The auto parts supply store chain is using mobile wallet offers to prime the pump for Apple Pay mobile payments in-store, which it hopes to launch in 2015.

Pep Boys, the auto parts supply store chain founded in 1921, began 2014 with only a desktop presence, says Ron Stoupa, chief marketing officer. But consumers were demanding something else. More than 50% of visits to the Pep Boys web site currently come from mobile devices, and 58% of those reach the site after searching for “oil change” via a mobile Google search.

So the 93-year-old company made some big changes. And now, at the end of 2014, Pep Boys is mobile-first, Stoupa says.

One of the ways Pep Boys has stepped into the mobile commerce arena is by working with mobile marketing firm Vibes to incorporate promotions in Apple’s Passbook app. The Passbook app is Apple’s mobile wallet app; it’s included on every iPhone and is used to store coupons and tickets as well as to deliver Apple Pay, Apple’s new mobile payments service which consumers can use to pay for goods at participating stores as well as in participating mobile commerce apps. 

But retailers don’t need to accept Apple Pay to have a presence in Apple Passbook, as Pep Boys proves. In April 2014, Pep Boys began adding coupons and promotions to the app. Consumers can add coupons to their own Passbook apps and redeem them in-store. Pep Boys just has to scan the unique bar code on the offer; accepting these coupons requires no additional technology at the checkout counter—or from shoppers. To accept Apple Pay, on the other hand, retailers must have point-of-sale terminals that use Near Field Communication, a short-range wireless technology that allows mobile phones to communicate with payment terminals. To use Apple Pay, consumers must have an iPhone 6 with NFC capabilities.

Pep Boys’ campaigns have been successful, Stoupa says. Of the consumers who viewed a Pep Boys offer on their iPhones, 26% of them add the offer to their Passbook app. And 30% of consumers who added a mobile offer—both in Passbook and Google Wallet—eventually redeemed it in-store. Only 0.8% of consumers who added an offer to their mobile wallet eventually deleted it without using it.

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The Passbook app also allows Pep Boys to send customers push notifications, target shoppers based on GPS location, and send updates to consumers to offer additional content—as long as those consumers have a Pep Boys offer added to their wallet. Push notifications are messages that appear on a mobile device screen whether a consumer has the related app open or not. Push notifications can alert shoppers to sales or send them promotions when they are close to a physical store.

Getting consumers used to pulling out their smartphones to redeem coupons in-store allows Pep Boys to prime the pump, so to speak, for when the retailer integrates Apple Pay—which it hopes to do in 2015.

Overall, Vibes has seen a 1,400% increase in consumers adding Passbook offers across its 300 retail clients in the past year—and that has only increased since the Apple Pay announcement, Vibes says. On average, 70% of consumers that view an offer will save it to their mobile wallets, says Jack Philbin, CEO and co-founder of Vibes. And mobile wallet offers have a 64% higher conversion rate than mobile web coupons, though he didn’t specify the exact conversion rate. Philbin also says consumers spend 26% more when they redeem a mobile wallet offer than when redeeming a paper or web coupon.

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