Riding Pikachu's Coattails: Retailing Lessons From Pokémon Go

The most massive and unexpected retail success story of the summer so far wasn't really even about retail. It was about catching, training and battling virtual monsters.

The Pokémon Go augmented reality (AR) app was released in North America on July 6. It was downloaded approximately 7.5 million times in the first week and was soon generating an estimated $1.6 million in daily revenue. On July 13, Pokémon Go's Twitter mentions peaked at 130,000 per hour.

Every retailer should take a moment to check how many Twitter mentions they had in the last hour, then let that sink in.

Those kinds of numbers easily explain why retailers hastened to take advantage of the app's popularity by advertising what Pokémon could be found in their stores, buying "lures" to attract more of the creatures and becoming sponsored locations. While this may seem brand new, it's only retail's latest brush with AR — and should be used as an instructive moment for the industry.

The use of AR in retail goes back several years. In 2012, IBM Research announced an AR mobile shopping app that the company claimed was the first of its kind. The app basically allowed consumers to use their smartphone cameras to view products on shelves and see an overlay of information, ranging from price and ingredients to reviews and discounts. It could even provide a same-day digital coupon for use in-store.

Not sexy, to say the least, but it was easy to grasp.

The applications of AR have changed dramatically since then, and there may be no better example than the interactive mirrors Rebecca Minkoff and eBay installed in "digital dressing rooms" in at a New York City store. These mirrors recognized the RFID markers in clothes and could show shoppers other colors and styles directly on the mirror, as well as letting them change the lighting and even order drinks.

AR has been around on the retail supplier side as well. Dusobox.com has been creating display and packaging solutions for its retail customers, and AR allows those customers to use their mobile device or tablet to see what their empty shelf space would look like with various types and quantities of packaged products.

Pokémon Go, however, represents a different and — in many ways — far more accessible option to fuse AR and retail. That's not to say it's ideal, but it gives the industry a new frame of reference for how this technology can be used to drive foot traffic and differentiate physical locations from their online counterparts.

However, while Nintendo and Niantic delivered people by the thousands to retailers’ doors, if there wasn't an incentive for those people to shop, they became merely catch-and-release consumers.

While it's true retailers could spend just a few dollars to buy "lures" or pay more to become a sponsored location — an Atlanta coffee shop saw a 400 percent return on investment on its lures, campaignlive.com reported — no one has yet produced a serious study of the real payoffs. That leaves retailers with mostly anecdotal information upon which to draw conclusions. Other more established methods for delivering foot traffic (e.g., geo-targeted push notifications, SMS) are not only familiar territory, but also have data to back them up. Oftentimes, though, they come with a high price, especially with new customer acquisition-focused messaging. It wasn’t that long ago that Groupon rose and fell on the wave of deep discounts, that all too often didn't produce repeat buyers.

Still, the Pokémon Go experience provides valuable insight into the future of retail and tech, with the most immediate lesson being that the barrier of entry is getting lower. Even the smallest retailer can afford to grab onto the app's coattails with a lure or two. While the largest global retailers may have the budget to develop their own AR apps, they may not want to, preferring to co-opt the value and fun of known brands like Pokémon for their own purposes.

It's important for retailers to bear in mind that while Pokémon Go is AR, it's not all there is to AR. Part of the impact of the game has been to raise public awareness of AR in general. Forrester found that in the week after the app’s initial release, mentions of AR on social channels jumped from around 25,000 to more than 150,000 at their peak. This means consumers have an interest that extends beyond this one game itself, and that gives retailers an incentive to find out how to best make AR work for them. As they further explore its potential, they should keep these lessons in mind.

Paul Mandeville is the chief product officer for QuickPivot, a provider of real-time, omnichannel marketing automation software solutions and services.