Retailer-Specific Mobile Apps an Important Means of Consumer Engagement

Retailer-specific mobile apps have become an important means of consumer engagement. They have been downloaded by a majority (53%) of smartphone users, and 42% have used them in the past 30 days, according to Private Label Credit Cards in the U.S., 10th Edition, a report by Packaged Facts. Age is a determining factor. 18-34s are more than three times as likely as 55+s to have used a retailer-specific mobile app in the past 30 days.

The apps can engage customers across a broad spectrum of features and benefits. Most use them to browse goods and services and to shop online at the retailer. But they are also used as in-store shopping management tools (such as for scanning items for special in-store prices and scanning items in store to view customer reviews).

The Target app provides a case in point

A prominent part of the Target app, the Cartwheel couponing feature remains an innovative way to engage and reward customers while promoting omni-channel behavior over exclusively online shopping. While app-based, it is an in-store-only promotion intended to drive in-store traffic.

The Target app features integrated sales and deals functionality, with Cartwheel deals, Weekly Ad, and online promotions all in one place. Users can access their shopping list and saved Cartwheel deals in the same place, and they can also opt in to receive personalized offers based purchase history, view past online orders in the app, browse through hundreds of Cartwheel deals and scan products in-store to find and save Cartwheel offers during their trip. It makes planning, shopping and spending easy and fun—and it gets shoppers into the stores, where they may choose to buy more. Most importantly, it helps ensure they don’t go shopping somewhere else.

Retailer-specific apps are also at the forefront of payments. The payments strategy succeeds by putting payments further into the background, buried beneath rewards discounts and other promotional tools that may save customers money on a specific purchase but are also intended to reward increased spending and purchase frequency. And when they do decide to spend, the payment application is there to make it easy.

Almost six in ten retailer-specific app users have used such an app to pay for a purchase at the retailer, and almost four in ten have used them to access special financing options.

Kohl’s provides a case in point

Kohl’s is among the retail industry’s private label credit card leaders. More than 55% of sales goes onto its Kohl’s My Kohl’s Charge card. Kohl’s has attempted to walk a fine line by rewarding its cardholder base while incenting trial and usage via its non-card-specific Yes2You Rewards program. In the bargain, Yes2You Rewards operates as a customer information gatherer and new card applicant feeder. The company prescreens Yes2You Rewards members who do not have Kohl’s cards so that they can offer qualified candidates the option at the point of sale.

But only Kohl’s card users can access Kohl’s Pay.  All Kohl’s app users can use it to find and apply offers, review Yes2You Rewards and Kohl's Cash balances and review gift card balances. Inside, via QR code scanning, Kohl's Pay allows Kohl's Charge users to pay in-store with the app. Kohl’s Pay automatically applies offers, Kohl's Cash and Yes2You Rewards at checkout, seamlessly integrating the retailer’s rewards platform.

Kohl's Cash coupons can be scanned into the app, and users can be notified when the coupons are set to expire. Customers can also scan items in stores to check deals and savings, and they can choose to receive location-based marketing messages. As a bonus, if they use the app while in a Kohl's store to check out, they get free shipping.

The bottom line: Like so many retailers, Kohl’s and Target face a challenging sales environment. These apps play a key role in buttresses customer loyalty, and they can put private label credit card programs in the driver’s seat.

-- by David Morris, market research analyst