The most successful retailers are providing a compelling mobile experience for tablet- and smartphone-based shopping.

1. • Cognizant Reports
Retail Mobility: Consumers in Control
The new playing field for retailers is a mobile one, and the most
successful retailers are overcoming challenges to provide a compelling
mobile experience for tablet- and smartphone-based shopping.
Executive Summary technology and the rapidly evolving landscape of
The retail industry has embraced the ubiquity of third-parties and their related solutions.
mobile devices across the consumer landscape.
Studies of shopping behavior clearly indicate Mobility is one of the few areas where retail has
increased reliance on mobile devices, especially led other industries. Most mobility investments
by value-driven consumers for product research have been driven by the ever-increasing number
and comparison. of consumers — existing and potential — armed
with smart devices with access to high-speed
Large retailers are responding by both acceler- Internet and the resulting demand for mobile
ating and continuously fine-tuning their mobile shopping solutions. But mobility in retail has also
commerce channel strategies. Retailers across been impacted by third-party applications and
categories have had varying levels of success offerings such as RedLaser and Decide, which
in harnessing mobility, but the trend is clear: provide intelligence to customers unavailable just
Successful retailers are those that are succeeding a short time ago.
with mobility.
The interplay of the various actors in this
The 2011 U.S. holiday shopping season witnessed environment affects the outcome for retailers
an explosion in shopping conducted using mobile striving to build a successful mobile commerce
devices such as smartphones and, increasingly, channel. Factors include their strategies around
tablets. Various surveys revealed a sharp rise in app development and design; their understand-
the number of mobile devices used to research ing of — and response to — consumers' mobile
and purchase products over the previous year, shopping behavior; the way they leverage lessons
especially on key shopping days like Black Friday. learned from the first wave of e-commerce; and a
This indicates a fundamental shift in how consum- desire to keep pace with the plethora of platforms
ers have begun to approach the mobile shopping and applications proliferating today.
proposition, one that is likely to be even more pro-
nounced in the current holiday shopping season. Additionally, the growth of tablet usage has
The new playing field comes with its own chal- created an even greater impetus for retailers
lenges, the biggest being continuously changing to develop and execute a mobile strategy.
cognizant reports | december 2012

2. Tablet owners shop more, have a higher conver- with superior tools, strengthened their purchase
sion rate and ultimately spend more using their decisions and improved their overall shopping
tablets than do the owners of smartphones — due experience. According to a Google study, 77%
primarily to the improved shopping experience. of tablet owners used their devices for shopping
Tablet customers and applications should be the during the 2011 holiday season.2 A National Retail
highest priority for retailers today. Federation survey notes that 37.4% of consum-
ers with tablet devices used them to conduct pre-
Mobile strategies must address capabilities purchase research during the 2011 Black Friday
through both mobile browsers and applica- weekend, and 25.7% used them to buy products.3
tions. While customers can be attracted through
the browser, many retailers feel they can best Our research, conducted with over 2,000
retain customers through capabilities only shoppers in 2012, confirms that mobile check-
possible through a mobile app — thus the need out and payment are not yet embraced by the
for both. However, shoppers are growing more majority of consumers, but younger shoppers and
aware of the demands that mobile applications high-income shoppers show the highest propen-
place on their smartphones, and retailers need sity to take this approach. Thus, we believe it is
to be careful of overloading capabilities and, a matter of “when” and not “if” retailers should
subsequently, data and battery usage. begin developing mobile checkout capabilities
(see Figure 2, next page). (For more detail, explore
Mobile Commerce Trends our Third Annual Shopper Experience Study,
Mobile-led shopping is on the rise. Moreover, conducted with RIS News, “Enabling Retail
mobile-empowered consumers are rewriting Without Boundaries.”)
the rules of the retail game, compelling retail-
ers to play along. Retail revenues generated by The Tablet Phenomenon
the mobile commerce channel are projected to According to research from the E-tailing Group,
influence 17% to 21% of all store sales by 2016.1 tablet owners use their devices for shopping to
a greater degree than smartphone owners.
One reason: Consumer bargain-hunting is The survey found that 69% of tablet owners
significantly bolstered by smartphones and rated their recent shopping experiences via
tablets. With economic uncertainly abounding, these devices superior to the smartphone, with
shoppers who engaged in "digital deal-seeking" 39% reporting a significantly better experi-
during the 2011 holiday season utilized their smart ence. The remaining 30% rated their shopping
devices to research products, compare prices and experience as somewhat better vs. shopping with
secure the best discounts available (see Figure 1). their smartphones.4
These near-ubiquitous devices equipped buyers
Shopper Use of Smartphones Leading into the 2011 Holiday Season
Looked up product information 57%
Compared prices 52%
Searched for coupons 47%
Scanned a barcode or QR code 43%
Checked inventory availability 40%
Redeemed a digital coupon 39%
Used shopping app to earn points 30%
Used mobile payment 24%
0% 10% 20% 30% 40% 50% 60%
Source: Shoppersciences.com Holiday Shopping 2011 Survey
Figure 1
cognizant reports 2

3. Features that make the tablet more enjoyable for visitors are more likely to make a purchase and
shopping include a larger screen and better user spend more per purchase than other visitors
functionality for browsing. A significant amount using other devices.5 Adobe also predicts that for
of online shopping is done in the comfort of a the 2012 holiday season, tablets will spearhead
living room, and with their larger display and the online sales channel. Tablets will constitute
immersive features, tablets enhance the entire 13.5% of all online sales, followed by smartphones
shopping experience. Also, tablet owners tend (6.5%) and other devices such as e-readers (1%).
to be gadget-buying early adopters — young,
educated and affluent and, hence, traditionally The average order value (AOV) by tablet visitors
greater spenders. was 16%, 56% higher than smartphones and
laptop/PC purchases for the 2011 holiday season
A Forrester/Bizrate survey clearly indicates that (see Figure 4, next page). The AOV of purchases
tablet owners across all age groups use these made using tablets also remained significantly
devices for shopping and prefer tablets over smart- higher than smartphone and laptop/PC visitors
phones for shopping-related activities (see Figure on Black Friday and Cyber Monday.
3, next page). The trend is more prominent among
the younger Gen Y and Gen X consumers, as they Retailer strategies for the 2012 holiday season
are early adopters of gadgets. In fact most Gen X, and beyond should focus on developing Web sites
Gen Y and baby boomer consumers find shopping and apps optimized for the unique user experi-
on a tablet at least as convenient as on a PC. ence offered by tablets. This may encourage
these consumers to shop more than they do when
Adobe Digital Index analyzed the more than visiting sites optimized solely for smartphones
16.2 billion online transactions of over 150 U.S. or traditional computers. Further, they should
retailers in 2011. The research indicates that tablet develop promotions and incentives that appeal
High-Income Shoppers Show Highest Propensity to Use Mobile Checkout
Electronics
>$150K
$75K - $149K
$25K - $75K
<$25K
Apparel
>$150K
$75K - $149K
$25K - $75K
<$25K
Health & Beauty
>$150K
$75K - $149K
$25K - $75K
<$25K
Grocery
>$150K
$75K - $149K
$25K - $75K
<$25K
Household
>$150K
$75K - $149K
$25K - $75K
<$25K
0% 20% 40% 60% 80% 100%
In-store Web site Mobile (using smartphone) Mobile (using tablet) Phone and others
Source: “Enabling Retail Without Boundaries,” Third Annual Cognizant Shopper Experience Study,
conducted with RIS News, 2012
Figure 2
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4. Consumers Prefer Shopping on Tablets
65%
I use my iPad/tablet more
72%
than my smartphone for
67%
shopping-related activities
51%
60%
It is as easy to visit and/or buy
62%
from retail sites on my iPad/
57%
tablet as it is on my computer
42%
73%
I would buy/have bought
70%
from a retail Web site
64%
using my iPad/tablet
48%
Gen Y Gen X Boomers Seniors
Source: Forrester/Bizrate Insights, Q2 2011 Tablet Commerce Flash Online Survey
Figure 3
more directly to tablet visitors and/or utilize the Apps vs. Mobile Browsers
tablet user experience. Dedicated mobile applications have been a
cornerstone of retailers' mobile strategies since
Conversion rates from tablets are also substan- the introduction of the iPhone in 2007. Our
tially higher than those from smartphones. research indicates that 26 of the top 30 retailers
For the 2011 holiday season, the conversion (by revenue) have a dedicated iPhone app, and
rates from tablets were 1.8% higher than those 23 have optimized their Web sites for the iPhone
of smartphones. The rate further increased on browser. Our study also suggests, however, that
Black Friday and Cyber Monday, when they were consumers, overall, do not show a preference for
2.4% and 3.2% higher than smartphone visits a dedicated app across all stages of the purchas-
(see Figure 5, next page). ing cycle. In some cases, they display a marked
disinclination toward using a dedicated app over
With the number of tablet owners expected to a Web site optimized for mobile browsers, accord-
skyrocket over the next few years, these shoppers ing to an Adobe survey (see Figure 6, next page).
potentially constitute the most important market
segment that successful retailers will factor into Consumers seem to prefer browsers over
their mobile and merchandising strategy in the dedicated apps because of the convenience
years ahead. of simply typing their queries directly into the
Tablets Claim Higher Average Order Value
$91
Black Friday $119
$129
$100
Cyber Monday $113
$123
$71
2011 Holiday
$96
Season
$111
$0 $20 $40 $60 $80 $100 $120 $140
(Average order value across devices)
Smartphone Laptop/PC Tablet
Source: Adobe Digital Index Report, 2011
Figure 4
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5. Tablet Conversion Rates Substantially Higher Than Smartphones
1.0%
Black Friday 4.4%
3.4%
1.0%
Cyber Monday 4.8%
4.2%
0.70%
2011 Holiday
3.2%
Season
2.5%
0% 1% 2% 3% 4% 5% 6%
Smartphone Laptop/PC Tablets
Source: Adobe Digital Index Report, 2011
Figure 5
browser instead of having to first search for and achieved a higher percentage of sales through
then download apps from an app store. Given that mobile devices than their competitors (see
the mobile browsing and search environments for Figure 8, page 7).
most devices closely resemble the desktop expe-
rience, it seems that desktop-based browsing RSR research also indicates that most retailers
behavior is being transferred to the mobile envi- are looking to leverage mobile devices to increase
ronment. Finally, most consumers are unlikely to customer interaction and intimacy and also to
download and maintain a large number of apps. provide better tools to their associates. This
objective was given higher priority than “save the
Retailers’ Mobile Strategies sale,” indicating that retailers view mobility as a
Our study of retailers’ mobile strategies reveals strategic capability (see Figure 9, page 7).
significant variations in their pursuit of growth
in the online and mobile channels. A major However, when retailers’ planned investments in
variation is the extent of sales achieved the mobile channel are assessed, this strategic
through e-commerce/mobile channels. Studies intent is less visible. Most retailers seem to
from Retail Systems Research (RSR) indicates be playing catch-up and are still working to
that retail leaders (those that have grown faster develop baseline capabilities (see Figure 10,
than the average industry growth rate of 8.85%8) page 8). Using our annual Shopper Survey as
Shoppers Prefer Browsers to Mobile Apps
67%
72%
Mobile Web browser
68%
63%
33%
28%
Mobile application
32%
38%
Browsing and searching products Researching and reviewing products
Registering/receiving online Purchasing and order tracking
promotions and coupons
Source: Adobe Mobile Consumer Survey
Figure 6
cognizant reports 5

6. a guide, most shoppers are giving retailers a regarding customer preferences, return on
reasonable timeframe in which to integrate mobile investments and technological approach.
capabilities throughout their organizations;
however, younger and more affluent shoppers Large Retailers’ Strategies
will be most sensitive to these gaps. Thus, while During the first quarter of 2012, Cognizant
retailers might be able to make it through the Business Consulting’s Retail Practice compared a
2012 shopping season without true mobile number of U.S. retailers’ mobile capabilities across
integration, we don’t believe shoppers will grant several parameters. The intent was to study the
them the same latitude during 2013 and beyond. variations, if any, in their mobile capabilities and
technical platforms, as well as to assess the range
The challenges of implementing a robust mobile of services implemented to capture the attention
strategy are exacerbated by the sheer variety of the mobile-enabled consumer (see Figure 11,
of technologies and platforms, the rapid pace page 8). Findings include:
of growth of new technologies, and uncertainty
Quick Take
To App or Not to App
Retailers lagging behind in the race to offer mobility have either been hampered by resource and
infrastructure challenges, or are feeling overwhelmed by what they see as the scorching pace of
adoption and the leaders’ rapidly evolving capabilities. Also, many are unable to decide whether to
introduce an app or use the conventional e-commerce Web site for their offerings.
According to a survey by Adobe, despite all the attention branded apps received in 2011, the connected
consumer does not like shopping via branded smartphone or tablet apps. Instead, a significant
majority chose smartphone or tablet mobile browsers as their preferred platform.6 Even as investments
rise, successful retailers will need to continuously evaluate how their apps integrate with the lifecycles
of targeted consumers.
Another survey by RSR reveals that 33% of retailers remain “neutral” on mobile apps, and 20% do not
believe apps will yield more engagement than a mobile site.7 Meanwhile, 47% think mobile apps will
add value to their brand offering, and 79% feel that just creating another version of a desktop-based
e-commerce site is not a viable option (see Figure 7).
Will an App Be Apt?
A downloadable app 9% 38% 33% 19% 1%
will yield more engagement
than a mobile site
1%
A cut-and-paste version 12% 51% 28%
of a full e-commerce
site is a viable mobile strategy 7%
0% 20% 40% 60% 80% 100%
Strongly agree Agree Neutral Disagree Strongly disagree
Source: Retail Systems Research
Figure 7
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7. Retail Leaders Sell More Through Mobile Devices
Leaders* 10% 17% 24% 41% 7%
Others 5% 5% 27% 55% 9%
0% 20% 40% 60% 80% 100%
(Percent of annual sales from mobile devices)
More Than 5% 3%-5% Less than 2% None Don’t know
* Retail leaders are defined as those that have grown faster than the average industry growth rate of 8.85%.
Source: Retail Systems Research
Figure 8
• Business capability: There was a fair degree • Implementation/release timing: Most retail-
of similarity among retailers in similar ers have implemented major functionality in
sub-segments, with some basic capabilities fairly large releases that typically occur only
extending across all offerings. For example, once or twice a year.
two luxury department stores offered basic • Product-related research and pricing is the
deals and in-store events that are likely to be most popular service that retailers provide
of interest to their customers. through their mobile site/app, followed by
• Technical platform: The iPhone appeared store location services.
to attract the heaviest concentration of • Check-out services are the least popular
capabilities, although the pace of Android mobile service offered by retailers. The
releases is increasing. complexity of integrating back-end supply
The Mobile Opportunity
Deeper customer engagement to build
loyalty through mobile channels 73% 25% 2%
Identify innovative mobile use cases
that no one else is doing yet 61% 27% 11%
Deeper customer engagement to drive
sales through personalized offers 61% 27% 11%
Deeper insight into shopper behavior
through mobile site or app 59% 34% 7%
Empower store employees through
mobile site or app access in stores 41% 41% 18%
Mobile "save the sale" at the shelf 40% 42% 18%
Stop the decline in store sales 30% 36% 34%
Mobile in-store concierge to alleviate
sales burden from store staff 27% 44% 29%
Disrupt other retailers by providing a mobile
experience that encourages the use of my product 27% 48% 25%
Discourage the use of price comparison
by offering another mobile option 16% 41% 43%
Very valuable Somewhat valuable Not valuable
Source: Retail Systems Research Survey
Figure 9
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8. Mobile Capabilities: Investment Plans
Register/redeem gift cards 17% 17%
Click to call 17% 21%
Purchase gift cards 17% 21%
Check loyalty status 17% 21%
Buy merchandise 17% 28%
Receive coupons/offers 23% 19%
Access product reviews 28% 15%
0% 10% 20% 30% 40% 50%
Budgeted project Planned, not yet budgeted
Source: Retail Systems Research
Figure 10
chain and payment systems is a significant their ongoing business plans and technical release
challenge in providing such services. strategies. RSR found the key inhibitors for mobile
• Services aimed at improving the shopping commerce to be budget and ROI, closely followed
experience — from store location services and by a lack of skilled mobile/ e-commerce resources
product locators to couponing services — are (see Figures 12 and 13, next page).
a key component of mobile app development
strategies for the retailers studied. Most retailers agree that quantifying the returns
• Coupons and discounted prices remain a from mobile commerce investments is difficult,
significant driver for mobile shopping, and and a significant number (28%, as shown in
hence, most of the retailers studied provide Figure 12) also state that the fast pace of
coupons to attract customers. technology change makes it difficult to keep up.
A key differentiator between retail leaders and
Challenges Facing Retailers other players is that leaders recognize consumer
Despite the progress so far, retailers still need trends before others and so are better equipped
to devote a fair amount of resources to further to stay a step ahead of the technological curve.
develop and integrate mobile capabilities into Because many retailers introduced price-match-
Mobile Services Offered by the Top 12 Retailers
Research products and pricing 12
Geolocation services 11
Loyalty/coupons 9
Dedicated app 9
Check-out 8
0 2 4 6 8 10 12 14
Source: Cognizant Business Consulting, 2012
Figure 11
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9. Organizational Obstacles for Mobile Commerce
ROI is hard to quantify 60%
Budgeting — there is little
capital investment available 51%
We don't have enough e-commerce/mobile
resources to manage all the available opportunities 40%
Difficulty getting IT resources for
e-commerce/mobile projects 37%
Mobile technology changes too quickly
for us to be able to make solid investments 28%
Stores don't understand the mobile,
social or cross-channel opportunities 19%
Stores are a higher technology
investment priority 19%
Our executive team doesn't
understand the mobile opportunity 16%
We don’t know how to turn data gained from
mobile channels into actionable business intelligence 16%
The marketing organization does not understand
the digital strategies we need to support 9%
Source: Retail Systems Research
Figure 12
ing policies late in 2012, they are looking to mobile • Leverage existing technology and
to arm associates with capabilities to address intelligence where possible. Apply current
shoppers’ concerns at the point of purchase. investments, existing tools and technolo-
gies and accumulated knowledge associated
The Road Ahead with prior desktop delivery methodologies to
We believe successful retailers will concentrate on provide mobile-optimized experiences.
the following key elements for a winning mobile- • Listen to what customers tell you and learn
device sales strategy: from their behavior. Continuously assess
mobile shopping and usage behavior, satis-
• Pay obsessive attention to both content faction levels and expectations by leveraging
and design: Craft a user experience that goes the wealth of analytical data capture and
beyond just a mobile app and Web site to a analysis tools.
mobile-optimized Web experience.
Mobile Business Challenges
Mobile price comparison at the 24%
shelf is hurting our business 4%
Our competitors have a mobile 33%
strategy and we need to respond 23%
24%
Our competitors don't have a mobile strategy 31%
Store sales are getting 33%
cannibalized; mobile can help 38%
Mobile technology is moving 48%
too quickly; we can't keep up 38%
We're seeing significant online traffic 29%
from mobile sources and need to respond 42%
Consumers are using mobile as part of their 81%
shopping experience and we need to be there 92%
Leaders Others
Source: Retail Systems Research
Figure 13
cognizant reports 9

10. • Engage across a variety of consumer their strategies and related investments will be
segments: Smartphone adoption will soon a key indicator of future business performance.
be ubiquitous, and differences in user As previously discussed, most shoppers are
engagement will narrow. Retailers must be giving retailers some latitude in how quickly they
smart about ensuring that large consumer develop mobile capabilities, but building these
segments are not under-served due to a capabilities takes time. Retailers cannot wait to
narrow focus on one slice of the pie. Doing develop strategic capabilities that will impact
this requires: such a large portion of their revenue.
> Integrating their mobile capabilities as part
of a multichannel/omni-channel business These strategic choices will determine whether
organization, focused first and foremost on these revenues will come at the expense of
the customer experience. existing channels or will open up a plethora of
> Developing and executing a technical possibilities, such as deeper and more meaningful
development strategy that brings new consumer engagement. Successful retailers are
capabilities to market at a speed that meets treating (and will continue to treat) mobile retail
consumer needs. as a strategic imperative and not merely as an
adjunct to the existing e-commerce channel. The
With mobile platform-influenced revenues mobile application strategy for retailers is thus a
estimated to be about one-fifth of retail revenues C-suite issue and not merely a to-do item on the
by 2016,9 the choices that retailers make in e-commerce division's agenda.
Footnotes
Michelle Hernandez, “The Mobile Influence Factor,” Deloitte Digital, June 27, 2012, http://www.
1
deloittedigital.com/blog/the-mobile-influence-factor.
2
“Tablets and Smartphones Become Holiday Shopping Assistants,” eMarketer, Dec. 8, 2011, http://www.
emarketer.com/Article.aspx?id=1008725&R=1008725.
3
“Big Online Gains For Black Friday Weekend, with Help from Tablets,” eMarketer, Nov. 29, 2011,
http://8.10.209.13/Article.aspx?R=1008710.
4
Lauren Freedman, “The ‘Shopping’ Mindset of the Mobile Consumer,” E-tailing Group, March 2011,
http://shopcoffeetable.com/wp-content/uploads/2011/05/e-Tailing-Whitepaper-March-2011.pdf.
5
“The Impact of Tablet Visitors on Retail Websites,” Adobe Digital Marketing Insights, 2012, http://www.
cmo.com/sites/default/files/Digital_Marketing_Insights_WP_FINAL.pdf.
6
“Adobe 2012 Mobile Consumer Survey,” Adobe Systems, Inc., 2011, http://success.adobe.com/en/na/
programs/products/digitalmarketing/offers/1207_20860_mobile_consumer_whitepaper_generic.
html?s_osc=701a0000000l9JeAAI&s_iid=70130000000l88xAAA.
7
Nikki Baird and Steve Rowen, “Keeping Up with the Mobile Consumer: 2011 Benchmark Report,” Retail
Systems Research, September 2011, http://iwoorx.com/ref/Keeping%20Up%20with%20the%20
Mobile%20Consumer.pdf.
8
Value Line database, January 2012.
9
“The Mobile Influence Factor,“ Deloitte Digital, 2012.
References
• Sucharita Mulpuru, “Mobile Commerce Forecast: 2011 To 2016,” Forrester Research, June 2011.
• “Winning Over the Empowered Consumer,” IBM Institute for Business Value, 2012.
• “Emerging Mobile Commerce Best Practices,” RIS-Cognizant Research, 2012.
• “Harnessing Mobile Innovation,” RIS-Cognizant Research, 2012.
cognizant reports 10

11. Credits
Author
Nitin Bajaj, Deputy General Manager, Cognizant Research Center
Subject Matter Expert
Colleen Coleman, Associate Vice President of Merchandising, Cognizant Business Consulting,
Retail Practice.
Analyst
Avinab Nandi, Research Analyst, Cognizant Research Center
Design
Harleen Bhatia, Creative Director
Suresh Sambandhan, Designer
About Cognizant
Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process
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