Retailers   //   September 1, 2020  ■  5 min read

Why retailers are seeing app downloads surge

As customers continue to do more of their shopping online, retailers are also seeing huge increases in the number of customers downloading their apps.

Best Buy reported during its second quarter earnings last week that the number of customers who have downloaded its app have doubled compared to the same time last year. Home Depot similarly experienced a record number of app downloads during the second quarter. And Abercrombie & Fitch reported that the number of visits to its app were up 50% year-over-year.

Aside from the fact that people are shopping more online, retail app usage is also increasing because of a few other shifts in shopping behavior. The coronavirus has led more shoppers to try out services like curbside pickup, and many retailers encourage shoppers to view status alerts for these types of orders through their mobile apps. Second, retailers such as Target and Nike have also tried to encourage shoppers to use their apps more for things like contactless payment in store, or to learn more about a product without having to come into close contact with a store employee. “You’ll just see us starting to promote — and even elevate — those store services on our app experiences more so over time,” Nike’s president of consumer and marketplace Heidi O’Neill told Modern Retail in May.

But, there’s a risk that app usage may start to decrease once shoppers feel more at ease shopping in stores again. The retailers who will get the most out of the current increase of app downloads are the ones who offer enough unique services through it that will convince shoppers to use it regularly.

“Walmart, Target, Home Depot, Best Buy — they have all done pretty well with their apps, but I think it’s largely been demand-driven,” said Andrew Lipsman, e-commerce analyst at eMarketer. According to Lipsman, these retailers have focused on encouraging customers to download apps by integrating popular services into them, like buy online pickup in-store, rather than doing more explicit email or social media marketing encouraging customers to download their apps. Walmart comes in second on App Annie’s ranking of the most popular free shopping apps on iOS in the U.S., with Target and Home Depot coming in at number 10 and number 28 respectively.

In-app services likely gave these retail apps a boost. Home Depot, for example introduced wayfinding in its app in 2017, so that shoppers could use the app to navigate store aisles more easily. Walmart, meanwhile encouraged customers to use its app for services that would ultimately drive them to the store, like grocery pickup and refilling prescriptions. At Nike’s House of Innovation flagship stores in Shanghai, Paris and New York, customers can use the app to reserve products that they want to try on in store, and to pay without having to check out with a store employee.

“The name of the game for us is engagement,” Home Depot’s vice president of merchandising Ted Decker said during an earnings call earlier this month, describing the home improvement retailer’s digital strategy. The more our customers engage with our capabilities, whether it’s in the store, self checkout, app downloads, delivery, search… that’s repeat business and that’s customer loyalty.”

Target is one example of how retailers’ thinking around mobile apps has changed. Back in 2017, Target discontinued its standalone deal finding app, Cartwheel, in favor of integrating more services into its main app like the ability to place a pickup or same-day delivery order.

Target’s strategy to integrate more services to its app was already in place before the pandemic, but has born more fruit during the pandemic as some are trying out services like buy online pickup in-store for the first time. According to Adobe, buy online, pickup in-store orders were up 23.3% between June and July.

In Lipsman’s estimation, mobile app usage will only likely increase in the lead up to the holidays. That’s because the number of people purchasing through mobile will go up as more people shop during this time. And, with a number of retailers — like Target, Walmart and Dick’s Sporting Goods — closing their stores on Thanksgiving, that could shift more purchases that normally would have taken place in store towards mobile, as shoppers have still been trained to look for deals during that day.

“[Thanksgiving] is going to be the ultimate couch commerce day,” Lipsman said. “You need to be thinking about how to have your app on their phone already, so they can be making their purchases on their phone on that day.”

Given the newfound adoption of things like buy online, pickup in store, retailers have said that they are trying to encourage more mobile app usage by adding more services to their apps. Target CEO Brian Cornell said that during the second quarter, the company added a new feature in the Target app that allowed customers to more easily toggle between whether or not they wanted to pick up their order in store, or have an employee bring it up into the car. Best Buy, meanwhile is piloting virtual consultations through its app, and is working on adding the ability for customers to see when the stores are busiest for curbside pickup orders, CEO Corie Barry told investors last week.

“Brands that we work with, we talk about the value of taking some of the guesswork away from the thing that consumers come to you store to do,” said Kyle Rees, research director at Gartner. “The more of those features that companies add to their apps, they can increase their chances for retention.”