NEW YORK (TheStreet) - Does mobile revenue really matter for retailers?
"Retailers love to talk about mobile - often tossing out huge year/year growth figures in sales and traffic," Wells Fargo Securities retail analysts wrote in a research note on Friday. "Of course this growth is off of a low base, but more importantly does mobile revenue really matter? Is it just a channel shift or is any of it incremental? Does it measure the true importance of mobile in the retail purchase path?"
While the mobile experience, i.e. customers using their tablets and smartphones for shopping purposes, will certainly be a tailwind for some retailers by "extending the desktop" and creating a more connected consumer, it may not be creating a "massive amount of incremental sales," the note says.
Mobile commerce was 13% of e-commerce sales last year, up from 9.3% in 2012, the analysts say, citing Internet Retailer and the Department of Commerce. Still that's just 1%-2% of total retail sales and "likely much less for most retailers," the analysts wrote.
"We believe mobile is much more important as a customer engagement tool for areas like product research, store and inventory look-up, and targeted local offers," the note says. "We believe retailers should spend less time talking about mobile revenue and more time talking about mobile engagement: mobile traffic, mobile app usage, tasks performed on mobile, and in store mobile usage."
So who's on the bandwagon and who's not?
Of the Wells Fargo Securities coverage list of retail stocks, 43 of the 62 companies have discussed mobile offerings in the past year. That leaves 19 companies that have not said anything about their mobile efforts, including: Ann Taylor (ANN), Burlington Stores (BURL), Five Below (FIVE), J.C. Penney (JCP) and Michael Kors (KORS) (the company's e-commerce business is run by Nieman Marcus).
"While most of these names are not surprising given their minimal e-commerce penetration (some don't even have e-commerce sites), we were surprised to hear no mention of mobile from JCP and ANN over the past year (perhaps they are keeping their initiatives tight-lipped)," the analysts said.
That said, some retail models lend themselves better to mobile while others don't.
"While we think a retailer's absolute mobile commerce sales are somewhat irrelevant, we find it interesting that some retailers are better positioned in mobile than others," the note stated.
"For example, AMZN and WMT are the largest and fourth largest mobile commerce retailers, respectively, according to Internet Retailer, consistent with their eCommerce rankings," the note says. "However, QVC ( (LINTA)) and [HSN] (HSNI) are ranked in the mobile top 10 (#3 and #9, respectively), higher than their eCommerce rankings (#5 and #26, respectively), which makes sense given the time sensitive nature of their sales. And then there are companies with a significantly higher eCommerce ranking vs. mobile include [Target] (TGT) (#18 vs. #36 in mobile), [Nordstrom] (JWN) (#28 vs. #56 in mobile), and [Gap] (GPS) (#19 vs. #55 in mobile)."
--Written by Laurie Kulikowski in New York.