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Are mobile price comparison apps a threat to retailers?

Smartphone usage is increasing rapidly. Nowadays consumers can scan bar codes to not only get additional information about a product, but also check to see who is selling it for cheaper.

“Retailers should assume that half of the consumers that walk into their stores have a smartphone in their pocket,” said Andrew Paradise, CEO of AisleBuyer, Boston.

“As we all know, with these devices, customers have all of the power of the Internet at their fingertips to enable them to shop smarter,” he said. “With the competition’s prices literally one click or bar code scan away, retailers need to proactively offer a mobile shopping experience of their own that engages consumers when they are in store.

“The best way to do this is through an application that delivers differentiated levels of service.”

Mobile effect
If consumers are driven solely by price, comparison shopping apps pose a true threat to losing the sale.

The risk is that bricks-and-mortar retailers become showrooms for online retailers.

Retailers need to be proactive about providing a more personalized shopping experience to stave off online competition.

“This is why you now see technologies like mobile self-checkout and tablet-wielding store clerks in the bricks-and-mortar environment,” Mr. Paradise said. “The key to better service is knowledge and convenience which online retailers have used to their advantage.

“If bricks-and-mortar retailers have the same access to data as online retailers, coupled with the ability to provide immediate gratification then they have the opportunity to provide a superior value add for the consumer versus their online counterparts,” he said.

“Retailers that do not take comparison shopping apps seriously may restate their earnings come January.  If this happens, expect the number of retailers offering an app to double for the 2012 holiday season.”

Price comparisons
According to a recent Deloitte study, this holiday season 59 percent of smartphone owners plan to use their devices for holiday shopping to compare product prices.

According to the company, there is a new holiday shopping tradition – smartphones and social networks.

Smartphone devices continue to grow and prove to be essential tools for holiday shopping.

“Mobile allows consumers easy access to a broad set of prices,” said Kasey Lobaugh, director of consumer and multichannel retail offering at Deloitte, Kansas City, MI.   

“Where as in the past, retailers had the benefit of limited information for the consumer playing in their favor, especially once a consumer was in their store, now consumers have easy access to prices, that are not limited by geographic location,” she said. 

“This is done through an every growing array of mobile applications focused on bar code scanning, QR code scanning or price comparison search engines.”

Mobile price comparison is a growing challenge for retailers who have different geographic pricing within their brand, or different pricing between their online and store channels.  

Additionally, it is a challenge because store-based retailers have to compete with the lower cost-structure of pure play retailers.   

“Retailers are having to come to grips with price transparency and focus on ways to add value so secure sales,” Ms. Lobaugh said. 

“Otherwise it becomes a race to zero as retailers try to compete for the lowest price,” she said. “With the Internet, it seems there is always someone willing to take a loss on a product for volume.”

Consumer spend
This holiday season price-sensitive consumers and increasingly connected consumers will look to maximize their dollar.  

“Stores haven’t typically had to compete against some of the more aggressive online retailers – like Amazon,” said Nikki Baird, managing partner at Retail Systems Research, Miami.

“Consumer mobile is changing that drastically,” she said. “And stores have a much different cost structure than online, so it’s very tough for a store to price-match against online prices – and there are lots of questions about which price they’re matching against.

“Does it include shipping? Sales tax? It’s tough for stores to easily have access to all of that information in order to make an informed decision about whether to price-match against online at all.”

Final Take
Rimma Kats is staff reporter on Mobile Commerce Daily, New York