TECHCITYINSIDER100: Former merchant banker Brad Liebmann is striving to boost the flagging independent retail market with a new loyalty card – that is only available on your mobile. Interview by Michael Pickard
As the UK economy falters, the outlook for high streets across the country is bleak. And, while an increasing number of shops are boarded up, it seems that only chain stores and out-of-town malls are attracting custom as shoppers spend more and more time shopping online.
Sales over the internet accounted for a total spend of £68.2bn in 2011, which makes the UK the largest e-retail economy in Europe, according to IMRG, the industry association for e-retail. Furthermore, the UK e-retail market grew by 16% last year and it is forecast to expand by a further 13% in 2012, while e-retail now accounts for 17% of total retail sales in the UK.
Geocast, a Tech City start-up based in Hoxton, is in business to help independent retailers across London drum up new business while also helping shoppers to save money. Its CEO and founder is former merchant banker Brad Liebmann.
Last month, Liebmann launched Shoparazzi, a mobile phone app that serves as a loyalty card, offering members 15% off in selected stores across the capital that is redeemable when visiting the shop in person. A physical card will not be provided, though members can print one from the Shoparazzi.com website.
There are already about 50 retailers signed up to the scheme, with “several thousand” customers joining as well.
“Imagine if the grocery world was filled with small independent grocers, we would be a loyalty card for them,” says Liebmann. “These retailers are small enough that they generally don’t have very well-developed online strategies, and we see bricks and mortar stores being able to benefit from the shift from desktop to mobile devices.
“Mobile is going to be an important channel and it should account for half of how people use the web pretty soon. When you’ve got a device in your pocket, the use case is very different. It goes from where can I find the best deal to where should I go shop now. We interact with people to help them guide them and create footfall for these bricks and mortar merchants.”
Geocast is an offshoot of Xbridge, the online insurance broker for small businesses that Liebmann founded in 2000. Before that, he worked for Lehman Brothers, a job that split his time between London and New York.
Geocast has more than 10,000 clients as part of its local advertising network, offering location-based adverts to partners including Ask Jeeves and Touch Local.
And it was after spotting the growth in mobile that Liebmann spotted the next stage of the company’s evolution.
“It was quite obvious a while back that mobile would be the next wave,” he says. “For Geocast we wanted to focus on mobile and create interesting models.
“Mobile is the one device that people no longer leave the home without. What’s more important, your mobile or your wallet? Most people would probably choose their mobile because they don’t want to be out of touch. Whereas they might be able to do without some cash for a couple of hours. What we’re doing is trying to make that device as useful as possible.”
Shoparazzi offers potential members a one-month free trial, after which they can sign up for £5 per month or £48 for a year. As well as the 15% general discount, they are also invited to occasional 50% discount “flash sales”.
Retailers involved in the scheme include Blitz London, a vintage clothing store in Shoreditch, and Revival Retro in the West End’s Carnaby Street. It is free for shops to join.
“There’s a really nice range of stores but the common thing they have is they offer their customers a world class experience,” says Liebmann. “We focused on a lot of cool labels that you can’t get anywhere else. A lot of these merchants like Super Superficial have their own labels so the owners are also a clothing designer. You can wear stuff nobody else is wearing.
“The criteria [for retailers] is would you recommend this to a friend? If it’s a type of store you’d recommend to a friend, they’re appropriate for the Shoparazzi card.”
Beyond attracting more members and a wider range of retailers in London, Geocast’s next move is to expand into new cities, whether elsewhere in the UK or internationally.
“We’re very much focused on London right now because it has so many great shopping experiences, particularly around clothing,” says Liebmann. “Once we grow up a little bit, then we’ll decide whether we go to the rest of the UK or another city comparable to London.”
Geocast is also involved in coupon redemption schemes for third party businesses such as pub chain Wetherspoons, where it oversees the management of discount vouchers customers can use to buy cheap drinks.
“We have some technology for authenticating voucher redemption,” explains Liebmann. “Wetherspoons have vouchers for Bacardi and Coke, and each time you do that, Bacardi has to reimburse Wetherspoons for that voucher. So we tell them how many vouchers were redeemed, where they were redeemed, and what time were they redeemed.”
The company was formed off the back of Xbridge’s success and employs a staff of six operating from its Hoxton base. “We’ve got a great team, we’re not hiring at the moment and we’re very happy,” says Liebmann. “Once we move outside of London, we’ll need to hire but we’ll always be very lean. I don’t see us ever being more than tens of people, that’s not the way we’re designed.”
So as online shopping continues to grow, why did Geocast want to take its business to the high street?
Liebmann compares the retail market to the film business, stating that cinemas continue to be popular despite the opportunities to download movies in your own home, and thinks the same applies to shopping.
“People just enjoy the experience,” he says. “Shops aren’t going to go away but we’re helping to connect these mobile devices, people and really cool places to shop.
“Mobile is not for every business. It depends on what your product or service is. For Xbridge, mobile is not that important, whereas for finding great stores to shop at, mobile is much more important because people like to use it while they’re out and about.
“Bricks and mortar retailers should be embracing mobile with a vengeance. The big ones have very myopic strategies. They’ll have a mobile app that is just a mini-version of their e-commerce site. If you’re out and about, do you really want a cut-down version of their site or do you want quick information about where’s your nearest store, what are the opening hours, do you stock a particular item? Those are the things people want to know and a lot of retailers are forgetting why people are on mobile devices and they’re building apps without really thinking it through or building apps without really needing them where perhaps having a mobile friendly website would be more useful than having an app.”
With mobile-only becoming a viable business platform with the take-up of smartphones in the last few years, there was an element of risk in both ventures Geocast has launched.
But entrepreneurs “have to take risks”, says Liebmann. “Both of the businesses Geocast are in didn’t really exist last year so it’s really about pioneering new ways of doing things. There are always certain risks but also great opportunities.
He adds: “It’s a bit of a Wild West out there in the mobile space right now. People are trying new stuff and creating new commercial models that didn’t exist before and that’s challenging – but quite fun.”
Founder and CEO of Geocast, helping businesses generate footfall and loyalty through mobile devices.
Founder of Xbridge, an online insurance broker for small businesses.
Senior VP of technology mergers and acquisitions for Lehman Brothers.