Pokémon Go Is a Go for Retailers

Thursday, July 21, 2016

You’d have to be living under a Snorlax to not have heard about Pokémon Go, the augmented reality game played via an app that has taken the country by storm.

Since premiering on July 6 in the United States, Australia and New Zealand, the game has become a full-fledged craze, drawing more than 15 million U.S. players of all ages out of their homes and into their communities to hunt and capture virtual creatures. It took just four days to become the No. 1 free app in the U.S. Apple Store. Some retailers have taken notice of the game’s meteoric rise in popularity and are using the game to lure (literally) customers into stores.

What is Pokémon Go?

Pokémon (short for the Japanese phrase for “pocket monsters,” Pokétto Monsut), was developed in the late 90s as a video game. Since then, Pokémon has birthed an animated television series, 19 animated movies, trading card games, books and merchandise like toys, cell phone cases, apparel and home décor.

Developed by Niantic, Inc. (formerly Niantic Labs), the app is free to download for both iOS and Android devices, but, according to Quartz, about five percent of iOS players pay for in-app purchase, amounting to approximately $1.6 million each day from U.S. players in revenue for its developer and partners, Nintendo and The Pokémon Company. Fortune reports Nintendo trading accounted for almost a quarter of all trading on the Tokyo Stock Exchange and that “shares ended Tuesday, July 19, up 14.4 percent at 31,770 yen, bringing its gains to more than 100 percent since the launch.”

Still unsure what Pokémon Go even is? For more information on how to play the game, watch this video: 

Augmented Realty and Retail

Retailers are using the game to increase foot traffic and sales in their businesses, capitalizing on increased migration to places like downtowns, parks, malls, cultural centers and office buildings. For those who operate near a PokéStop, one of two fixed locations within the game that is usually at a landmark or well-known location, the retailer can use the lure module via an in-app purchase. A lure module, or simply, lure, baits a number of Pokémon characters to the PokéStop for half an hour, which also draws Pokémon Go players. Within the game, a player would see the flashing pink sign to know that this location will allow them to catch a large number of Pokémons. The hope is that the players will stay and spend money, something that has proven to work.

One such retailer used a lure to success. According to the New York Post, L’inizio Pizza Bar in Long Island City, Queens, purchased a $10 lure so that a dozen Pokémon characters appeared at the PokéStop near the restaurant. The store owner, Tom Lattanzio, reported business went up 75 percent based on the number of players the lure drew in.

CNBC proclaims that sales at GameStop locations named within the game as either a PokéStop or a Poké gym, the second of the fixed locations within the game and one where players battle each other to claim the gym for their team, were up 100 percent, resulting in an eight percent raise in GameStop stock.

Over the weekend, frequent adapter of retail and technology designer Rebecca Minkoff advertised that her Soho store would be dropping lures throughout this past weekend and offering discounts to players. Sprint also rolled out lures this past weekend at its stores and Boost Mobile shops, turning them into PokéStops. They also advertised on-staff Pokémon experts and free charging stations, since one of the negative aspects of the game is the drain on smartphone batteries.

Instead of using lures, some businesses are advertising specials for Pokémon Go players who use their services. As part of its weekly “T-Mobile Tuesday” program, over the next four Tuesdays beginning July 19, T-Mobile will offer a special deal one has to claim that will grant T-Mobile customers the ability to play Pokemon Go with unlimited data for one year. Additionally, T-Mobile sold a Pokémon Go “care package,” including a free Wendy’s Frosty, 50 percent off portable battery power packs and other accessory deals and $15 worth of free Lyft rides to help users to reach new destinations to “catch 'em all.” Participating customers will be eligible to win $100 in PokéCoins, and five people will win a Pokémon Go hunting trip anywhere in the U.S. for themselves and a guest.

Small businesses are advertising specials for Pokémon players where you get a percentage off for taking control of a nearby gym or for catching a monster at the location (usually photographic proof required for the later). Community publications are often advertising these specials.

According to MarketWatch, Pokémon Go has the ability to “save the shopping mall” as a significant traffic driver since the game is showing up in popular mall stores like Sephora, Forever 21, Macy's, Nordstrom and H&M, bringing droves of potential new customers with it.  

When asked his thoughts regarding the Pokémon craze and how it ties into consumer traffic at malls, HFF Director CJ Osbrink of HFF's West Coast Retail Team said: "It comes of no surprise that retailers and restaurants are capitalizing on the latest viral craze, Pokémon Go. Today, more than ever, retailers are constantly searching for the best way to bridge the gap between e-commerce and brick-and-mortar shopping. Pokémon Go seems to be the latest strategy to integrate mobile apps into increased traffic and sales volumes."

Getting Out and About to “Catch ‘em All”

Cultural attractions are getting in on the game as well. The Museum of Contemporary Art of Los Angeles offered discounts for general admission, and the Science Museum of Virginia offered a free family membership to the museum for the person who caught the most Pokémon last Friday evening during their monthly Science after Dark event. Bloomberg reports that museums across the country are seeing a dramatic uptake in admission over the last two weeks; Crystal Bridges in Bentonville, Arkansas, saw a spike of 30 percent more visitors after promoting Pokémon characters on the grounds in a blog post and on Instagram, and McNay Art Museum in San Antonio reported a 50 percent bump in visitation.

Events are popping up all over the country in relation to the Pokémon Go trend. In Las Vegas, 98.5 KLUC radio station is hosting a Poké Pub Crawl on July 22 in Town Square, and Rogue Toys and Zappos.com is hosting a Pokémon Go mini-con called Las Vegas Fandom Friday on July 29. The free event will host vendors and activities and organize a Pokémon Go hunt. Adventure walks in parks are popping up in places like New York City and Brisbane, Australia.

The Future: Sponsored Locations

According to NPR, Pokémon Go will roll out “sponsored locations.” This will increase the options for retailers, as they can turn their physical location into a PokéStop or a gym.

The sponsored locations revolution may have already started without anyone knowing. Gizmodo claims that players have found evidence within the game code of a sponsorship deal between Pokémon Go and McDonalds. Details of the leaked deal include every McDonalds in an unnamed Asian country will either be a PokéStop or a gym.

Fortune reports that, instead of the usual social media advertisement of pay per click, it would be pay for game player visit.

Bandwagon or Bust?

In the United States, Pokémon Go has hit viral status, quickly surpassing Twitter’s daily users and becoming the biggest U.S. mobile game in history, beating Candy Crush Saga, the previous record holder. SensorTower states that mobile users spend more time on the Pokémon Go app than they do on Facebook.

Currently available in about 30 countries, global roll out to approximately 200 countries is in Pokémon Go’s future, and, if its popularity in the U.S. is any indication, Pokémon Go will grow into a global phenomenon with virtual critters – and players – heading to the Roman Coliseum, Great Wall of China, Eiffel Tower and Pyramids in addition to cafés, parks, museums and shopping malls all around the world because players “gotta catch ‘em all!” But will it last?

"Landlords and retailers alike are always looking for creative ways to bring in customers," said HFF Associate Director Danny Reddin of HFF's San Francisco office. "I think it’s great that Pokémon Go has brought an immediate positive impact to tenant sales, but the way the app world works, it seems unlikely that Pokémon Go will be able to provide a long-term impact to sales and customer trips. My takeaway from this craze is how creating unique and engaging experiences through mobile apps can attract new customers, so I’m sure even if Pokémon Go isn’t around in 10 years, app developers, landlords and retailers will be working in lockstep to find ways to connect virtual reality with tangible experiences."

By Kimberly Steele, HFF PR Coordinator

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