Since the launch of the first iPhone, there has been an ongoing debate about the relative strengths, weaknesses, and long-term survivability of the two key modes of accessing content on a phone: browser or app. Brands looking to scale costs have paid close attention to this battle, hoping for one approach to eventually overwhelm the other and negate the need for separate development efforts.
Marketers prefer apps’ more immersive consumer experience— nine of ten minutes on mobile are spent in apps—and the superior marketing platform apps provide. Apps allow marketers to understand the persistent identity of an end user, which is extremely difficult to do in mobile browsing environments.
Apps are also more effective at a whole range of activities relative to their mobile web brethren. These include driving cross-channel interactions and providing a streamlined conversion funnel, thus facilitating more target advertising and providing better behavioral data via SDK-based in-app analytics.
The rub is that App usage is extremely concentrated, with most consumers using only a handful of apps on a regular basis. The majority of consumers spend half their mobile time using a single app, most often Facebook. The situation is equally challenging at the category level: 39% of consumers use only one or two retail apps on a regular basis, according to L2’s Mobile report.
This fierce competition has produced winners and losers. By the end of 2015, 40% of brands in the fashion industry had launched apps. However, several – including Pucci, Michael Kors, Paul Smith, Prada, and Tod’s – threw in the towel and took down their apps during that time.
Give Them What They Want
While the first wave of retailer apps focused largely on lifestyle content and mobile-only shopping, successful retail apps today put an increasing amount of emphasis on the smartphone’s role as an in-store shopping assistant.
Nordstrom was able to drive a 23+ point lift in consumer satisfaction with its retail app, the second-highest increase observed for a retail app during the November 2014 to August 2015 period. This gain didn’t appear out of thin air, but was hard-earned through a series of savvy updates designed to provide omnichannel and social media integration.
In response to growing consumer demand for omnichannel commerce, Nordstrom incorporated new features like geolocation notifications and in-store pickup for items bought online. To ensure smooth on-device transactions, a Paypal incorporation offered an expedited payment option. Finally, by including links to its own blog and Instagram and syndicating video content, Nordstrom improved integration with social media to drive word-of-mouth marketing.
CVS recently announced that it had launched CVS Pay, a proprietary mobile wallet housed within the CVS Pharmacy app. This approach aims to drive additional adoption and usage of the app by capitalizing on the fact that US consumers have indicated a preference for retailer-based options over general-purpose mobile wallets. Starbucks, for example, processes a quarter of payments in the US through its mobile app, which lets customers store funds, pay for purchases and earn points at the register.
The CVS app offers a powerful trifecta of features – payment, the popular ExtraCare loyalty program, and prescription pickup – that resonates with consumers looking for apps to make their in-store shopping experience easier.
Additionally, the app offers an easier checkout process, reducing time and friction at the register. Currently, customers have to present their rewards cards, scan individual items, and pay separately. The CVS app rolls all that up into a single streamlined process launched by scanning the barcode in the CVS mobile app.
“What we’re trying to do is provide real utility and solve real problems for customers using digital. With one scan, we’re taking away three or four extra steps that customers have lived with for a long time,” CVS Health Chief Digital Officer Brian Tilzer explained.
Time will tell if consumers will flock to CVS Pay or not. But combined with the already impressive pioneering of an identical model by Starbucks, a success here could redefine how retail brands deploy mobile payment solutions.