Why A Mobile App Won’t Cause Channel Cannibalization
Posted by Amanda McLaughlin on Aug 1, 2022
Deliver modern, mobile-first shopping experiences that delight your customers. Drive ROI back to your business across all customer touchpoints—in-store, online, and on mobile. Book a time with our team to learn how we can help transform your business with our omnichannel solutions.
*Privacy Notice: By hitting "Submit," I acknowledge receipt of the NewStore Privacy Policy.
In-store retail is back in vogue and ecommerce is expected to continue to dominate. In fact, online sales are expected to reach $7.4 trillion worldwide by 2025. Naturally, this creates worry about whether now is the right time to invest in technology like a mobile shopping app. Will it lead to channel cannibalization?
If implemented correctly, omnichannel solutions like mobile shopping apps can help improve both in-store and online revenue.
In this article, we discuss how mobile apps contribute to the “halo effect” in retail to boost in-store and online sales instead of causing channel cannibalization or channel conflict.
Channel cannibalization or channel conflict is where sales on one retail channel negatively affect sales on another channel. The fear of this scenario causes brands to hesitate when it comes to adding another channel into the mix like a mobile app. However, retail is not a zero-sum game.
The International Council of Shopping Centers (ICSC) discovered that physical stores drive an increase in online traffic and brand awareness – a phenomenon they dubbed the “halo effect.” It makes sense. Stores are increasingly becoming marketing channels to attract new customers and engage returning ones. If a customer likes what they see in-store, they are more likely to judge all other aspects of the brand favorably.
Further research from the ICSC found that the halo effect flows both ways. When customers shop online and then make a purchase in-store, their spending increases by an average 131%. Frequency of purchase also goes up. Even more, the research suggests halo shoppers complete an average of 2.1 in-store purchases within 15 days of buying online.
The halo effect refutes channel cannibalization or channel conflict. As brands consider ROI retail strategies, they should look for opportunities to drive awareness and growth across and within channels.
Brands looking to take advantage of the halo effect will be considering what eggs to put in which digital basket. An excellent ecommerce website is a brilliant start. But then what?
A mobile shopping app is a great option for brands looking to expand their digital presence. Not to mention, customers want to shop on apps. We recently surveyed 610 American consumers to prove the hypothesis that an app is more than a nice-to-have; it’s a must-have.
In fact, we discovered that one-third of U.S. consumers (31%) prefer shopping in mobile apps to other channels, and 88% have one or more shopping apps on their phones (50% have four or more).
But these aren’t just “download it and forget it” metrics. More than half of consumers use their mobile shopping apps weekly (15% daily and 37% a few times a week), with 49% of people opening an app 11 or more times a day. Generally speaking, 70% of U.S. digital media time is spent on mobile apps. No wonder mobile commerce is expected to grow at a rate of 17% until 2024.
Creating a mobile shopping app may be viewed by some in the organization as direct competition for the hard-earned revenue of your well-established ecommerce site.
However, instead of creating competition, mobile apps complement other channels and present the opportunity to meet customer demands for digital-first experiences.
From our recent survey, we know that 60% of people choose to use a brand’s mobile shopping app over its mobile website because of the superior experience apps offer. And the other top reasons? They are all features unique to mobile apps that consumers say aid or enhance their buying experience, such as:
Providing incredible experiences has always been pivotal for retail brands. A mobile shopping app gives consumers a far superior experience to what they would find on a mobile website, with better load times, easier navigation, and additional features that connect consumers with their favorite brands.
For an omnichannel retail brand, ecommerce, stores, and mobile apps don’t exist in isolation. The harmony between the three is the main argument for why mobile apps don’t cause channel cannibalization or channel conflict but instead encourage sales everywhere.
For example, app users visit a brand’s physical store 58% more in a year than non-app-users. They also tend to buy more frequently. The same is true in reverse; if customers don’t convert in-app, they are likely to buy in-store or online later.
It’s the powerful ways mobile apps enhance the shopping journey that light a fire under consumers and get them buying more. With apps, you can incentivize customers as they shop, convincing them to buy more and more often and promoting sales across channels.
Below we outline 5 ways in which mobile shopping apps support sales across channels.
Enabling buy online pickup in-store (BOPIS) or click-and-collect during the checkout process on your mobile app allows customers to head to your store to collect their items. This gives you an advantage – you know what your customer has bought and when and where they’re going to be in-store. Armed with this information, your store associates can upsell and cross-sell relevant products when they arrive to gain additional sales. Over 50% of shoppers use BOPIS, and 67% of those people add additional items to their carts when they know they can pick them up immediately.
Because they’re updated with the latest information, mobile shopping apps can let customers see real-time inventory and product details about items that are available at nearby stores. For example, if a customer has recently bought a shirt for a friend’s wedding, but forgot to buy a tie, they can see what ties are available in their nearest store and then pop down on their lunch break to try it on and pick it up.
With a mobile shopping app, you can send push notifications to customers as they browse in-store, notifying them about new products, offers, and product availability in real-time to entice them to purchase. Got a customer visiting your store who abandoned an item online earlier that week? Send them a notification that there is a special discount available for that item while they browse and encourage them to make a purchase.
A mobile shopping app is an easy way to enhance your loyalty program. It becomes a place where consumers can view and access their rewards, discounts and coupons, and manage their profile. Customers can use whatever rewards and discounts they accrue when shopping online or in-store – which might be the extra help they need to choose to buy.
Mobile shopping apps can connect customers to store associates via messaging and video functionality which supports remote selling. Associates can respond to questions, provide updates on new arrivals, and help customers build a cart. Even if the customer isn’t ready to buy right that second, the cart will be there for them to hit buy later. With remote selling, you can keep the buying experience on mobile which is first-nature for most people these days.
At the end of the day, a sale is a sale. Given the shift in consumer behavior, retail brands need to take a more holistic view of the benefits of having a physical presence. At the same time, online retail still provides convenience to consumers by bolstering essential opportunities for engagement, brand building, and order pickup.
Brands must move away from viewing retail in channels. Modern retail brands are unifying in-store and online with mobile shopping apps. Omnichannel retail achieved in this way stops any chance of channel cannibalization or channel conflict.
If your brand has any hesitations around mobile shopping apps, check out our eBook below. You can also book a demo with our team to learn how our customers benefit from omnichannel retail.
