App development costs deterring some retailers

Every retailer is scrambling to get into the palm of their shopper's hand with new mobile initiatives, but according to research from Forrester and the National Retail Federation, apps may not be the best solution for everyone.

That doesn't mean mobile retailing is going away, far from it. Forrester's "State of Retailing Online Report" found that 58 percent of the 71 surveyed companies plan to make mobile their top priority this year, a 5 percent increase from a year ago. The percentage of digital sales that came from smartphones also doubled to 12 percent in 2014, while tablet sales accounted for 16 percent of all digital sales.

Forty-five percent of retailers hope are making omnichannel improvements the next priority after mobile, but apps are playing less of a role in those plans due to the high cost of entry. Apps are a key component of less than half of the survey respondents' strategies for this year, and even fewer said they would be important to their employee strategy.

"Apps are simply too expensive to build and maintain for most retailers, begging the question–what's after apps?" said Sucharita Mulpuru, Forrester Research VP and principal analyst. "We'll see retailers focus spending on redesigning the core site, which benefits the site experience beyond mobile, and embracing responsive design—an approach that retailers favor over apps, with nearly half already applying it to their mobile site."

It isn't just about the initial investment. The cost of developing an app is estimated at around $2 million, and can cost another $1.6 million each year to properly maintain it. Compare that to the roughly $200,000 cost for a mobile-optimized site and it's no wonder many retailers are dodging apps and looking for better ways of leveraging the mobile Web.

But for the big retailers, mobile apps do still offer some advantages over cheaper alternatives. The updated loyalty programs that many retailers are rolling out often require that shoppers download their app, and apps are crucial to the future of beacons in retail, which are largely useless if they can't push notifications and deals to customers in-store.

That creates a significant divide among retailers where the big may opt for apps while the small choose responsive design until the cost of app development and maintenance can be brought down.

For more:
-See this Forrester and Shop.org press release
-See this CNBC story

Related stories:
Regional grocers light up stores with beacon tests
Walgreens' mobile program connects with Boomers and Millennials alike
Dick's uses in-store mobile to drive digital sales
Mobile tech: Connectivity beyond beacons
Retailers ready Apple Watch apps

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