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Is mobile more threat or opportunity for physical retailers?

It has barely been a month since the 2012 holiday shopping season came to a close, but it is already clear that mobile-related shopping activities such as showrooming had a big impact on bricks-and-mortar retailers, including Barnes & Noble and Target.

With Barnes & Noble revealing plans to close numerous stores and Target introducing a new price-matching policy recently, the retail landscape is quickly evolving and mobile is part of the reason why. Mobile?s convenience drove record mcommerce sales over the holiday but, even more importantly, was how mobile influenced shopping behavior from researching products online, in-store price comparisons, exclusive offers and more.

?As the Internet comes into their stores, retailers are going thru the single biggest shift in consumer behavior in our time,? said Michelle Crames, vice president of social commerce solutions at Revionics, Los Angeles. ?Power is shifting to the consumer in the form of a smartphone device they will have on their person at all times, ready to check the infinite selection and comparatively cheap pricing of the internet.

?If you're not a J. Crew or a Gap, with your own brand and distribution, you're competing with Amazon,? she said. ?Retailers who carry products that are not differentiated are at greatest risk.

?Even within retailers, the products that are most susceptible are those with highest margin - and therefore most likely to have consumers find much cheaper prices online. As these products are no longer bought at traditional retail, this can have a devastating impact to a retailers' bottom line.?

Digital content consumption
Barnes & Noble will shut up to a third of its bricks-and-mortar bookstores over the next 10 years as ebooks and digital publications gain sway, according to a recent report in the Wall Street Journal. The goal is to have between 450 and 500 stores, down from the 689 stores the chain now operates.

The move points to the growing use of ereaders and tablets for consuming a variety of types of digital content, including books, magazines and video.

As consumers flock to ereaders and tablets for reading digital books, Amazon?s already significant role in book sales has become even more important thanks to its thriving Kindle division and its growing digital content sales.

The influence of mobile shopping and Amazon.com is evident in other recent retail news as well.

Earlier this month, Target announced a new price match policy to match top online retailers? prices year-round, including Amazon.com, Walmart.com, BestBuy.com and Toysrus.com to address the growing practice of consumers going into physical stores to look at a product and then purchasing it online for a better price.

Extreme service measures
Barnes and Noble and Target are not the only retailers under pressure to rethink their model and figure out a way to provide a differentiated experience or offering as mobile shopping grows. This is why retailers are rolling out services such as curb-side delivery, buy online pick up in store and same-day delivery.

?Showrooming is as much a problem about lack of loyalty as it is about price,? Ms. Crames said. ?Many retailers are rolling out new - and often extreme - service measures to compete with showrooming.

?Social provides an opportunity to create customer intimacy to differentiate and help relationships go beyond price,? she said. ?However, long-term, the problem is driven by economics when the price gap is too large.

?Without a differentiated product mix or exciting in-store experience, how much cheaper does Amazon need to be - already on average eight percent cheaper than Walmart - before supply and demand curves shift? In addition, with Amazon's launch of same day delivery in an increasing number of urban markets, the immediate gratification of physical retail is under fire as well.?

To combat the many challenges they are facing, some retailers are turning to the type of software Revionics offers that helps them ensure the right product, price, promotion, placement, and space decisions, across all touch points, including online, in-store, social and mobile.

At the same time, mobile also presents significant opportunities for retailers to communicate more directly with shoppers in a way that is meaningful and relevant to them, to drive in-store traffic and loyalty as well as to learn more than ever about customers.

Stores are expensive
While better pricing and merchandising can help retailers compete in the new retail environment, in some cases it is not enough.

Barnes & Noble?s physical presence is shrinking as the retailer tries to build its presence in the digital world with its line of Nook ereaders and tablets as well as through sales of digital content for these devices.

However, the Nook business is not, so far, the success it needs to be and by closing stores, the retailer may be looking to free up some capital to invest further in the digital side of its operations.

Barnes & Noble recently reported that revenue for its Nook digital business segment declined 12.6 percent for the nine-week holiday period ended Dec. 29, 2012. During the holiday period, digital content sales increased 13.1 percent while Nook device unit sales declined compared with the same period a year ago.

?Its decision to close 1/3 of its stores reflects the relatively high cost structure its stores represent compared to its online counterparts,? Ms. Crames said. ?Although an admirable effort and great product, it is not sustainable for the NOOK to compete with the Kindle, especially when you factor in Prime, and free video streaming, book library and other models which make it a comparative bargain.

?Closing stores frees up capital and bandwidth for B&N to focus on digital efforts,? she said. ?However, even this is challenging.

Lasting impact
The trend toward mobile shopping is likely to have a lasting impact on the retail landscape. In fact, Gary Schwartz , author of ?The Impulse Economy? and ?Fast Shopper, Slow Store,? says the physical bookstore could become a thing of the past.

With the mobile consumer in mind, a yoga studio could sell books about spirituality and enable customers to tap their phones to order a physical or digital book in a context-rich environment. The same is true for a doctor?s office, a movie theatre and other locations.

?Barnes & Noble executives are undoubtedly aware - as Borders executives before them - that the 2010s are eerily reminiscent of the music industry in the 2000s,? Mr. Schwartz said. ?Books, reading, and commerce behaviour has changed.

?The relationship between shopper and store has changed,? he said.

?Does this mean good riddance to bookstores, publishers, agents? Perhaps there is a new, more efficient order in town? Perhaps a new, streamlined business model would be both good for consumers and good for the industry long term??

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York