A case study from the Economist Intelligence Unit Marks & Spencer: mobile innovation March 2014 Sponsored by M arks & Spencer is the UK’s largest seller of clothing as well as one of its biggest retailers of upmarket food The 130-year-old business enjoys a reputation as a national institution, but has been betting big on mobile technology to help it in its ambitions of becoming a multichannel international retailer M&S, as its customers call it, sells one garment of every ten sold in Britain However, it does so with famously variable store real estate: its shops vary from small food-based convenience stores to big anchor locations the size of department stores In addition, the retailer is well known for its disproportionately middle-aged customer base Perhaps because of the inevitable constraints on in-store ranges imposed by space and customer type, M&S’s innovations are proving that no enclave in the retail industry is unaffected by the mobile revolution Laura Wade-Gery, M&S’s executive director in charge of multichannel, has said that there was once a belief that the transformation of shopping was something that was happening to other stores’ customers, not M&S’s stalwarts But, in late 2012 she introduced free Wi-Fi for customers in every store, explaining that, according to M&S’s data, 52% of 55-to-65-year-old women were now smartphone users For M&S, this development underlines the importance of creating an integrated in-store and mobile strategy © The Economist Intelligence Unit Limited 2014 Creating a multichannel experience Kyle McGinn was recruited by M&S in 2013 to lead its Digital Lab, a small team that works alongside its in-house developers to foster innovation “Customer usage of mobile and tablet is growing exponentially year-on-year We have a good offering on both, so it’s going to be worth us carrying on that investment into 2014,” he says In the six months to the end of September, M&S’s mobile sales were growing at a rate of 70% annually Sales over tablets alone are on course to hit more than £200m by the end of 2013 Although smartphones and tablets are ordinarily bundled together as “mobile devices,” consumers tend to use them to shop in very different manners “The tablet is very much used sitting at home on the sofa, and you could argue some of that has displaced desktop traffic Mobile app usage tends to be out and about: travel, commuting It has very different time patterns, different conversion rates,” says Mr McGinn For M&S, having a shop front in customers’ pockets is no longer a nice-to-have bonus—it is a commercial imperative School uniforms are among the best-sellers via the app, with a particular peak at 3.30pm as mothers wait for their children by the school gate “The interesting thing is that mobile is different from in-store shopping When a multichannel business gets it right, they don’t think about their online presence only,” Mr McGinn says “A success is a multichannel customer using their iPhone to find a store and buy their lunch.” Marks & Spencer: mobile innovation Innovating for multiple devices The company has enjoyed some success over the last year by equipping staff with iPads and integrating attractive touch-screen terminals into the design of new stores “We’re seeing a significant portion of our orders from dot-com come from iPads in-store,” Mr McGinn explains “Over the last 12-to-18 months, there’s been a slow but sure shift where customers are increasingly using their own devices in-store.” Smartphone use is not just transactional: the iPhone and Android app both support barcode scanning for extra product information And a recent advertising campaign shot by the photographer Annie Leibovitz backed stores up with augmented reality shots, giving smartphone users access to extra content In September, M&S introduced mobile vouchers to its app “We were one of the first retailers, if not the first in the UK, to roll out mobile vouchers and we’re seeing good usage,” Mr McGinn says The mobile vouchers feature will become increasingly sophisticated “We push offers to you; they’re not passive All the offers are collected in a single place within the app, you get notifications when new offers arrive or when they’re about to expire They’re not yet location-aware: that’s one thing that’s on the roadmap.” “If you’re aware of context and aware of position, you can offer a lot more,” says Mr McGinn “That’s the direction of travel We’re not doing this today, but if you’re walking down a high street towards a branch, the chances are we should show you the store locator when you open the app, for example.” © The Economist Intelligence Unit Limited 2014 App design: Following the leader to help the customer M&S’s innovation team is working on making their app location-aware to facilitate this overlap of mobile technology and stores But the primary focus is on improving the nuts and bolts—making sure that the app is as efficient and effective as possible In a strategy that is not uncommon in app development, M&S is looking towards Facebook as a model as it develops a cleaner, more functional mobile app Like the social network, its first smartphone app was built using a “standardsbased” code system called HTML5 Today, however, Marks & Spencer is using a native code tailored to the mobile operating systems of the most popular smartphones, thus giving its development team the ability to collaborate on the app “The way we’re doing it, is you are responsible for a feature—the store finder, for example—and you’re making sure that works across all the channels The technology is mature enough that you can take that approach today.” Mr McGinn’s logic is that only a subset of customers might use a new, location-based feature—but all users will benefit from a better basic functionality “The overwhelming priority on mobile is really understanding the medium and making sure that it behaves in a way that customers want,” he says “Making the user experience, design, usability as slick as possible: that’s by far the number one.” .. .Marks & Spencer: mobile innovation Innovating for multiple devices The company has enjoyed some success over... introduced mobile vouchers to its app “We were one of the first retailers, if not the first in the UK, to roll out mobile vouchers and we’re seeing good usage,” Mr McGinn says The mobile vouchers... cleaner, more functional mobile app Like the social network, its first smartphone app was built using a “standardsbased” code system called HTML5 Today, however, Marks & Spencer is using a native