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Mobile Retail in the UK Edelman Digital, 28 January 2012

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Introduction: Mobile Retail in the UK

In 2011, the installed base of smartphones in the UK has reached 32.4 million* Many of those phones play a key role in the shopping behavior of UK consumers, where in the last year:

•  9% of UK web users bought goods or services via mobile** •  20% of UK smartphone users found a retail store location with their phone*** •  15% used a phone to photograph a product while in-store***

* mobileSQUARED.com ** “DIBS E-Commerce Survey 2011: A Comprehensive Study of European E-Commerce”, The October 2011 *** comScore MobiLens Report, Ctober 2011

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Edelman and Mobile Retail

Here at Edelman, we have for years been working with global brands such as Unilever, Diageo, Shell to make Social and Digital media a central part of their marketing and communications strategy. Now that half of Facebook and Twitter interaction happens on mobile devices, and mobile penetration is five times that of social media, it’s time to take a closer look at how Mobile can be used to evolve the conversation between consumers and brands. This presentation provides on overview of mobile behaviour and trends emerging in the UK and EU5, drawing on research from leading organizations such as comScore, eMarketer.com and mobileSquared.

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A Mobile Society

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Social media is Mobile

50% of Facebook members are

mobile (400 million

people)

Nearly 50% of Tweets are from

mobile

Mobile Facebook users are twice

as active on Facebook than

non-mobile users

Mobile will overtake PCs for web surfing by

2013

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Europe leads the way with 120% mobile penetration

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9.7

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Top EU5 Smartphone Activities & Penetration

comScore, March2011

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How mobile is changing retail

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Did you know 71 percent of smartphone users that see TV, press or online ad, do a mobile search. Will they find your mobile site or your competitors’?

Source: Google/Ipsos, “US consumer Mobile Movement survey”, April 2011

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4.7 million UK smartphone owners have accessed a retail site

comScore Mobilens report, October 2011 – Mobile retail is one of the fastest growing phenomena amongst smartphone users, with more than 13.6 million EU5 smartphone owners accessing a retail site in October 2011. The UK had the largest audience with 4.7 million people, but Germany accounted for the largest increase in users with a 112 percent growth year-over-year. The double or triple-digit growth rates across Europe represent an excellent opportunity for retailers to make their goods readily accessible to today’s connected consumers.

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Mobile Content UK m-commerce revenue doubled from £123m in 2009 to £275m in 2010, and could hit £1bn this year. Most popular purchases from mobile devices in the UK: Mobile Content/Games 39% Travel 12% Apparel 10% Consumer Electronics 10% Entertainment Tickets 9% Other 1% Most popular purchases from mobile devices in the US Mobile consumables/games 42 per cent Consumer Electronics 19 per cent Apparel 15 per cent Entertainment Tickets 13 per cent Travel 11 per cent

Source: May 2010 InMobi survey of 15,000 mobile users in 14 countries about their shopping habits

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Smartphones open up a whole new world for consumers

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…and have become an in-store shopping tool

In October 2011, nearly 22 percent of EU5 mobile users took a picture of the product while in a retail store, making it the most popular e-commerce related activity. A significant percentage of smartphone users in retail stores also texted or called friends or family about a product (14.9 percent). New technologies also gained traction with European smartphone users with 6 percent scanning a QR code in-store.

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Young Males are driving mobile retail

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1 in 5 UK Smartphone Users Searched for Retail Store Location

In the UK, the top retail/e-commerce activity performed on a smartphone was finding a store location, with 20.2 percent of smartphone owners using the service in August 2011. 15.3 percent of all smartphone users in the UK took a picture of a product while in a store, making it the second most popular retail-related activity performed via smartphone. Looking at the top 10 e-commerce activities, users are taking advantage of their smartphone to gather information before purchasing a product or service. Activities like contacting their friends/family via text (14.2 percent) comparing prices (12.7 percent), finding coupons or deals (11.7) and sending a picture (8.7 percent) of the product to friends/family while in the retail store.

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13.2% of UK smartphone owners have scanned QR codes

The overall European audience for QR or bar codes was considerably larger than for in-store, as codes can not only be scanned while in a retail store but also at home, at work, on public transport or even while dining in a restaurant. The highest penetration of QR code users was in Germany, with nearly 15 percent making use of this emerging technology in October 2011.

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Mobile browser versus apps

For every shopping activity, including researching products and prices, reviews, promotions and purchasing products, most respondents in the US (61-81%) preferred browser to native app. (Adobe/Keynote Mobile Report, October 2010)

However, in the UK, 47 per cent using m-commerce through apps, 22 per cent through mobile site and 31 per cent through both.(InMobi Mobile Shopping Report, May 2011)

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SMS is the dominant mobile payment system

DIBS Payment Services and YouGov noted that in the UK, as in other EU-5 countries, top product categories bought via mobile in 2011 included media (such as games and music) and travel tickets. Over half (56%) of mobile payments were made via SMS, while 22% were added to the buyer’s mobile phone bill.

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82% of UK mobile buyers spend up to £100 via mobile

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16% of UK internet users prefer mobile to redeem vouchers

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UK Has Highest Penetration of Social Networking via Smartphone in EU5

Over 45 percent of all smartphone users accessed a social networking site or blog in EU5 (France, Germany, Italy, Spain & UK) during the three month average ending October 2011. A closer look at the different markets showed that the UK has the highest penetration of social networking users, with 61 percent of all smartphone owners accessing social networks or blogs.

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UK Mobile Users Access Social Networking More Frequently

In September 2011, 17 million UK mobile users accessed social networking sites or blogs on their mobile device, representing 35 percent of the total mobile audience. More than half – 57 percent – of this audience reported accessing social networking sites on a daily basis. Interestingly, the growth in daily social networking use from the previous year outpaced that of mobile social networking access as a whole (57 percent vs. 36 percent), indicating that the mobile platform is proving to be conducive to very frequent social networking use.

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20.4 million people in the UK use mobile media

In October 2011, 76 percent of smartphone owners in the EU5 were mobile media users, meaning that they browsed the mobile web, accessed applications, or downloaded content. The impressive 62 percent growth in the total number of mobile media users in the past year is largely attributable to the acceleration in smartphone adoption, 3G/4G network quality, and the increasing ubiquity of aggressively priced data plans, all of which facilitate the consumption of mobile media. Amongst the five European countries analysed, Germany stands out with the fastest growth rate of 89 percent while the UK had the largest audience with 20.4 million mobile media users via smartphones.

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In 2011, 1 in 3 US Smartphone Buyers Made Purchase on Their Phone While in a Store

In the U.S., 38% of smartphone owners have used their phone to make a purchase at least once in the course of their device ownership. In September 2011, 56% of smartphone purchasers completed their transaction while at home, leading as the most popular purchase location. 42% of consumers made purchases while out of home (i.e. restaurants, parks, etc.) or at work, with 37% making purchases while traveling/commuting. Slightly more than one in three purchasers used their smartphone to buy while in a store, highlighting the increasingly important role mobile is playing in consumers’ brick and mortar retail experience, especially as a tool for real-time price and product comparisons. EU5 Data for these behaviours have not yet been released

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Conclusion

Point of View: comScore Europe “Mobile commerce is taking off and reshaping expectations for the retail industry. Consumers will continue to expect mobile commerce as a fact of life and will only accelerate their usage of mobile devices to conduct commerce transactions. Retailers and advertisers need to embrace the mobile commerce use case and develop compelling consumer solutions built across the leading mobile ecosystems.” Point of View: Edelman Digital With 50% of social networking taking place on mobile phones, we have a tremendous opportunity to connect the dots between emerging consumer behaviours in digital marketing and mobile retail. Search and mobile optimization are key, with the majority of people now searching for mobile content after seeing an advert or press about a brand or product. Retail brands need to streamline their communications and social media programmes to resonate as strongly, and more personally, in the mobile sphere.

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