Four months after acquiring the e-commerce business of buy2, Azrieli Group Ltd. (TASE: AZRG) is taking another step towards expanding its activity in the digital arena. The group today launched the Azrieli app, in which the group says it invested NIS 2 million.
The app is designed first and foremost as a tool for increasing customer loyalty and movement of customers in Azrieli shopping malls in order to distinguish the Azrieli brand name and gain an advantage over Melisron Ltd. (TASE: MLSR) and other competing malls. As Azrieli chairperson and controlling shareholder Danna Azrieli put it, "We want to create a situation in which our stores are the most successful."
The group also intends, however, to use the platform for more diverse and broader purposes, some of which will constitute a growth engine for the group, and no less important, will also constitute activity that is synergetic to the new e-commerce site that the group plans to launch in the coming weeks, which is slated to replace the buy2 website.
As part of this, the Azrieli group intends to turn the app into an e-wallet, making the group in effect a clearance company earning clearance fees, facilitating restaurant orders, and make it possible to offer customers of the shopping malls vacation packages, and even cars.
Target: 100,000 downloads
What this actually amounts to is Big Brother, Azrieli style. Without using navigational software, downloaders of the app will be identified as soon as they reach the area of the Azrieli malls, and the app will offer them discount coupons for the various chains operating in the mall.
Up until now, several dozen chains have announced that they will take part in this activity. In this way, the group is seeking to generate a preference for shopping in Azrieli malls over other malls. If successful, chains in the future are likely to pay for it through higher rents in the Azrieli malls, as Azrieli management confirmed in answer to a question from "Globes."
As long as competing shopping malls have no similar platform, the retail chains wanting to increase traffic in their stores have an interest in offering special discount coupons for Azrieli. The idea is to make things as personalized as possible, which is indeed likely to also help the chains in local bargain campaigns, without having to conduct a nationwide campaign, and in eliminating individual concentrations of inventory.
If the Melisron group, for example, launches a similar app in the future, the Azrieli group will lose at least some of its advantage.
Azrieli has set itself a target of at least 100,000 downloads in the first year. The group provides an incentive for downloading the app by granting a 50% discount in its shopping malls. The group also awards a gift in order to encourage downloaders of the app to respond to personal questionnaires that will enable it to collect widespread information about visitors to its malls, and will use the information for direct marketing.
"Globes": Is this the Azrieli version of Big Brother?
Danna Azrieli: "Absolutely not. On the contrary, I think that with the launching of this app, we're reached a stage in which we're creating an experience for each customer in each store that will only add value for everyone."
Nevertheless, you will know exactly when I enter your mall and when I enter competing malls.
"I won't know when you enter a competing mall, and if we know when you enter our malls, it's because you approved us knowing. Without your go-ahead, we won't know, and with this go-ahead, we can send you things specially fitted to you. We'll create value for you and tools for your entire shopping experience."
Say that I am now in a Ramat Aviv mall. What value will you create for me to make me jump to the Azrieli mall in Tel Aviv or the Ayalon mall in Ramat Gan?
"I'm not talking about the competition. I can only say that our app has coupons that give discounts on the site on the same day that no other mall has. It's special for people using the Azrieli group's app. In addition, through the app, you'll get a discount on parking, and if you agree, personalization of the app will give you added value."
The businesses pay for the benefits
Azrieli Malls CEO Arnon Toren says, "The app is a very big advantage for us. It brings innovation that no other shopping malls group has, and this advantage will bring us more satisfied customers. I believe that there will also be more traffic."
The app is a great platform, and so tomorrow, you can put on it anything you want, and perhaps sell, for example, vacation packages to those visiting Azrieli malls.
"Absolutely right. We can put anything on it that will bring value to our customers, and vacation packages are a very big value, as are also cars. Above all, we'll offer the entire content of the mall, but in the future, the sky's the limit."
Who will pay for the benefits in buying vacation packages or cars?
"Most of the benefits in the app are paid for by the businesses and the chains. If we have vacation packages tomorrow, I assume that it will be financed by the same party that is offering the vacation packages, but it could also be that we as a group will want to offer value to our customers or users of the app in the form of those same vacation packages. The main purpose of the app is to be a sales and marketing tool. In the near future, in early 2017, the app will also become a means of payment, and we'll be the clearance ones doing the clearance, of course."
Toren adds, "The app will also be a special tool for ordering restaurant meals in all the malls for people working in the malls and the office towers. With an easy click, you can see all the menus, all the restaurants, and all the bargains there are for that day. You order, get a meal in your office or in a restaurant, and use the app to pay for it."
Even if I'm in the nearby building, not inside the mall?
"Sure. If you have the app, you can also order food from home."
If that is the case, then you are competing directly with other apps in the sector, such as 2eat.
"We have an interest in also becoming competitors of these apps, with one major difference - I have no intention here of profiting from the fact that I'm providing the service, other than providing the service."
In the end, will you make a profit from higher rents?
"Assuming that the businesses work better, the answer is yes."
Published by Globes [online], Israel business news - www.globes-online.com - on August 23, 2016
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