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Reshaping the World of Retail

People are shopping with a mission, and brands are announcing themselves from behind store walls. The Proximity Era has begun.

Christian Northeast

John Gerzema, chief insights officer for Young & Rubicam

Courtesy company

John Gerzema, chief insights officer for Young & Rubicam

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Mall rats soon may be an endangered species. A bounty of mobility-enhanced apps, services, and communities is transforming mindless mall wanderers into purposeful shoppers who, to borrow a phrase from Robert De Niro's character in the movie Brazil, "Go anywhere; travel light; get in; get out." And as more consumption becomes strategic, it will reshape the brick-and-mortar world of retail.

Welcome to the Proximity Era, in which brands reach out from inside stores to yank the elbows of nearby shoppers. Last spring, Blu, which makes what it calls electronic cigarettes (they are actually little cartridges that release a flavored, nicotined vapor), introduced sensor-enhanced packs that start vibrating near stores that sell the product. Augmented-reality companies like Layar create software that lays data over the view through a smartphone's camera, so businesses can tell you what's inside without a single sign or window display. Stella Artois uses augmented-reality technology to guide thirsty beer drinkers to pubs that serve its brew. Open the brand's Le Bar Guide app on your phone, and markers with bar names and addresses float onto the screen, superimposed on a live image of your immediate surroundings.

Then there's Zaarly, which enables overtures not from brands but from individual sellers. Standing on a street corner, you can post on Zaarly that you're in the market for a backyard grill at a particular price. The post alerts sellers in your location, who may be retailers or simply members of the Zaarly community. Zaarly connects buyer and seller by phone, and five minutes later, you're in someone's backyard testing the ignition on a two-year-old Weber. A company called Point Inside takes more of a push than pull approach. It sends maps of malls, airports, and other shopping clusters to consumers' smartphones and then allows retailers in those clusters to reach out with ads and deals.

Precision shopping used to be a desktop-based activity. A website's store-locator feature was its primary tool. But our BrandAsset Valuator database reveals that 78 percent of frequent shoppers at big boxes, mass retailers, and department stores are smartphone aficionados, and nearly half of this group use shopping apps and location-based services. Those consumers will be looking for products while they're out and about, an appealing compromise between driving directly to a seller identified earlier at home and wandering in frustration from store to store. What should make this prospect exciting for retailers is that these people are on a mission—but also open to conversations.

Many big-box retailers, malls, and department stores remain focused on the physical world, trying to reduce their sprawling footprints and placing stores within stores to make shopping less daunting. Instead, retailers should be looking outward—into the halls and the streets where legions of smartphone-carrying shopping commandos are within arm's reach. Just as Web businesses use optimization tools to increase their visibility, physical stores can engage these human search engines with come-hither applications designed for mobile users. Another benefit: People nabbed while they are already out are more likely to spend a few more dollars if they can walk 10 feet rather than drive 10 miles. People shopping from home, by contrast, often choose their destinations based on price.

In essence, retailers need to think of their stores as hot spots in a Wi-Fi network. The challenge is to reach out beyond their doors and craft the shopping experience for people who desire efficiency, personalization, good deals, and—ideally—fun.

John Gerzema (jgerzema@inc.com) is executive chairman of BrandAsset Valuator Consulting.

From the September 2011 issue of Inc. magazine




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