Retail Traffic
Shopkick Ups the Ante on Shopping with Smartphones

Shopkick Ups the Ante on Shopping with Smartphones

The retail real estate industry up until now has only speculated about how the in-mall experience may change with the continued rise of smartphones. Many mall owners have been thinking about developing property-centered smartphone applications, but were unsure about the way to translate mobile marketing efforts into sales. A new technology unveiled this week—with the backing of the largest mall owner in the country—promises to help them turn their visions into reality.

For the last few years mall owners have experimented with social networking campaigns that have grown more sophisticated. At the same time, applications like Foursquare and FastMall became first steps in retailers’ experiments in location-based marketing.

Now, an application called Shopkick has entered the scene. The application, a product of a Palo Alto, Calif.-based app developer, enables retailers and mall owners to reward smartphone-carrying customers for entering stores or malls. Further functionality allows customers to get additional rewards for scanning products and trying on clothes. It’s a way to incentivize activities that retailers know increase on-site purchases.

What’s most significant about the application’s rollout is the all-star roster of firms that have already endorsed it. Macy’s, Best Buy, American Eagle Outfitters and Sports Authority are rolling out Shopkick at its stores, as is Simon Property Group, the largest regional mall owner in the United States.

“We’ve wanted to be in the mobile space for a while and started a process of evaluating players in that space about a year ago,” says Les Morris, a spokesman for Simon. “We feel like we have an obligation to our retailers to present things that are very cool and that will help them get traffic into their stores and make shopping fun. One of the reasons that we like Shopkick in particular is that their app is very much retail-focused, as opposed to being social media-focused with a retail component added on.”

Shopkick is currently active at about 25 Simon malls in New York, Los Angeles, San Francisco and Chicago. By the holiday shopping season, Simon plans to roll out the application at more than 100 of its properties.

The application, which has been about a year in the making, is meant to encourage more store visits, says Cyriac Roeding, Shopkick CEO. Stores that want to use Shopkick install a location device on-site that emits a silent audio signal when a customer with the app on his or her smart phone steps inside the store. At Simon properties, the devices have been installed at the entrances to the malls, as well as in food courts and common areas. Shopkick’s audio transmitter is several degrees more precise than standard GPS technology and costs less than $100 to install, Roeding notes.

“With GPS, you have no idea whether you are inside the store or just close to it,” Roeding says. “We can reward you for being present in the store. The signal stops at the entrance.”

For the customer, Shopkick works by adding so-called “kickbucks” points to the customer’s account for engaging in activities retailers want to encourage. Walking into an American Eagle store, for example, automatically gives you 35 kickbucks.

Scanning the barcode on a shirt or a pair of jeans adds additional kickbucks to the account. In a deal that is so far exclusive to American Eagle Outfitters, customers also get rewarded for trying on clothes—the retailer has installed special Shopkick panels in its dressing rooms that allow shoppers to alert the app that they have been inside.

The kickbucks points the customer collects can then be applied toward a number of online and offline purchases. The customer can get a gift card that can be redeemed on-site, download songs or online games, or donate money to charity. There is a cap on how many kickbucks a shopper can get per day, so you can’t simply walk in and out of a store repeatedly and redeem the rewards. And it also takes quite a few kickbucks to earn a tangible reward. For example, a $5 gift card at American Eagle requires 1,250 kickbucks.

As payment, Shopkick gets a fee from the mall owner/retailer for every kickbuck earned and a percentage of the sales that can be directly attributed to the app.

“For us, Shopkick is really the first solution for bringing mobility, loyalty and precision” to our marketing approach, says Mike Dupuis, vice president of marketing and operations with American Eagle Outfitters Direct. “It’s about how we can leverage the capabilities within the app to make more targeted offers to [our] customers.”

As of now, 52 American Eagle stores in New York, Los Angeles, San Francisco and Chicago are participating in the Shopkick program. The retailer plans to increase the number to 200 by November, and expects to have the app available chain-wide within a 15-months period.

Customers can download the app for free from the iTunes store. It is currently available exclusively to iPhone users, but an Android version will be unveiled within a few months, Roeding says.

Roeding notes that Shopkick initially approached Best Buy, Macy’s, American Eagle, Sports Authority and Simon about rolling out the app because it saw the companies as market leaders in their respective fields and felt they would be more open to adapting an innovative approach to marketing. But the company is already talking to more potential clients.

“This is largely a non-exclusive arrangement,” Roeding says. “The more retailers participate, the more value you get.”

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