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Aisle by Aisle, an App That Pushes Bargains

It’s like the most persistent sales clerk you’ve ever encountered.

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Major retailers are working with a new smartphone application that tracks and offers promotions to shoppers as they move from outside the store, to counters, to cash registers—even inside the dressing room (now that’s persistence).

The app, called Shopkick, will be available on Tuesday for the iPhone and in the fall for Android phones. And with five major companies supporting it—Macy’s, Best Buy, Sportsand American Eagle Outfitters, along with the Simon Property Group, the prominent mall operator — it is getting a big introduction.

Customers with the Shopkick app will get points (called kickbucks) for entering a store. Pick up a putter at Sports Authority, and points drop into the app. Stop in the dressing room at American Eagle, and more points arrive.

The points are redeemable for gift cards at the retailers, along with music downloads or credits toward Facebook games. It takes a lot of points, however, to earn even a $5 gift card, although the stores say they may adjust the point system to make points more valuable.

"Will it lift sales? That remains to be seen, but everyone is eager to experiment." -Forrester Research, Sucharita Mulpuru

Whether shoppers will get a kick, so to speak, out of being followed — and pinged from one floor of a store to the next — remains debatable. What retailers see as sophisticated marketing, privacy advocates see as intrusive. Shopkick knows “where you are, what you buy, your spending habits, passions, excesses,” Jeffrey Chester, the executive director of the Center for Digital Democracy, said via e-mail.

Unlike apps like Foursquare, Shopkick tells retailers when users are inside, not just near, a store.

“That’s unusual,” said Sucharita Mulpuru, an analyst with Forrester Research. “Will it lift sales? That remains to be seen, but everyone is eager to experiment.”

The app lets stores “influence their behavior,” said Mikael Thygesen, who is the chief marketing officer at the Simon Property Group and the president of its Simon Brand Ventures division. Simon, along with the other companies using Shopkick, will install it in stores in and around New York City, San Francisco and Los Angeles initially, with Chicago to follow next week.

Before introducing Shopkick, the company’s co-founder and chief executive, Cyriac Roeding, tested how willing consumers would be to “check in” to a location in exchange for a reward — in that case, money for charities. That app, called CauseWorld, was introduced in December 2009 and was downloaded more than 550,000 times in its first five months, with almost $1 million going to charities so far. Ms. Mulpuru called it “a success story of the retail-app world.”

Shopkick goes further.

On Monday, Mr. Roeding stood on a slim strip of sidewalk on 46th Street in Manhattan, trying to avoid Times Square tourists as he demonstrated the app. As he stood a few yards from the entrance to an American Eagle Outfittersstore, the app showed him all the nearby stores where he could check in—including American Eagle or the tiny candy store nearby. For each check-in — which did not require him to actually go inside — he could receive 0 to 2 points.

That was fine, but “foot traffic is so important,” Mr. Roeding said. “Why does no one ever reward anyone for visiting a store?” By actually going inside the American Eagle store, the app told him, he could earn 35 kickbucks. The app knows someone is in a store by listening for an audio transmitter placed in each participating store; the phone’s microphone picks up the signal, which people cannot hear.

Once inside, Mr. Roeding swiped through offers: a 15 percent discount, a sale on jeans. Enter a dressing room — once a shopper tries on clothes, sales rise, retailers know — and posters on the walls offer points for scanning the bar code.

“It’s the first reward programs for desired behaviors,” Mr. Roeding said.

Shopkick earns a small fee for each kickbuck a customer earns. If a customer buys something after using the app, Shopkick gets a percentage of the price.

Right now, it takes a lot of kickbucks to earn anything — a $5 gift card at American Eagle requires 1,250 kickbucks. And retailers limit the number of eligible visits each day, so someone cannot sprint in and out of Best Buy all afternoon.

Soon, the retailers say, they hope to become more sophisticated, giving points or promoting items based on sex or age, where people live, how frequently they shop or their buying history.

The companies can even weave in rewards-card numbers, as Best Buy is already doing. With that, “we have the ability to target down to even an individual level,” said Mike Dupuis, the vice president for marketing and operations at American Eagle Outfitters Direct, the Web and mobile division of American Eagle.

Privacy advocates like Mr. Chester said that was problematic, especially given how that data could be combined with other available information about consumers, and that Shopkick’s privacy policy was too broad.

“What appears to be a relatively harmless trade-off of your information for rewards or discounts is really misleading,” he said.

Mr. Roeding said he believed that because consumers had to turn on the app, the privacy problems were minimal. “The device does not detect your phone, the phone detects your device,” he said.

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