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The Rise of the App & Mortar Economy

  
  
  

Retail is among the world’s largest industries. The top 10 global retailers are made up of 5 from the U.S. and 5 from Europe, collectively driving annual revenue in excess of $1.1 trillion. The U.S. Commerce Department estimates that U.S. domestic revenue exceeded $4.7 trillion in 2011 and is growing. Two thirds of the U.S. GDP, the world’s leading economy, comes from retail consumption. 

Now, the retail industry is colliding with the mobile app economy. Just consider that, according to a recent IBM report, more than 18% of shoppers used a smartphone or tablet to access a retailer's website on Cyber Monday in 2012, an increase of 70% over 2011. Mobile made up 13% of total web-based purchases. The App & Mortar economy has arrived.

In this report, Flurry explores the shopping app category. For our analysis, we measured time spent by consumers across more than 1,800 iOS and Android shopping apps from December 2011 to December 2012.  Shopping apps were found predominately within the Shopping category on Google Play, and within the Lifestyle and Food & Drink categories in the Apple App Store.  From there, we broke down “Shopping” into five sub-categories:  Retailer Apps, Price Comparison, Purchase Assistant, Online Marketplace and Daily Deals.  Let’s take a look at how time spent in shopping apps is growing.

Flurry Shopping Apps Column Chart

The chart above shows growth in time spent by consumers across the top five shopping sub-categories.  For reference, indicated by the dotted light-blue lines, we overlay growth rates for All Shopping Apps and for All Apps that Flurry measures (over 270,000).  Starting on the left, we see that consumer time spent in Retailer Apps has skyrocketed by 525% from December 2011 to December 2012. This growth far exceeds total shopping app growth of 274%, as well as overall app growth 132%, represented again by the light-blue dotted lines. Time spent in Price Comparison and Purchase Assistant apps have also grown significantly, by 247% and 228%, respectively. Finally, still growing, but not as quickly as other shopping categories are Online Marketplace and Daily Deals apps at 178% and 126%, respectively.

For reference, below are examples of the kind of apps across shopping sub-categories in this analysis. Please note that example apps may not be Flurry customers.

  • Retailer Apps: Walmart, Target, Macy’s, Victoria’s Secret, Gap, Saks 5th Avenue
  • Price Comparison: RedLaser, Grocery iQ
  • Purchase Assistant: ShopSavvy, ShopAdvisor
  • Online Marketplace: eBay, Amazon
  • Daily Deals: Groupon, Living Social

Flurry Shopping Apps Pie Chart

In the chart above, we next look at the shift in time spent across shopping sub-categories.  Retailers, represented by the dark blue wedge, saw the greatest increase in time spent, from a share of 15% of time spent by consumers in shopping apps in 2011 to 27% in 2012.  The enormous growth in retailer app share has come largely at the expense of Daily Deals, down in share from 20% in 2011 to 13% in 2012, and Online Marketplace apps, which contracted from 25% in 2011 to 20% in 2012.  This suggests that retailers are beginning to better respond to the tectonic shift created by the collision of online- meeting offline-shopping through mobile apps.

Incoming! App & Mortar Fire

The opportunity for retailers to extend their relationship with consumers outside the store has never been greater, or more mission critical. Gone are the days when retailers should focus the majority of their marketing effort attracting consumers into stores, where 95% of all purchases take place. In the new mobile app economy, devices are always with you, always on and always connected. Consumers can be intercepted in store aisles and even on their way to the cash register. There are apps to scan an item, select size and color, and then have it shipped to your home - conveniently, quickly from the phone you have in your pocket right now. Apps are connected to credit cards and can have shipping info on file. In the new App & Mortar economy, they serve as virtual, portable show rooms that consumers can use to shop anytime, anywhere.

To keep dollars flowing through their cash registers, retailers need to re-examine the consumer relationship from the ground up and through the lens of mobile-first. In the App & Mortar economy, the battle for deeper consumer relationships is beginning. And there are already thousands of apps for that.

Holiday 2012 Delivers Historical Worldwide App Downloads

  
  
  

The most important week of the year for app makers is the final week of the year, between Christmas and New Year's Day. Starting with Christmas Day, the largest single device activation day of the year, the week between Christmas and New Year’s Day is marked by significantly elevated device activations and app downloads. This is the primary reason why companies jockey to rank well leading up to Christmas Day itself. This report reveals that the last week of 2012 was the largest week for both new device activations and app downloads in iOS and Android history.

For this report, Flurry leverages its data-set from over 260,000 apps running on the significant majority of iOS and Android devices. With its application penetration, Flurry can detect over 90% of all new devices activated each day. Additionally, with its analytics service in more than 25% of all applications downloaded on a given day from the App Store and Google Play, Flurry can reliably estimate total iOS and Android downloads. To benchmark against the market, Flurry regularly triangulates its device and download figures with data released publicly by Google and Apple.

In its most recent report, Flurry estimated that a record-breaking 17.4 million iOS and Android devices were activated on Christmas Day, along with an equally record-breaking 328 million application downloads. Studying the data from December 25 – December 31, additional records were set, now for the highest number of device activations and app downloads of any week in history. Over the holiday week, Flurry estimates that over 50 million iOS and Android devices were activated, and 1.76 billion applications were downloaded. Let’s take a closer look at downloads.

Flurry appDownloads Christmas toNewYears2012

The columns in the chart compare the number of app downloads during Christmas through New Year’s Day (on the right) versus the average of the first two equivalent weeks of December (on the left). The seven days from December 25 – December 31 spanned from a Tuesday to a Monday. As such, we take the average of the first Tuesday-to-Monday weeks in December to establish a baseline. The average downloads over these weeks were surprisingly even. The final week of the year, between Christmas and New Year’s Day, grew by 65% over the early-December baseline, historically breaking through the largest single week record previously set during the same week of 2011.  While several weeks since late November delivered billion+ week download levels, the holiday week delivered a record-shattering 1.7 billion downloads.

Flurry appDownloads byCountry Christmas toNewYears2012 resized 600

This second chart shows the top twenty countries across which the record 1.76 billion downloads were distributed.  Starting from the left, the U.S. took the lion’s share with 604 million downloads, or 34.3%.  Referencing an earlier report, wherein Flurry sized the installed base of top countries, it’s not surprising that the U.S. continues to lead the rest of the world, especially since the fast-closing second place China does not celebrate Christmas (only 3% of China’s population is Christian). Just before the holidays, Flurry estimated that there were 181 million active iOS and Android devices in the U.S. market, compared to 167 million in China.

Following the trend that Western countries more widely celebrate Christmas – note the higher positions of countries like Canada, Germany, France, Australia, Italy and Mexico in the chart – these countries over-indexed against largely non-Christian countries of China, South Korea and Japan. For example, while Japan and South Korea have the 4th and 5th largest smart device installed bases of all countries, they ranked 14th and 10th, respectively, for downloads over the record week.  Christmas is not recognized as a national holiday in Japan, and in South Korea, roughly half the population self-identifies as non-religious.  Countries that significantly over-indexed during the holiday include Russia, Italy and Mexico which drove the top 7th, 8th and 9th most downloads despite the fact that their installed bases are ranked 13th, 14th and 15th, respectively.

Looking forward to 2013, Flurry expects the trend of one-billion-download weeks to become the norm, and that the industry will surpass the two-billion download week during Q4. Following a year where Google and Apple drove unprecedented adoption of mobile devices, Facebook declared itself a “mobile” company, and Amazon and Microsoft both made significant investments into mobile computing, we look forward to continued record-breaking adoption of smart devices and applications. Happy New Year from everyone at Flurry.

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About Flurry

Flurry is the leading mobile measurement and advertising platform that is optimizing mobile experiences for people everywhere. Flurry's industry-leading Analytics software sees activity in over 400,000 apps on more than 1.3 billion mobile devices worldwide, giving Flurry the deepest understanding of mobile consumer behavior. Flurry turns this insight into accelerated revenue and growth opportunities for app developers, and more effective mobile advertising solutions for brands and marketers. The company is venture backed and headquartered in San Francisco with offices in New York, London, Chicago and Mumbai. 

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