Mobile handset use for retail and commerce is one of the fastest growing activities for US mobile consumers according to the analyst firm comScore. At first glance, this would seem to be good news for the retail industry which has been struggling in the recent down economy. However, upon closer examination, it is clear that the use of mobile phones in the retail environment is proving to be a challenge for retailers.

As more consumers are making the shift to smartphones, retailers have begun to actively seek mobile consumers. “More retailers have developed apps and optimized their sites for mobile browsing, making it easier than ever for consumers looking for product information or doing price comparisons to do so from their phones,” said Carmela Aquino, analyst for comScore.

What retailers are now seeing are customers actively using their smartphones to cross shop while in an actual store. For example, comScore’s recent report “2012 Mobile Future in Focus”, notes that in December 2011, 28.5 million shoppers used their smartphones to find online retail content, this represents an 87% increase over 2010. The study also reveals increases in mobile access to other commerce-related content over 2010 including:

• 80% increase in electronic payments
• 72% increase in classifieds
• 70% increase in auction sites
• 67% increase in shopping guides

US consumers have also been using their mobile devices to photograph products (20%), scan barcodes (20%), and compare in-store product prices with online lists (12%).

What is clear is that brick-and-mortar locations are now clearly in competition with online sites. Even when you have the customer in the aisle, you don’t have their complete attention. Traditional retailers must provide additional incentives to encourage consumers to shop and buy in store as opposed to shopping online.

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Overall retail sales were also up 8.2% over 2010 to $1.1 trillion. 2010 third quarter e-commerce sales accounted for 4.6% of total retail sales. This represented a slight increase over the 4.4% increase seen in the third quarter of 2010. However, according to Andrew Lipsman, senior director of industry analysis at comScore, a digital business analytics company, the 4.6% increase is a soft number as it includes food, gas and automotive purchases. “If you take out food, gas and auto from the calculation, the increase is in the 8% to 9% range now,” he said.

“There was a little bit of relative softness in this quarter given the market volatility,” Lipsman said. “As of now, there seems to be only minor pullback and Q4 is looking pretty strong.”

The Census Bureau e-commerce sales estimates for the third quarter of 2011 are based on approximately 12,500 retail firms whose sales are weighted and benchmarked to represent the complete universe of more than 2 million retail firms, according to the U.S. Department of Commerce.

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The 70% that will be allocated to digital channels will breakdown as follows:

• Online/Digital: Includes mobile, social, online directories, display, and digital outdoor
• Performance-based Commerce: Includes pay-per-click, deals, and couponing
• Customer Retention Solutions: Includes email reputation and presence management, websites, social marketing, and calendar/appointment-setting

During this forecast period, spending in traditional advertising outlets is expected to be flat with $10.8 billion spent in 2010 and $12.1 billion to be spent in 2015. However, overall spending on media, marketing and business solutions will grow dramatically from $22.4 billion in 2010 to $40.2 billion in 2015.

BIA/Kelsey also expects spending on performance-based commerce and transaction platforms to increase to $4.6 billion in 2015 up from $1.7 billion in 2010. Customer retention spending is also expected to increase. 2010 saw customer retention spending of $3.5 billion; this number should rise to $6.9 in 2015.

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In this year alone, they expect marketers to earn nearly $25 billion in revenues from local interactive marketing.  This is a nice jump from the $21.7 billion earned from online ad revenues in 2010.  Total local ad revenues in 2010 came in at $136.3 billion.

BIA/Kelsey is predicting online’s share of local advertising revenue will also continue to grow over the next four years. According to the firm’s estimates, the online and interactive local marketing percentage of revenue earned will increase 9.5% to 23.6% by 2015.

With a compound annual growth rate (CAGR) of 14.4% over the next four years, local interactive advertising revenues will take on even greater importance in advertiser’s overall marketing strategy. BIA/Kelsey predicts overall local advertising revenues will grow at a CAGR of 2.1% to $153.5 billion by 2015.

• 80% of visual content to be digested through digital devices by 2015.
• 5 billion people to be active on the web by 2020, up from the 1.9 billion active on the web at the end of 2010.
• 10 billion mobile subscribers by 2020, up from the 5 billion mobile subscribers in 2010.
• 53 zettabytes of digital information projected to be created by 2020, as compared to the 800 exabytes created at the end of 2010.

According to David Shapiro, Google’s director of small business marketing, “Mobile will be bigger than desktop in five years.”  He also pointed out that “Mobile searches grew five times in the last two years.”

He went on to explain that searches are the “web’s killer app,” with mobile and search functions becoming increasingly integrated.  Shapiro explained that one-third of all Google mobile searches have local intent, with consumers searching for information related to where local businesses are located, what products they carry and what their hours of operation are.

The numbers have been increasing steadily since the start of the holiday shopping season on Thanksgiving Day when a 28% year-over-year increase was reported representing $407 million in online sales.  On December 17, “free shipping day”, consumers spent 61% more than they did in 2009. 

During the final holiday shopping weekend of December 17 and 18, online shopping sales were approximately $900 million during the two day period, for a 17% increase over the corresponding weekend in 2009.  The final shopping week of the year, ending December 19, broke records with consumer spending $5.5 billion, a 14% increase over last year’s final shopping week.

“Online retail spending has increased due to the improving economic environment and a long-term shift in consumer behavior toward the online channel,” said Andrew Lipsman, senior director of industry analysis at comScore, through e-mail. “Consumers appreciate the convenience, the ability to find the best prices and the ability to take advantage of discounts when online shopping. I think the especially high growth rates on Thanksgiving and ‘free shipping day’ can be attributed to heavy promotional efforts around those days that we have not seen in years past.”

Highlights include:

• 11% increase in online retail sales in Q1 2009.
• Nearly 60% of companies surveyed reported increases over the same quarter last year.
• Increases of 10% or more were reported by 44% of e-tailers.
•  14% of e-tailers reported increases of up to 10%.
• 13% of E-tailers reported flat sales.
• Online sales increases were reported by approximately 70% of consumer brand manufacturers and multi-channel retailers.
• The only dark spot was that 60% of web-only merchants reported sales declines.

Overall, US retail e-commerce sales are expected to grow to $141 billion in 2009, a 4.4% increase.  2010 is projected to see a 16.5% increase, according to Citi Investments Research.