Mobile Retail Shopping and Retail Banking – Millennials Rule the Roost & iOS Matters

The other day, Facebook announced its very first quarter where it generated a billion dollars in profit. At the same time, Apple announced that the rate of iPhone sales declined in Q4 2015 – during the holiday shopping season. Facebook’s profit for the quarter was driven by mobile usage, and regardless of short term hand-wringing by some – not all – financial analysts, Apple still posted a record quarter. These things are related. The Apple “slowdown” merely suggests that the market is saturated with smartphones, and Facebook’s record profit merely underscores the exploding use of mobile devices and apps – especially shopping apps.

Neither of these things is surprising and I’ve opted not to write about either – it’s just not worth the time to state the obvious. There are some things to consider – global currency fluctuations had a little something to do with Apple’s numbers, for example. But …

I myself find both Apple and Facebook much more interesting relative to a new research report I’ve just completed on the mobile retail market. Some very interesting mobile user demographics coupled with and correlated to some even more interesting and important global “app behavior” and global mobile OS and device adoption rates (among many other variables) point to some extremely interesting mobile trends that both the retail and retail banking verticals must consider as each builds out their mobile retail strategies. The intersection of mobile demographics and global and local mobile app metrics (highlighted in the Venn diagram I’ve shown here) are the keys to creating highly effective retail mobile strategies.

The research was conducted with the assistance of mobile application intelligence vendor Apteligent, which provided the global app, OS and device data used in the report based on queries I formulated for the research. Apteligent’s participation and the relevance of its data and extensive mobile app database is fully explained in the report itself.

I’m not going to try and summarize the report, Extending the Mobile Enterprise: Building Effective and Profitable M-Commerce Apps here – it runs 18 pages and is loaded with data charts – but I do invite downloading and reading it. In addition to the report, I’ve also created a webinar presentation with the same title that I recently delivered to a retail audience that highlights and summarizes the key points in the report. I think it’s worth taking a look (but run the presentation if you do, don’t just look at the slides in SlideShare). Comments and feedback on the report and webinar presentation are hugely welcomed!

I won’t leave you completely empty-handed here, though. Below are some charts from the report/webinar that provide a bit of context for the title of this blog post. The first two point to the massive penetration of Millennials in particular and Gen Xers within the retail space.

The chart above makes it abundantly clear that younger mobile users are already heavily invested in utilizing mobility for their retail shopping needs. Even younger baby boomers are engaged, though not surprisingly they are somewhat less engaged than the “youngsters” are. Given this, the next logical question to ask is what percentage of shopping is actually done through mobile devices. Merely being engaged in a shopping experience is interesting but are these large cohorts of mobile users just nibbling at the edges or fully immersed in their mobile experiences? Let’s take a look.

Is it any wonder that Facebook reported record profits of over $1 billion for Q4 2015 that was primarily driven by mobile usage?

Other charts and data points I haven’t shown here also point to Millennials being hyper-aggressive in recommending mobile shopping apps and experiences that they find highly delightful – something Net Promoter Score advocates will certainly find valuable. More importantly, Millennials unequivocally state that delightful shopping experiences will lead them to increase their usage of mobile shopping apps. Retail mobile leaders benefit directly here while retail laggards can anticipate steady and potentially fatal erosion of their retail businesses.

But how exactly does a retailer or a retail bank deliver on highly delightful mobile experiences? The answer here requires us to switch gears and take a look deep under the covers of mobile app behaviors. For this quick blog post I’ll touch on just one global mobile data set and visualization – that for iOS adoption rates over time – in our case here dating back 18 months from mid-2014 to the last day of 2015.

That is one mighty interesting chart! By looking at total global iOS app downloads we can extrapolate and correlate the adoption rate of iOS. As the chart above shows, when Apple releases a new version of iOS its users rush to upgrade. iOS 9 has already achieved 80% market adoption and when we add January and February 2016 to the chart above we can anticipate a number closer to 85% and possibly to 90% adoption. Should these types of insights matter to retailers? Yes!!!

iOS 7 reached 94% and iOS 8 reached 90% but the adoption rate for iOS 9 is steeper than that of iOS 8. Can we run visualizations and find correlations here to the impact of larger screen iPhones on the adoption rate of iOS 9? Indeed we can, but for that and numerous other mobile retail app insights you will need to grab the report and/or webinar presentation.

Let me wrap up by returning to Apple. The adoption rates for iOS, for iPhones and as well the global crash rates for iOS 9 – which I show to be quite stable in the report – suggest to me that Apple has very quickly saturated the market for iPhone 6 and 6s generation devices. A slowing down of sales rates was inevitable as Apple already owns almost all of its natural markets.

That leaves one to wonder if the iPhone 7 will offer enough differentiation to get all of those iPhone 6 users coming to the end of their two year payment cycles to upgrade en masse as they did from the iPhone 5. This is critical for retailers to grasp – how retailers can do so is detailed in the report.

A huge tip of the hat needs to go to Apteligent, which has developed an extensive repository of data on the mobile app ecosystem. Meanwhile its data scientists are able to deliver essentially all of the data sets needed to correlate metrics within the greater mobile ecosystem and to develop strategies and ongoing measurements of any metrics a retailer requires.

The smart businesses with both the retail shopping and retail banking verticals will already be investing heavily in this type of analysis and will very likely produce successful outcomes for their retail shopping strategies.

The laggards … well, I don’t like to dwell on that sort of horrific thing!!

About Tony Rizzo

Tony Rizzo joined Blue Hill Research following a 20 month stint heading up TMC's enterprise mobility and wearable technology coverage. Prior to TMC Tony spent several years within the mobile vendor community. Before his journey into the vendor community Tony spent five years as the Director of Mobile Research for research analyst firm The 451 Group, covering all aspects of enterprise mobility. There he lived through both the early and later stages of both consumer and enterprise mobility and the first stages of the BYOD enterprise mobility consumerization phenomenon following the release of the original iPhone. Tony has served as the Editor in Chief of Mobile Enterprise, Internet World, as the Editorial Director of an Ernst & Young Financial Services Web Advisory project, as the Editor in Chief of NetGuide (the first Internet magazine), as a founding editor and Editor of Network Computing Magazine, and as the founding Technical Editor of Microsoft Systems Journal. Prior to moving into tech journalism, research and analysis, Tony served as the Assistant Director for Information Technology at New York University's School of Continuing and Business Education, delivering extensive computer technology training programs.
Posted on February 10, 2016 by Tony Rizzo

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