The New Digital Consumer

Consumer shopping behavior is increasingly being transformed by the evolution of digital capabilities, including with social media, mobile devices and coupons.

Younger consumers are the early adopters but others are catching up. This embrace of all things digital is putting pressure on retailers to respond with new initiatives. Are they making strides?

Yes and No. SN’s 2010 Center Store Survey published last month provided mixed answers, particularly as it relates to social media involvement. While a majority of retailers have at least experimented with Facebook, Twitter and other social media, some 41% haven’t yet begun. Perhaps the best news is that three-quarters of retail respondents said they planned to grow their use of social media in the next year.

The leading players include Safeway, Dorothy Lane Market, Lowes Food, Whole Foods Market, Price Chopper, Hannaford Bros. and Brookshire Brothers. Many companies use social media as a marketing tool, but Safeway is among those who view social media as a two-way street by making sure to respond to consumer comments. A few leading-edge retailers are testing less established social media platforms, including Foursquare and Groupon, which have built a following of young consumers and are reaching out to businesses for partnering.

Meanwhile, many retailers are already on board with digital coupons in some form. The SN Center Store survey found two-thirds of retailers are making available online coupons that can be printed at home. A total of 18.5% have digital coupon hubs offering coupons from multiple manufacturers and 13% enable downloading of coupons to loyalty cards. Notably, some 70% of supermarkets plan to increase their use of digital/mobile coupons in the next year.

Perhaps the trend with the biggest potential to change the shopping landscape is mobile. Retailers and suppliers are mulling the implications of being able to connect with shoppers in real time while they navigate the store.

This revolution may end the use of portable, in-store scanning devices. For example, currently Stop & Shop/Giant Food uses a device called Scan It! that enables customers to scan and bag purchases as they shop and pay at the checkout. This program also distributes targeted offers based on factors such as in-store shopper location.

The retailer is betting that in the future this function may be handled by the shopper’s own mobile phone or PDA, said Stephen Vowles, senior vice president of marketing. Still, the use of Scan It! today helps put the retailer in good position for that future, Vowles contends.

More retailers are beginning to wade into the mobile waters. For example, recently ShopRite launched an iPhone application to enable in-store customers to view the weekly circular more easily. A&P, meanwhile, has been sending text messages that offer coupons to shoppers and linking the discounts to loyalty cards.

Future retailer initiatives are likely to further embrace the unique capabilities of mobile marketing, which include GPS functionality. Consumers will increasingly expect to find a wealth of information on price comparisons, nutrition and other attributes merely by scanning a product with their phone.