Merchant Innovation

Pokémon’s New Retail Customer Acquisition Math

The coming ascendance of augmented reality and virtual reality has long been article fodder for tech enthusiasts, gamers and retail watchers alike. And for good reason – the story of virtual and augmented reality makes for some great copy.

Oculus Rift rose from being a plucky crowdfunded upstart to a $2 billion acquisition by Facebook – a deal that Marc Zuckerberg touted at the time as a first step toward using AR/VR tech to connect the entire world in wholly different ways. And the potential and possibilities of those connections across verticals is really amazing: medical services that can be carried out remotely over thousands of miles, education and training that can be done hands-on without literally laying hands onto anything but a visor, video games that take gaming to a new level, or eCommerce that literally brings the entire store to you – are but a few of the things that can be done if richly rendered and interactive virtual worlds can be affordably built.

It really is a little piece of the Jetsons brought into day-to-day life.

The problem is that these applications work more naturally in some places than in others – and retail presents the clearest possible example of why. It could be amazing to be able to try on clothes without ever having to leave the privacy of one’s own home – but the reality of that today is not quite at the Jetsons level.

Gamers are used to pursuing hyper-real digital environments and will happily plunk down the money for – and then wear – those expensive virtual reality headsets. Your average shopper, on the other hand, might decide that it would just be easier to drive 25 minutes to the store and see how a pair of pants actually fits then it would be to spend several hundred dollars for an as-yet-unproven virtual pants experience – and have to endure the clunky headset in the process.

A related, though less severe version of the problem exists for augmented reality functions that hinge on the enhanced graphical capacities of the modern smartphone. There are really interesting ideas in beta and running as prototypes right now – but most still rely on consumers having a more specialized than average smartphone to make them work.

Wayfair View is a good example. The app allows customers to photograph the rooms in their home they want to furnish and combine those images with the furniture featured on the site for 3-D photo-realistic renderings of who the room will look. Sounds cool, right? It is – so long as one happens to be carrying the Lenovo Phab2 Pro phone – since its proprietary camera lens is critical to making the AR program work up to spec.

When it comes to retail applications for VR/AR, there seemed two rather tall hills to climb – getting customers to do something new and perhaps a little awkward and getting the right specialized and currently expensive tech into their hands to make it work.

Either one of those hills would be a significant impediment toward getting to scale. At best it could be an interesting game changer of the future.

And then came Pokémon Go.

This augmented reality experience managed to get a ten year jump on the future by offering an easy to play, fun to engage socially and universally available extension of augmented reality tech to anyone with a soft-spot for early 90’s cartoon nostalgia and a smartphone.

The story of how that blew up and came out of nowhere to dominate app stores that hadn’t seen a significant change to their top five app line up in five years has been well written. Pokémon Go as an example of AR gaming dominance is pretty much unquestionable.

But Pokemon has quietly turned out to be a retail game changer as well – now documented through Revel’s POS data over the last several weeks.

PYMNTS sat down with Revel’s CTO Chris Ciabarra to get the inside skinny about the Pokémon Go retail’s effect -which has been undeniably profound by the numbers.

“What we’re seeing online here is that 63 percent of our customers that have Pokestops increase weekly gross sales by 12 percent. If you want to put a number on that, it averages out to about $2,000 to weekly gross sales.”

This, Ciabarra notes, is a notable difference in bottom line for small and medium sized businesses on tight margins – that requires essentially no investment or upgrade – or marketing costs – just willingness to participate in a virtual world that someone else maintains.

Which means it’s a matter, for retailers, of knowing when to sign on – and how to let this guide how they think about customer acquisition going forward.

By The Numbers

Revel Systems, by nature of what it does, is uniquely qualified to watch the Pokémon Go effect unfold in real time – because in essence that is what its POS software is designed to do, according to Ciabarra. Revel’s customers are retail, grocery stores, restaurants and soon, hotels.

Ciabarra said that Revel’s POS system can analyze sales data – and report it – in real time, which gives SMBs an immediate opportunity to tap into what’s trending – and take action.

“We are especially wired into trending because we make it easy for our retailers to plug in and see what is having an effect – and what exactly effect it is having,” Ciabarra said.

Which made it especially easy for Revel to spot the immediate and emerging Pokémon Go trend. More or less, Ciabarra said, it was easy for their merchants to essentially hit a switch that noted they were playing the game – so to speak – so that Revel could easily track what effect it had.

And that effect, as Ciabarra noted, has been profound. Even merchants who don’t have Pokestops are seeing an upswing. 82 percent of merchants reporting nearby Pokestops are seeing an uptick in foot traffic – a nine percent increase, to be exact.

Measured by the customer – businesses that place Pokestop in front of their location see an increase of 253 customers per week and an increase in daily customers of 25.

Ciabarra also noted that apart from the uptick, which was notable, it was equally interesting that the increase was across the board – no matter what vertical the Pokestop was in proximity to.

“It works well for everybody – what we’ve noted is that when that Pokestop is in there, all the people are going to that stop because they really want to catch the Pokemon. So it works for retail, it works for restaurants – it really works everywhere.”

And it is that quality of working everywhere, Revel notes, that marks the opportunity going forward.

What AR Can Really Do For Retail

Pokémon Go may be around forever – or enthusiasm for catching them all may wane as kids go back to school in the fall, and the whether changes such that running through the streets after digital monsters may seems like a less fun idea. It’s still early days.

But the data – and the sharp uptick and results for retailers, tell a pretty unmistakable story for retailers who are looking carefully at their data.

“Augmented reality is where the future is going, and they need to adapt their stores to that technology.”

That doesn’t mean that retailers necessarily can or should make huge investments in complicated AR tech – in fact, the lesson of Pokémon Go is just the opposite. Though there have been complaints that the game is buggy and the graphics are basic – customers flock to it because it is easy to access and play.

And it’s fun.

That means that retailers don’t necessarily need to build complex digital worlds – they just need to know what worlds their customers are inhabiting, and how they can become a contextual part of that experience. Ciabarra and Revel contend that doing that requires looking at the data – and being able to see changes in consumer behavior fast enough to respond. Seems a whole lot easier than trying to build that next “big thing.”

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