US Insights

Pokemon GO: a new kind of shopper reward?

Alvaro Morilla

Associate Analyst

Retail 07.28.2016 / 10:05

urban jungle

What the augmented reality game could do for the future of retail

In just the couple of weeks since its launch, all predictions for number of downloads and amount of time spent by users on Pokemon GO have been surpassed. (For the few of you who may not know, Pokemon GO is an augmented-reality, or "AR" game that requires players to explore the real world to find and “catch” the creatures called Pokemon.)

The most interesting aspect of the game for anyone in marketing or retail is how it can drive players to fixed locations. These locations are called Poke Stops, places where players can collect items, and Gyms, where players can virtually interact with others via the app. Retailers are beginning to take note of the traffic the game can generate.

When Pokemon GO recently launched in Japan, McDonalds partnered with the game as its first sponsor and turned 3,000 McDonalds locations into Pokemon GO Gyms. This deal will involve a fee-per-visit basis, similar to Google’s cost per click. McDonalds has been quick to “catch” the hype around the game and is winning by encouraging people to visit McDonalds stores to use the Gyms, thus increasing the foot traffic into its restaurants in the hopes of driving more purchases.

American retailer Sprint has gone one step further, offering training for employees to become “Pokemon Go Experts”, leveraging its stores and associates as a destination for Pokemon Go expertise. Store managers have also shown initiative by setting up beverage stands at Poke Stops located near Sprint stores. Katey Chamblin, director of sales operations at Sprint, reported that an hour after Sprint tweeted about a store in Louisville, Kentucky that was also a Poke Stop, a bus full of children and parents showed up to catch Pokemon and shop.

The app also offers the option of purchasing a “lure”, which will attract Pokemons to a specific place, as well as shoppers. According to the New York Post, a New York pizzeria paid $10 for the in-app purchase of the “lure” for Pokemons. The pizzeria reported a boom in business of around 75%.

Lyft is taking advantage of this trend, too, offering discounts to customers using the service for a ride to a Poke Stop (luckily, Poke Stops are usually general-interest places or monuments).

Lyft Pokemon promo

What could Pokemon GO teach us for the future of retail?  Pokemon GO, like many fads, will have its day in the sun and won’t last forever. For retailers, these sweeping crazes aren’t just cultural events, but could be a major driver of profits and sales. The best retailers are those that react to trends the fastest and innovate around them. This doesn’t always require a huge investment, either. Sometimes it’s about getting the right product in at the right quantities, at the right time. Last year, Poundland, one of Britain's biggest discounters, had huge success throughout the Loom craze (colourful band/bracelets for kids). Poundland sold 6 million units and boosted sales, but once the craze ended, blamed slowing sales on the vanishing interest in Looms.

Pokemon GO will help retailers boost traffic in the short term. Traffic at malls and brick-and-mortar stores can certainly be reenergized. As we’ve seen, some merchants are encouraging game play, selling merchandise around it, and promoting it. That could have broader implications for retailers who are trying to find new ways to engage with shoppers. The main challenge is how to convert this increase in foot traffic into revenue, or how a retailer can lock these new customers into a longer-term relationship. What this craze really shows is that for retailers, the future of shopper interaction may be through the gamification of an experience− i.e., making shopping fun and rewarding.

How can retailers and brands capitalize on the hype?  There is a small window of time to capitalize on such trends or crazes. Taking Pokemon GO as an example, the existing user base features a large number of players who are “casual”. They just downloaded the app in order to try it. The idea should be “capturing” new users, converting them to the retail brand, and build a relationship from there.

With this new wave of AR and location-based apps, there is a big opportunity to influence behavior. Location-based marketing works and creates a bigger sense of personalization and uniqueness. This new wave of mobile marketing can bridge the gap between online and in-store engagement.

 


Source: Kantar Retail

Editor's Notes

This article originally appeared on the Kantar Retail blog on July 25, 2016. Journalists, to speak with the author or for inquiries, contact us. Follow @Kantar and sign up for our insight alerts.

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