Europe's shoppers buy into m-commerce
For growing numbers of tech-savvy, time-poor consumers in Europe, shopping from a smartphone is becoming an increasingly popular way to buy what they want, when they want it.
In the U.K., Europe’s largest e-commerce market, over 60 percent of retail traffic comes from mobile devices, with the proportion expected to rise to 80 percent in the next couple years. M-commerce has been steadily increasing in Germany to make up nearly 39 percent of e-commerce sales, while France sees about a third of online sales through mobile devices.
“Millennials and younger consumers are becoming larger parts of the key spending demographic, and they tend to prefer mobile devices as a primary computing device,” says Colin Burnet, Director of EMEA Retail Research at JLL.
Evolving smartphone design is also helping as people who are familiar with shopping online on laptops switch to using their phones. “The increase in smartphone screen size has led to a boost in e-commerce recently,” notes Burnet.
Making it good on mobile
Retail brands that can design mobile sites providing a good user experience are the ones who will benefit most from the cresting m-commerce wave. “The key challenge is to convert the amount of time that users are spending on mobile into transactions, driving consumers to actually make purchases,” Burnet says.
More retailers are investing in mobile shopping apps – a move which is proving a hot with consumers and a big driver behind the growth of online shopping.
“Apps are becoming the most convenient way for consumers to shop online, because they can save payment details, searches and shopping carts for fast, easy purchasing,” says Mario Litta, Team Leader, Retail Leasing at JLL Germany. “For brands, an app also offers a way to build loyalty through tailored alerts and a unique experience.”
Increasingly, evolving technology makes for a more immersive experience. The Ikea Place app, for example, incorporates augmented reality so that users can virtually place Ikea furniture inside their own homes.
Technology tools such as chatbots and voice assistants can drive sales, as well as enhancing a brand’s image. Fast fashion e-tailer Asos, which receives 70 percent of purchases via its mobile app, uses artificial intelligence to predict the most relevant search results, and is experimenting with a visual search engine to further refine this.
“This is the additional challenge: the cost of investment in new technologies to get a piece of the m-commerce pie,” Litta says. “And, while retailers must become more active with mobile channels, the point is to combine all their online and offline channels in a meaningful, useful experience.”
For example, the Apple Store app recommends items based on a user’s current Apple products, and allows customers to pay via the app for in-store purchases, providing a customer experience that works between smartphone and storefront.
From mobile to in-store
While retail sales are rising overall, the growth of mobile commerce is impacting the role of bricks-and-mortar stores. “The biggest challenge is that m-commerce will reduce sales in physical retail. In Germany, rents have risen in parallel, which has resulted in a growing supply of retail space amid stagnating prime rents,” Litta says.
As a result, smaller store spaces are increasingly the norm, Litta observes, with over half of the retail space leased in 2017 comprising areas less than 250 square meters each.
The use of shop space is also evolving to meet the challenges of the digital age. “Retailers really need to give people a reason to visit the store, through differentiating experience and service,” Burnet says. As such, they’re reimagining spaces as showrooms that showcase products that can be ordered online and provide a unique brand experience to drive customer loyalty.
Click-and-collect facilities for online purchases are becoming a common features in Europe’s stores and malls, with added benefits for retailers: about a quarter of click to collect customers have purchased additional items while collecting their purchases in-store.
As smartphones become increasingly integral to the shopping journey, the key will be for European retailers to weave mobiles into their store experience – whether they’re encouraging mobile usage within stores, such as interactive hangers that provide information about other sizes or complementary items, or creating mobile tracking technology to direct customers within larger stores.
Indeed, for all the potential of m-commerce, physical retail still has an important place in an omnichannel strategy. “M-commerce will continue to increase in the coming years, but there will always be goods you won’t purchase online; you will always want to sit on a couch at least once before you buy it,” Litta concludes.