1
Central Question : What is the future of traditional, brick-and-mortar retailing as social and technological changes lead to the integration of ‘smart’ mobile devices and associated technology into the day-to-day activities of Americans living in major urban areas? Current Assessment : The Wireless Era – The Wireless Era consists of the popularization of mobile networks emerging in the 2000s. A fundamental change is seen the shift of consumer behavior as smartphones is introduced into consumers’ daily lives. The significant integration of smartphones into day-to-day activities presents both opportunities and challenges that retailers should consider as they assess their long term goals for the future. The growth of mobile phone users world- wide has increased from 12.4 million in the 1990s to over 5.6 billion today. Today, smartphones make up 40% of all mobile devices in the United States market, and 89% of the users are estimated to use their phones on a daily basis. 71% of users report using their smartphones to search as a result of seeing an ad, representing the significant effect smartphones has on the future of retail industry. Brick-and-Mortar Retailing: There’s an App for That! Abstract : This research project examines the future of mobile retailing and utilizes several categories of current trends in the retailing and technological spaces to project visions of the future environment of mobile retailing. Two main uncertainties—mobile payment technology and security software development—will shape these future visions. For each of these potential scenarios different business implications, including opportunities, threats, and ethical considerations, are developed to add color to the analysis and to encourage retailers to prepare themselves for the future uncertainties. While one scenario, driven by high technological advances and strong online security software, is the most preferred scenario, the trending of several relevant data sets indicates that the scenario marked by high mobile payment technology but low levels of security ought to be expected. Business Implications : Kiss of Death – This scenario implies the disappearance of mobile retailing. Retailers ought to consider alternative investments in technology. The low level of payment technology development penalizes forward-thinking retailers that invested in R&D. Ethically; retailers should not risk the privacy of consumers. Bridge to Nowhere – Mobile retailing exhibits slow but increasing growth retailers ought to develop innovative and efficient payment devices to drive mobile sales. Ethically, retailers must consider the possible job terminations that could result from reduced human capital needs. Paradise Lost – Growth of mobile commerce stagnates due to fears of security issues. Retailers risk exposing themselves to potential lawsuits and would be participating in unethical behavior by risking their consumers’ personal information. This scenario is most expected given the analysis of the forces of change. Back to the Future – This ideal scenario involves a transformation of the retailer-customer interaction. Mobile devices replace credit cards and cash as primary methods of payment. Use of laptops and computers may be become obsolete. In-store “price checking” via mobile device drives price competition among retailers and severely limits margins. Retailers with well managed supply chains are best positioned to survive. Ethical considerations include job termination and predatory pricing strategies. Strategic Recommendation : The choice of strategy depends on a firm’s appetite for risk. It ranges from low investments in security measures to high investments in security databases. The second scenario carries the greatest possibility for reward, as the highest invested retailer will emerge as the industry leader with US mobile sales revenue growth and solidify their position in the mobile space. Today’s retailers face the very real threat of intrusion, and many companies who have suffered security breaches have lost the trust of their customers. Paradise Lost • Software for online payment available. • Consumers fear negative repercussions due to lack of security. • Online mobile payments will not be profitable because of low consumer usage. Back to the Future • Scenario is best described as retailer utopia. • Consumers feel safe upon giving up private information and online payment software is at its best. • Consumers will rapidly begin to shift from in-store shopping to online mobile purchases. Kiss of Death • Inefficiency and ineffectiveness in payment methodologies. • Consumers fear for losing private information. • Mobile commerce doesn’t exist in any economic productive way. Bridge to Nowhere • Consumer information security increase demand for mobile payments, yet low software development prevents it. • Firms begin to develop mobile retailing software little by little. • Demand for online shopping will be satisfied in the long- run. Low Security High Security Mobile Payment Technology Development University of Notre Dame Mendoza College of Business Spring 2011 Emily Chiu, Michael Barnett, Andres Humbert, Andrew Romero, Michael Thomas Smartphone Usage Urbanization Hispanic growth Online Sales Mobile Applications Social Networking Privacy Online Sales Tax Forces of Change 0 10 20 30 40 50 60 70 80 90 100 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Percentage of Total U.S. Population Urban and Rural Population as Percentage of Total Urban Population Rural Population Urban Projection Rural Projection Data Source: World Development Indicators (2011) Data Source: World Development Indicators (2011) Data Source: World Development Indicators (2011) 0 10 20 30 40 50 60 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Dollar Value % of GDP U.S. Government Revenues & Expenditures Government Expenditures Government Revenues Expenditure Projection Revenue Projection Data Source: OECD Factbook 2011-2012 [Type a quote from the document or the summary of an interesting point. You can position the text box anywhere in the document. Use the Drawing Tools tab to change the formatting of the pull quote text box.] Trend Analysis
