It seems like retailers are getting more and more aggressive in pushing people to download their apps.
Walmart (NYSE:WMT) introduced its Savings Catcher almost four years ago, encouraging people to scan their receipts and get a refund if a competitor beats its prices. It introduced Walmart Pay at the end of 2015, and around 25% of U.S. smartphone owners have tried it since. Last year, it introduced Scan & Go technology to a few dozen stores, where customers simply scan items and pay for them with their phones, and it's slowly expanding it this year. And just last month, Walmart introduced Store Assistant, which provides item locations in stores and helps you create shopping lists.
Target (NYSE:TGT) is also pushing for more app downloads. It integrated its Cartwheel app, which provides special offers and coupons, with its main store app at the end of last year. It also outfitted its stores with bluetooth beacons to alert app users of nearby deals in stores. In December, Target introduced a payments platform in the app similar to Walmart Pay.
These features aren't cheap to build out, and some incentives like Walmart's Savings Catcher have ongoing costs. But Walmart, Target, and other big-box retailers can see great long-term benefits by increasing usage of their apps -- not just one-time sales increases. Here are two of the biggest benefits.
Better mobile sales conversion
It shouldn't come as a big surprise that apps convert better than the mobile web. Apps can offer a better shopping experience than the mobile web as well as the ability to store payment information. In-app shoppers convert 21% of the time compared to just 6% for mobile-web shoppers, according to a recent report from Criteo.
That bodes well for retailers like Amazon (NASDAQ:AMZN) that have already had a lot of success getting customers to download their apps. Amazon's app consistently ranks No. 1 or 2 in the App Store for the shopping category and in the top 20 overall, and more millennials say it's the one app they can't live without than any other app.
Indeed, Amazon continues to grab a larger share of online commerce as more sales shift to mobile from desktop. As Walmart and Target continue their respective pushes into online shopping, their mobile apps will play a critical role in turning shoppers into buyers.
Gathering more customer data
Perhaps even more important for Walmart, Target, and other brick-and-mortar retailers is the ability to collect customer data by connecting in-store purchases with an account.
Customer data has historically been a huge advantage for online retailers. Amazon uses data to improve sales conversions by putting the right product in front of the right customers. It can also use the data to develop private-label products, target advertisements for its ads business, and a host of other applications.
Access to shopper data is why Walmart is willing to send gift cards to customers who scan their receipts into the Walmart app for its Savings Catcher feature. The data it gathers from those receipts is far more valuable than the amount it sends out in store credit. Walmart Pay and the new Wallet feature in the Target App present another way to gather data on customers shopping in stores.
Understanding customers on an individual level will enable Walmart and Target to compete much more effectively against Amazon by leveraging their huge in-store sales to grow sales online. Walmart, for example, used its in-store shopper data to introduce Easy Reorder last summer, showing customers items they bought both online and in store. That can have a meaningful impact on online sales growth.
Taking on the giant
In online commerce, at least in the U.S., there's Amazon, and then there's everyone else. Walmart and Target are simply battling for second place.
That said, shareholders should expect continued investments from Walmart and Target to encourage in-store shoppers to download their respective mobile apps as a way to gather more data and convert more shoppers into buyers when they're not in store. The mobile app is the key to a true omnichannel shopping experience, which is one key advantage brick-and-mortar stores have over Amazon.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Levy owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.