For some time, industry insiders have been touting the importance of virtual and augmented reality. However, this revolution and its associated conjectures of its influence on the industry has been slow to materialise. Pokémon Go marks a turning point in this school of thought, vindicating those who have been endorsing the use of technology in an industry which has been slow to react. In truth, this technological advancement will tangibly effect the strategies of shopping centres and retailers globally. This new form of engagement with consumers could be a boon for the industry, increasing opportunities for interaction with commercial space.
Pokémon Go, a closer look.
For those whom have managed to avoid the fanfare, Pokémon Go is a downloadable app from Android or from the Apple Store predicated on the legacy of Pokémon, a card trading and game boy game of the late 90’s and early 2000s, which has lived on in the hearts of millennials. The App allows users to catch Pokémon on their phones by lobbing ‘Pokéballs’ at superimposed sprites. This is the central theme of the app, the idea its self is not something which one would expect to be of much interest, instead it is the theme of ‘Go’ which makes this app as revolutionary.
It is the opportunities that stem from the user’s interaction with their external environment, outside the home. It marks an opportunity to capture consumers and wrestle market share from competitors. It is this external interaction which manifests itself in retail parlance as footfall which can be converted into consumption through the framework of the app.
Ready, Set, Go. How retailers catch ‘em all
We shall look at three aspects in detail, which are of importance to the industry. Pokéstops, Pokégyms and rare Pokémon are the core of what makes Pokémon Go important. These facets represent the capitalisation strategy of the game, however the positive externalities for the retail industry of this model are significant.
The main in game resource required is Pokéballs, without these miniature prisons, one cannot catch any pocket monsters. Thus, ensuring a healthy pantry full of Pokéballs is paramount to any serious trainer. These Pokéballs can be accumulated through three distinct ways: one can purchase the in game currency of Pokécoins; interact with ‘Pokéstops’ which can be mined for in game resources like Pokéballs among others and utilise Lure Modules for attraction of rare and desired Pokémon.
The game encourages users to catch more than one of every type of Pokémon. i.e. to improve one’s Pokémon combat capabilities one must accumulate both Pokémon Candy as well as Stardust which are used in tandem to level up Pokémon. This impacts one’s use of Pokéballs as these two resources are farmed from the capture of Pokémon. To capture a Pokémon, one receives both 100 Stardust and 3 Pokémon Candies (which are specific to species), thus this increases the incentive for a user to capture Pokémon, thus increasing consumption of Pokéballs.
Pokéstops provide the resources required to accumulate Pokémon, Candy and Stardust. These Pokéstops are important as they tend to be attached to commercial real estate. Those whom wish to advance their status as a ‘Pokémon master’ and wish to avoid buying the in game currency must interact extensively with the local environment, where the positive externalities to retailers are realised. Pokéstops will only yield their treasure when the user is standing approximate to the stop. This represents opportunities for retailers to target advertisement and capture discretionary expenditure resulting from this ‘Pokéfootfall’.
The same is true for Pokémon gyms, which give trainers an opportunity to fight each other at these Gyms to claim territory and experience. These Gyms are more scarce than Pokéstops which can lead to increased concentration of consumers, particularly around these areas rather than just ‘passing’ footfall for Pokéstops. This is significant as it may well be the case that as individuals battle in the gym, they go for a coffee at the local café and possibly remain to defend their territory.
A further way centres can take advantage of these ‘Pokéxternalities’ would be through Lure Modules and allocation of rare Pokémon. It has already been established that rare Pokémon attract large numbers of users to a specific location, with the catchment being larger than walking distance. An increase in the number of rare or desirable Pokémon will likely result in an increase in footfall of users, of course lack of academic study on this topic limits my conjecture but it follows intuitively. Thus, shopping centres and retailers retain an opportunity to exploit this craze by increasing the number of rare and desirable Pokémon at their locations. However, there is no way of guaranteeing the presence of a Charizard or Dragonite, however through Lure Modules, one can attract Pokémon of all types to a location. Lure Modules result in a significant uptick in the concentration of Pokémon in that area. Lure Modules can only be placed at Pokéstops meaning that retailers can increase their monopoly power over the consumption of Pokémon in the area through Lure Module Placement (LMP). If Nintendo allows for a scenario in which retailers can purchase specific Pokémon to be released at their location, both parties can benefit significantly (at least in the short term), however, specific values of each Pokémon are subjective and difficult to ascertain.
It is commonly accepted within the industry that retailers and shopping centres have failed to engage the Millennials and Generation Z. As explored above, the opportunities for the sector are significant; That is to say to engage consumers that are somewhat alienated and associate a retail brand with a well-recognised institution (at least in the minds of younger consumers) should be paramount. We have seen some adoption of this strategy, but in a sector which can be slow to engage with new technologies, this may take some time.