Following the news that HP halted production of its webOS devices in September 2011, including the TouchPad and webOS phones, the retail industry is speculating on the future of tablet technology. While the Apple iPad has made the most significant impact on the market to date — with more than 86% of Fortune 500 companies already deploying or piloting the device — other brands such as the Motorola Xoom, the Samsung Galaxy Tab, the Blackberry PlayBook, the Cisco Cius and the Kindle Fire are working to make market headway. As retailers deploy tablets to create a more media-rich in-store experience, analysts are contemplating if adoption of the technology will fulfill expectations.
Tablet technology took hold of the industry following the release of the first iPad in April 2010. In an interview with Bloomberg, Sarah Rotman Epps, an analyst at Forrester Research, estimated that the iPad 2 will account for approximately 20 million tablet computer sales in the U.S. during 2011, or 83% of the total market.
Apple reached a record quarterly revenue of $28.57 billion in Q3, with 9.25 million iPads sold in those three months alone — a 183% unit increase over the same period in 2010, the company reported.
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The overall potential for increased engagement via tablet tools is now prompting analysts to increase predictions for tablet adoption. According to Deloitte’s Predictions for the Technology, Media and Telecommunications Sector, 2011, 25% of all tablets will be purchased by businesses in 2011, and 25% of those businesses will be retailers.
The number of consumers tapping in to tablets also is expected to increase in coming years. Tablet sales will more than double in 2011 to 24.1 million units, according to Forrester in its eReader Forecast, 2010 to 2014. Further, by 2015, 82 million U.S. consumers — one-third of the country’s online shoppers — will be using a tablet.
Furthermore, the average retailer currently is investing approximately $14,000 in tablet commerce tools, according to the Forrester Research study titled Why Tablet Commerce May Trump Mobile Commerce. Furthermore, the study also noted that 30% of retailers are currently planning to roll out a tablet strategy to help store associates increase in-store purchases.
For retailers considering a commitment to tablet technology, the key information to note is that consumers’ increasing interest in the iPad and other tablet brands has drastically altered browsing and buying behaviors. As many as 61% of users tap into the web while on tablets, while 39% browse through applications, InsightExpress reported in its Mobile Consumer Research for Q3 2011. But despite the appeal of m-Commerce, only 36% of tablet users have made purchases via the device, citing security as a primary deterrent (33%).
Additionally, tablet users are abandoning their desktops/laptops. Overall, 77% of survey respondents have decreased desktop/laptop use after purchasing a tablet, according to the AdMob/Google study titled Understanding Tablet Device Users. Additionally, 30% of respondents said the tablet is currently their primary computer.
Tablet Improvements Create In-Store Opportunities
Because the iPad has taken the consumer market by storm, a number of retail organizations have adopted it as their go-to employee device, but others have questioned the iPad’s enterprise capabilities, security and ruggedness for the store environment. In response, other tablet providers are developing and releasing new versions that are specifically designed for the needs and demands of a retail environment.
The benefits of employing an enterprise mobility strategy and arming store associates with tablets are numerous. In-store mobility allows retailers to efficiently integrate online and in-store inventory in real time, obtain a 360-degree view of consumers by receiving and analyzing shopping and browsing behaviors, and create an interactive media-rich store experience.
Despite HP’s sudden exit from the tablet arena, there is still high growth-potential, according to Aberdeen Group. In the report titled Mobile and Tablet Shopping Demystified, the research firm revealed that adoption will continue to spike due to consumers’ increased mobile capabilities.
Nearly half (47%) of retailers are taking the leap into mobile retailing because of consumer expectations and demand around the shopping experience, according to Aberdeen. Another 38% of retailers are driven to mobile retail because of consumers’ increased adoption of mobile technology such as smartphones and tablets.
“Consumers are entering stores with their own personal mobile technology, and a quick search can give them more knowledge about products on sale than many store associates may have,” said Deena Amato-McCoy, Research Analyst for Aberdeen. “If retailers want to bring more value to the shopping experience, they need to give their associates mobile access to the real-time information that consumers need to make educated purchase decisions. In this way, tablets can help make the shopping experience more valuable.”
Retailers can anticipate a number of benefits by replacing traditional POS hardware with mobile POS (m-POS), noted Greg Buzek, Founder and President of IHL Group. Those benefits may include:
- Giving managers the ability to leave their offices and take on a more active role in the front of the store;
- Empowering associates with the tools and information to improve customer service and increase engagement with in-store shoppers; and
- Using the device to complete transactions, thereby eliminating long queues and creating a seamless purchase process.
“Tablets matter to retailers because they foster improved consumer intimacy,” noted Ravi Bagal, Vice President of Retail and Distribution for Verizon. “Tablets liberate store associates to come to the shopper anywhere on the floor, and allow them to connect to a universe of cloud-based functionality. Initially we will see more guided selling occur in the aisles. This will evolve into true selling on the retail floor with secure payments and electronic receipts. Retailers will rethink their formats, moving from a POS-centric layout to a more flexible layout conducive to collaborative interaction with the consumer.”
Retailers Test In-Store Tablets
Retailers are implementing tablets to optimize the associate-to-shopper experience or deploy a direct-use experience by transforming tablets into standing, self-serve kiosks.
PacSun recently began to test the use of iPads in-store via the Retailing App from Global Bay Mobile Technologies. The retailer plans to deploy the device in a total of 100 stores during 2011, with the goals of enhancing customer interaction and increasing ROI. The initiative also includes QR code integration designed to deliver exclusive content on sales and promotions via shoppers’ smartphones. To facilitate a seamless implementation, PacSun is tapping into the iPad software for associate training tools such as videos and manuals, and other store management functions.
Macy’s also recently announced that it will run a trial of wireless tablets in 350 of its locations to determine how the platform engages its consumer base in select merchandise areas. The new project corresponds with its expansion of e-Commerce fulfillment in-store. The department store retailer is conducting a 10-store test of interactive kiosks in its cosmetics department, as well as a replacement of signature pads at all 50,000 POS terminals with VeriFone devices that will enable shoppers to use m-Commerce technologies such as Google Wallet. The rollout will be completed by fall 2012, according to a company announcement.
Steps To The Best Tablet Test
When planning an enterprise mobility strategy, smart retailers will look beyond the bells and whistles and consider important characteristics such as security and overall infrastructure. If those steps are missed, a tablet initiative can replicate a bad experience, according to Buzek. “If you are just putting the devices in to try and replicate the Apple Store experience, it can turn negative,” he said. “But you have to worry about bags, cash wraps, security tags, hangers, etc. In addition, the availability of the network, the infrastructure, and card security for payment could all be negatives if they are compromised.”
Another important aspect of rolling out a successful tablet initiative is choosing the ideal hardware and software for a retailer’s needs. A majority (56%) of companies report that the daunting amount of mobile devices and operating systems posed the biggest challenge for their mobile strategy, according to Aberdeen research. “Because the marketplace is so vast, retailers should consider a more device-agnostic approach,” asserted Amato-McCoy. “A device-agnostic mobile retail solution is more cost-effective and easier to manage than proprietary or legacy-based hardware or software.”
To that end, Liuzzo added that retailers also should focus on creating a unique and overall engaging tablet experience to maximize the in-store experience. “Don’t try to reproduce your online site on a tablet,” she said. “Think in-store use cases: outfit suggestions, coordinating colors, project ideas, and so on. Think of it as another sales voice, not channel.”
New Devices Come To The Forefront
Currently, the overall price and functionality of the iPad is making it the most sought-after tablet. “No one has put forth a tablet of reasonable price that has the pizzazz of the iPad at this point,” Buzek said. “Motorola had a shot, but priced their product above that of Apple and it was a dud. Samsung has mis-fired a couple of times as well. I think it is way too early to claim iPad is the long-term winner due to Apple’s insistence on a closed system. But the competitors have not stepped up yet.”
Liuzzo also noted that iPad’s seamless format is the greatest appeal of the technology. “At this time, I think the jury is still out on who will be the main competition for iPad,” she said. “Apple has a clear advantage right now because the iPad works just like a large iPhone (same apps, same interface, same experience) but if someone can come out with something that improves upon that, and at a better price, they could give Apple some serious competition.”
But that hasn’t stopped a number of companies from easing their way into the tablet marketplace. For example, Verizon has teamed with Cisco to enhance the power of its 4G LTE network via the Cius tablet. The new partnership was developed to allow businesses to decentralize and accelerate decision-making within operations.
The offering, which became available to enterprises August 2011, provides an array of solutions within customer experience, merchandising, operations and workforce management sectors. Verizon’s new partnership with Cisco was formulated to contribute to a new, digitalized retail experience, according to Bagal. “Tablets are part of a larger story,” he said. “They are the endpoint of next-generation retail systems. Cloud-based solutions will be delivered securely over wireless networks to tablets. From a Verizon perspective, this new delivery model offers remarkable reductions in cost and complexity of retail solutions while fostering a higher degree of flexibility.”
In late September 2011, Amazon announced the release of its new device, the Kindle Fire. With an entry price of $199, the new multi-media tablet has been named top competition for the iPad during the holiday season. In an article for IHL Group, Buzek commented on how the Kindle Fire can potentially impact the retail industry.
“At that iPod Touch price point, with a screen more than 2x the size and weighing less than a pound, the Kindle Fire is also the ideal tablet format for the associate to carry around at the store level,” Buzek noted. “Oh, and did I mention the support for Adobe Flash, the technology used on the vast majority of retailer web sites but eschewed by Apple? Flash is a big deal for retailers.”
Although the Amazon tablet does not offer a camera or microphone, the compact, 7-inch size makes it the ideal footprint for many specialty and department stores, and restaurant servers, noted Buzek. “Tablets and handhelds are becoming ubiquitous in certain segments of retail,” he said. In turn, tablet adoption in-store is still expected to rise in the coming years.
