In the United States and all over Europe the Pokémon Go phenomenon has become a potential business driver for local stores. Could this indicate the emergence – following on from the m-commerce era – of game-based commerce, i.e. the use of online gaming as a way of boosting local retail?

Pokémon Go: mobile gaming a boon for local retail?

Within just a few days, the app became the most downloaded of all time from the Apple Store, currently boasting more daily users than Twitter, and higher engagement than Facebook. Pokémon Go has beaten all the records. Nintendo, which was generally regarded as a company in decline, has now, thanks to the Pokémon Go phenomenon, seen the fastest rise in stock market valuation in the history of capitalism (although the share price began to plummet again after Nintendo clarified that it owned only 32% of the Pokémon Company). Nevertheless, small traders seem well-placed to cash in on the Pokémon surge and attract customers to their stores. Not for the first time it is the retailers of startup Mecca San Francisco that are leading the way. San Francisco, with its tech-friendly inhabitants and tech-friendly local traders, was one of the first cities to see Pokémon Go played extensively, earning itself the nickname Pokéville.

Using Pokémon Go to entice customers into bricks-and-mortar stores

The principle of the game is that players are encouraged to walk the streets of their city using their smartphone GPS and camera to ‘catch’ Pokémons. More interestingly for business, the game transforms certain venues, such as retail stores, into ‘gyms’ – training centres for Pokémon hunters – or ‘Pokéstops’ – places of interest where Pokémon hunters can pick up game accessories, mainly the Poké Balls needed to catch the little virtual reality monsters. This is the ideal lure for enticing players into stores…and converting the visit into a purchase. Some stores even insist that ‘their’ Pokémons are reserved for their paying customers.

The Pokémon Company and Niantic Labs, which developed Pokémon Go, devised the system whereby stores have to pay for the lures that bring the little monsters – and the paying customers –  to their premises.  One could also envisage other monetisation solutions, such as augmented reality advertising or sponsored Pokéstops.

Pokémon Go also targeting recommendation platforms

Yelp is another example of how the game can be used to serve commercial aims. This platform for crowd-sourced reviews and recommendations on stores and places of interest enjoys enormous influence:  90% of Yelp users say positive reviews encourage them to make purchases. Yelp is now offering to filter its search results according to ‘Pokéstop Nearby’, a move which should encourage local businesses to install the lures that attract the monsters – and so lure the hunters who are potential customers as well.

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Telco battles

On the back of this phenomenon, US telecoms operator Sprint has launched a guerrilla marketing campaign across the States. The telco invites customers to visit local Sprint retail stores, where special deals are available. In addition to equipping the stores as Pokéstops where customers can pick up Poké Balls, the company will allow hunters – who require a lot of power to track and catch the monsters – to charge up their smartphones free of charge and talk to Pokémon experts on the spot.  

This also provides opportunities for the telco to offer the players special price deals for using unlimited amounts of data and the Sprint stores will also be making the hunters a special Pokémon Go offer of an external battery at half price. This is a good example of a business understanding customer needs and responding with the right offers. The Sprint campaign is clearly a reaction to rival telecoms operator T-Mobile’s recent announcement that its US customers will be able to play Pokémon Go for a year without any of the data counting towards their monthly plans. 

This, without any particularly revolutionary technologies – after all, augmented reality and geo-located games have been around for years – Pokémon Go has succeeded where Foursquare failed, i.e. it has managed to gamify the in-store experience, offering bricks-and-mortar traders a digital tech-based opportunity to attract customers. However, this current success is at least partly down to the nostalgic feelings of those Millennial gaming fans who have now become adults.

Strategically, Pokémon Go takes the opposite approach to Second Life-type platforms, which count on selling stuff inside a parallel universe. And Pokémon Go has demonstrated that augmenting reality through digital technology can offer a whole new dimension to bricks-and-mortar retailing. It remains to be seen whether the Pokémon Go craze will last. But whatever happens going forward, this is an opportunity that all traders looking to differentiate themselves, show their taste for innovation and stay in touch with young customers, should not fail to seize.

By Arnaud AUGER
Senior Strategic Analyst, Head of Media Atelier North America