app. And CheckPoints, a shopping app, just reported it has accumulated 1 million check-ins since launching in mid-October.

“It looks like more than half of all shoppers will soon be using their mobile phones for retail purposes,” said Kevin Ertell, VP-retail strategy at ForeSee Results, a company measuring customer satisfaction. “Any retailer not actively working to develop, measure and refine its mobile experience is leaving money on the table for competitors.”

Indeed, eBay reported mobile sales of nearly $2 billion in 2010, more than tripling 2009 levels. The retailer, which sells through a variety of apps, cited clothing, accessories, cellphones, collectibles, jewelry and toys as leading mobile purchases.

Plenty of retailers, big and small, are just beginning to wrap their heads around “m-commerce.” But smart retailers are already figuring out how to market their wares, build loyalty and deliver advertising, from coupons to circulars to commercials via mobile phones. Here are five mobile sites we’ll be shopping in the coming year.

Amazon

It probably won’t come as a surprise that the online giant has a pretty stellar mobile site. It consistently shows up on the list of best-performing mobile sites, with fast response times and consistent availability, according to Gomez, the web-performance division of Compuware. Category sections Bestsellers and Deals makes it easy to find products, while Today’s Deals quickly directs shoppers to the site’s Deal of the Day and Lightning Deals. When it comes to product detail, price, reviews, complementary products and numerous images (and resolution options) make it easy to zero in on specific items. However, there is some room for improvement. Zappos.com and Diapers.com, both owned by Amazon, have not yet been optimized for a variety of mobile devices.

Crate & Barrel

Not only does this site look good, but gift buying is made easy with a section dedicated to gift ideas. Within the section, shoppers can sort by price, occasion and recipient. Product detail pages include multiple, clear images, price and reviews. And options include buying the item, emailing the details or adding it to a favorites list. Crate & Barrel is also a perennial favorite for bridal registries, and the mobile site doesn’t disappoint on that front. Brides can add items to their registry or manage a registry, while guests can easily locate registries and make purchases.

JCPenney

This department-store retailer’s site stands out for its simple design and navigation, as well as easy access to current sales. Shoppers can also find a store, sign up for mobile alerts, track orders and view weekly deals from the site. Select videos, including commercial spots, are also easily accessible. Within categories, shoppers can further filter results. In the kitchen furniture section, for example, it’s possible to filter results by subcategory (bar stools, chair cushions), decor style (modern, country) or color. At-a-glance results are packed with information, including an image, original price and sale price, number of reviews and stars indicating the product’s customer rating. Oddly, the actual reviews aren’t readily available.

REI

Sure, you can shop the latest and greatest in gear and apparel at REI. It’s easy to navigate, well organized and pretty to look at. Product detail pages include the option to purchase, add to a wish list or find in store. There’s also an extensive description, along with product specs, images and customer reviews. And, like the e-commerce site, there’s a handy section that tells you what people purchasing that item also bought. But what really makes this site special is a expert advice section. It’s chock-full of informative, well-written articles on everything from kayaking and triathlons to snowshoeing and travel. So you can read up on the latest and greatest gear, budget travel and types of avalanches. There’s even an article on how to teach a child to ride a bike.

Target

Not only does Target consistently turns up on Gomez’s list of top performing mobile sites, it also makes it easy to save a buck, with Daily Deals and Weekly Ads both featured prominently. Product detail pages are simple but pack a punch, with multiple images, detailed descriptions and customer reviews. And if you’re not looking to snag an item right away, there’s the option to email or text product details. Target also makes it easy to create and manage lists for future shopping trips. If you add a Target store location to your profile settings, it automatically tells you the aisle where items on your list are located.