These are some thoughts that I presented at the AMP Social Media Cafe in Sydney on 11 November 2010, the slides and references follow below.
The future of shopping is social. But that is nothing new – shopping has always been social. The difference is that now we are seeing social interaction on a hyperconnected scale and the emergence of new competitors. It is still shopping, but social shopping is on steroids.
Firstly I want to give you a sense of the broader shopping landscape in the digital age.
There is a growing body of empirical research on retail effectiveness and the statistics are quite scary. As Sorenson notes “The shopper comes to the store to buy things. The retailer creates stores to sell things. Manufacturers create products to sell. Yet most of the shopper’s time in the store is spent not buying.” And he notes further that “a single item in a store might attract only 300 seconds [of attention] from all shoppers in an entire week, about five minutes [in total]”.
This means that not only are shopping centres fighting to get and maintain traffic, but also that the traffic is not necessarily being well used by the retailers to sell products effectively. And this leaves each of them vulnerable to competition.
Yet the work we have been doing in the shopping business over the years can summarised quite nicely by this diagram by Robert Kozimets. And the model works equally well for retailers or for shopping malls. We have been building spaces for brands that cluster around either the transactional (think supermarkets) or the iconic (think of one of the new high fashion shopping centres).
But all of this is happening in a broader context. The economy is changing around us. We are moving into what I have come to call the engagement economy. But there are so many competitors how for a share of that attention ( as well as for a share of wallet) that it is important to be able to grab attention and then to drive ongoing engagement.
We’ve had social shopping for a long time – since commerce began. But the nature of competitors is changing. Before it was the other mall or the retailer down the road that we had to worry about. Now competitors include farmers’ markets in grocery and fresh food; virtual goods like digital video and music from iTunes; large online aggregators like Amazon (who perform many of the functions of a department store and are often cheaper); and new entrants such as online shopping clubs (of which more later).
This competitive landscape has evolved very fast – just look at this timeline from Sean Carton to see how fast. Two and a half thousand years ago we were writing on clay tablets and in the last decade the digital revolution has changed our lives. Many of us cannot imagine a world without the internet anymore.
Also media has been changed by this digital revolution too. Marketing and advertising are being reborn in this new digital world; while many newspapers around the globe cling tenuously to existence. This diagram by David Armano illustrates this phenomenon very well. He nicely illustrates the fact that we are moving from lower engagement traditional media to higher engagement online social media. After all not many people check their newspaper first thing in the morning, but some recent research indicated that many people check Facebook (or Twitter) before they go to the loo or brush their teeth in the morning.
And the tools of the digital revolution – web 2.0, social media, social networking and mobile devices – have changed the way people interact with each other and with brands.
Facebook is probably the best example of this change (although there are other similar services such as Twitter that are gaining ground). Facebook is important because it is changing what real people are doing with real time and attention every day all around the world.
But now hold that thought for a little while as we consider some other trends.
Let’s have a brief look at the evolution of shopping in the digital age.
There are a number of trends here:
- Rise of mobile devices
- Word of mouth via social networks
- Social shopping
- Collaborative shopping
- Geo-social services (location based)
- Putting geo-social into perspective
Social and collaborative shopping is reshaping the power relations between consumers and sellers. New intermediaries are arising, ones who aggregate consumer demand via shopping clubs. The fight for better value by consumers is shifting onto new territory. And this shift will begin to manifest as changes in share of wallet for traditional retail channels.
The growing role of mobile devices also means that the shopping dynamic is changing. Consumers can share realtime information and collaborate while they are on the move. In the past we had to connect online via fixed PCs,but now the devices are always on and in our pockets and handbags.
Sites like Facebook are picking up on this trend with their adoption of Places – a geo-social application that enables users to share their physical location with friends (there are other contenders in the geo-social space too). And now the interesting thing is that we are seeing the merging of online and offline social activities with shopping and the integration of micropayments. For example Facebook’s relatively recent addition of Buxter to enable peer to peer payments between friends.
It is very early days yet. We do not know where these trends are heading in particular. However, it is clear that geo-social applications have the potential to close the loop between online social networks and real world activity, especially when these are connected by online micropayment capabilities.
What we do know is that consumers are:
- Going mobile
- Sharing information via social networks
- Collaborating via social networks
- Shopping for virtual goods
- Starting to use augmented reality
Future of shopping is social
Sorensen, Herb, Inside the mind of the shopper: the science of retailing, Safari Tech Books (ISBN: 0131366130), 2009
Lowrey, Tina, Brick & Mortar Shopping in the 21st Century (ISBN: 9781410618252), Psychology Press, 2007
Report: Consumer Shopping Experiences, Preferences, and Behaviors, Oct 2010, Art Technology Group, Inc. , http://www.atg.com/resource-library/white-papers/atg-online-shopping-study.pdf