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Cellphones Let Shoppers Point, Click and Purchase

Published: Saturday, 27 Feb 2010 | 4:09 PM ET

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By: Stephanie Rosenbloom
The New York Times

Shoppers will soon be able to stand outside the designer Norma Kamali’s boutique in Manhattan, point a phone at merchandise in the window and buy it — even late at night when the store is closed.

ScanBuy
A close-up of a Scan-Life barcode.

Ms. Kamali is at the forefront of a technological transformation coming to many of the nation’s retailers. They are determined to strengthen the link between their physical stores and the Web, and to use technology to make shopping easier for consumers and more lucrative for themselves.

The main way they plan to do it is by turning people’s mobile phones into information displays and ordering devices. Can’t find the flour at the grocery store? Grocers will offer phone applications that tell shoppers exactly where to go. Is the department store out of size 8 jeans? Retailers want to make it simple to punch a couple of buttons and have the desired size shipped home.

Some supermarkets intend to offer real-time coupons while people shop. For example, a promotion for milk may be sent to a shopper’s mobile phone the moment her cart rolls into the dairy aisle. Drugstores will offer loyalty programs on cellphones, not on plastic cards. And specialty chains will allow shoppers to breeze through the aisles compiling a wedding registry, just by pointing at merchandise.

It remains to be seen how readily shoppers will embrace such aggressive merchandising, which will generally require them to download free applications onto their phones and consent to being tracked electronically while in a store. But many stores are betting they will go along. After all, people already wander city streets guided by maps on their mobile phones. Why shouldn’t the same technology lead them to the toilet paper in Aisle 3?

Hoping to use the technology as a competitive advantage, some big chains are reluctant to discuss their plans. The Sam’s Club division of Wal-Mart [WMT Loading... () ], Crate & Barrel, Kerr Drug of North Carolina and Disney stores are among the retailers that confirmed they were testing various mobile technology or planned to do so soon.

Technology companies behind the products say retailers are sniffing around, with some planning limited introductions this year and wider deployments in 2011 or 2012.

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Other retailers have begun testing a product from I.B.M. [IBM Loading... () ] called Presence. Shoppers who sign up can be detected as soon as they set foot in a store. That enables Presence to offer real-time mobile coupons. And tracking shoppers’ spending habits and browsing time in various departments can help the system figure out who might be moved to suddenly buy a discounted item.

Presence can also make product recommendations. If a shopper was buying cake mix, Presence might suggest buying the store’s private-label frosting and sprinkles, too.

“We’re also able to do predictive analytics — predict what we think you might want based on what we already know about you,” said Craig W. Stevenson, an I.B.M. executive who oversees Presence.

Cisco Systems [CSCO Loading... () ], the supplier of networking equipment and services for the Internet, is also a leader in the field. The company’s Mobile Concierge system is capable of connecting customers’ smartphones to retailers’ wireless networks — so a shopper could type “Cheez Whiz” into a cellphone, then pinpoint its location in the store.

“We see the smartphone being used more and more in the shopping experience,” said Dick Cantwell, Cisco’s vice president for retail at Cisco’s Internet business solutions group.

Beyond privacy worries, retailers recognize other potential pitfalls. If the phone applications freeze or give bad information, they will most likely frustrate consumers. So reliability will be a priority, a reason retailers are starting with limited tests. And as some executives said, many stores cannot yet afford such technology.

As the more daring retailers see it, the potential benefits outweigh the risks. More aggressive profiling of shoppers — along with a novel, entertaining shopping experience — could help increase sales. And the technology may help retailers save money by cutting workers, essentially substituting electronic guidance for store clerks. Motorola [MOT Loading... () ], for example, has stores testing kiosk systems that enable consumers to summon a clerk to a particular department or fitting room when needed.

A new Motorola product promises to eliminate loyalty cards, instead putting the program, as well as coupons, onto shoppers’ cellphones. “Probably by the end of 2010 we’ll have 10 to 20 retailers up and running,” said Frank Riso, a senior director at Motorola, adding that most of the activity will begin in 2011.

Many big retailers have already created cellphone applications that do more than just dole out coupons. Target [TGT Loading... () ], for one, has an application that can identify which store aisle sells nightgowns.

So far, many stores have focused on improving their mobile shopping sites, which some consumers use when browsing the aisles to see product reviews and specifications. Retailers like Sears [SHLD Loading... () ] and American Eagle Outfitters [AEO Loading... () ]work with a company called Usablenet to optimize their mobile sites.

Jason Taylor, Usablenet’s vice president for mobile products, said retailers began clamoring for improvements around Thanksgiving. The company is also working with a retailer, which it said it could not name, to enable shoppers to use smartphones to scan items in its stores, then add them to gift registries.

“Extending the phone to use as a scanner in the retail world — especially gift registry, wish lists — you’re going to see a lot more of this year,” Mr. Taylor said.

In the end, though, stores may not have much control over the way consumers use mobile technology.

Some shoppers are already outwitting retailers, using mobile applications like RedLaser to compare prices in a physical store to those on the Web. (Such applications scan product bar codes through a cellphone’s camera.)

Ben Aldern, 20, of Berkeley, Calif., went to Target recently to shop for headphones. “I was ready to spend whatever I needed,” he said, but on a hunch, he fired up RedLaser — and found the same model for less at Amazon [AMZN Loading... () ], the online merchant.