If 2010’s holiday sales are going to be any indication of business in 2011 then retailers have little to worry about. If only. They do, of course. The economy is still shaky, various surveys can’t come to a consensus about consumer sentiment and a new ghost of Christmas future has emerged – gas prices that could go as high as $5 per gallon. So much for basking in the glow of a 15.4% year-on-year increase in holiday shopping, as estimated by MasterCard Advisors’ SpendingPulse.
Going into the New Year, retailers still have to navigate a tricky economy and cautious consumers. On the other hand, they also shouldn’t forget one key lesson learned this holiday season – most didn’t offer deep discounts as they did in previous years, and consumers bought and bought and bought anyway. Profits are expected to be stronger as a result. Some thoughts , or keeping in the spirit of the day – New Year’s resolutions – to keep in mind as they perfect this balancing act:
Don’t be evil as you sell. The Washington Post recently highlighted a practice with which e-tailers have been increasingly experimenting – dynamic pricing. Essentially that means adjusting prices in real time to whatever the retailer thinks the customer will pay. If you’ve bought a number of airline tickets to New Orleans, for example, then the next time you log onto a site to buy the next one – bingo – the price has magically jumped by 15%, just for you. Consumers hate this practice and related ones like it, and go, as the Post put it “apoplectic” when they discover a retailer doing it. It is perceived as grossly unfair and unsportsmanlike.
Don’t creep your customers out. If they can eek out the data from various systems and customer databases – not always an easy task – retailers find that they know a lot more about their customers than their customers realize or feel comfortable with. Most of this data is benign – at least in retailers’ eyes. A zip code perhaps and the knowledge that a particular customer whose unique mobile identification number is 9649e796e8b23900dc9629a18f2d47306430e62f likes football and has been perusing ticket prices recently for the next game from the device. From the retailer’s view, this information is useful to both parties: why beam the guy coupons for a manicure at a local spa? Many customers, though, feel differently, as Jonathan Lalo of Los Angeles can attest. A suit seeking class action status was filed on his behalf in Northern California’s federal district court, alleging that Apple and several app creators have been passing along mobile device users’ personal information, via these mobile identification numbers, to ad networks without their permission . Pandora, Dictionary.com, Toss It, Text4Plus and The Weather Channel were also named in the suit.
If you do decide to use behavioral targeting or other data gleaned from online monitoring, be responsible about it. Okay, so you targeted the football fan with a mobile ad from Ticketmaster. Fine.
In November advocacy groups Center for Digital Democracy, U.S. PIRG, Consumer Watchdog, and the World Privacy Forum filed a complaint with the Federal Trade Commission over “unfair and deceptive” advertising and data gathering practices at online health information and service sites.
The complaint alleges some sites and marketers eavesdrop on online discussions of health consumers via social media data mining and them use viral and “word-of-mouth” techniques at these sites to drive interest in prescriptions, over-the counter drugs, and health remedies. That’s not so fine. See No.1 for the reason why.
Embrace tech. Experimenting with consumer-facing technology, especially anything social, these days is a leap of faith. Will it catch on? It doesn’t always – just ask Apple how its Ping initiative is faring. That said, forward-looking retailers and shopping center owners have been trying out apps and geo-location games with some success. Retail REITs like Simon Properties and CBL & Associates have begun rolling out mobile apps to help shoppers better navigate their malls.Simon Property Group recently teamed up with a Silicon startup, Shopkick. Now in some of its retailer centers, digital coupons are beamed to shoppers as they walk by certain stores. But as you experiment with these technologies, remember to ….
Protect your customers. According to McAfee Labs’s 2011 Threat Predictions report, Google’s Android, Apple’s iPhone, foursquare, Google TV and the Mac OS X platform will be major targets for cyber criminals this year. Remember master hacker Albert Gonzalez who stole the customer accounts of several major retailers via their wireless networks, which he infiltrated using a laptop from a nearby location including the stores‘ parking lots? Don’t be like those retailers, namely stupid about security.
Discounts still rule. One more word about consumer tech: Only a very small percentage – 4% – of online adults use such services as foursquare or Gowalla, according to the Pew Research Center’s Internet & American Life project. To lure shoppers to your check in promotions and other such initiatives remember that discounts are always welcome. But a mayor’s badge? Maybe not so much. RadioShack also experimented with a geo-location app this holiday season, anointing “Holiday Heroes” on foursquare with a special badge. It attracted a lot of traffic, one reason being the discount of 20% off anything in the store to anyone who unlocked the badge.