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Meet the Enemy: Price Comparison Apps Featured

  • Written by  Mike Santos

By Tom Ryan, RetailWire

amazon_price_check_capAccording to a recent article in the Wall Street Journal, a growing number of consumers are using smart phones inside retail stores to compare prices in cyberspace,  "threatening to upend the business models of the biggest store chains in America."

The more than 2,000-word expose concluded that in-store mobile shopping will only steadily increase as more Americans purchase smart phones and as shopping applications become increasingly sophisticated. The article points to recent statistics from IDC Retail Insights, which showed that approximately 45% of customers with smart phones had used them to check on a store's prices. Also, Coremetrics found that consumers using mobile devices accounted for 5.6% of visits to retail web sites used on this year's Black Friday, up from just 0.1% in 2009.

But the article particularly focused on the many threats to retailers due to greater consumer visibility into the value of both deal and regular-priced goods.

redlaser_iphoneThrough a growing multitude of price comparison apps, consumers now have the ability to see whether "specials are really so special," the article stated. A cheaper price on any touted deal can quickly be spotted via a mobile device at an online or offline competitor. Moreover, the item can be purchased inside the store. Just as important, mobile phones provide easy access to pricing comparisons on regularly-priced goods; the items with higher-margins many retailers are betting consumers will scoop up while picking up the deals.

Particularly seen as vulnerable were retailers of branded, big-ticket items like electronics and appliances already seeing much of the action on price-comparison web sites. Some analysts attributed part of Best Buy's third-quarter shortfall to the growing popularity of price comparison apps. Retailers using every-day-low-pricing strategies, personified by Walmart, were also seen as facing new challenges.

"The whole notion of going to one place to buy everything in one fell swoop because you are sure of a total market-basket savings may go away," Leon Nicholas of consultancy Kantar Retail, told the Journal.

Finally, observers said that despite the higher brick & mortar costs, it will become more challenging to charge higher prices at retail than on web sites.

The article did note that there was no consensus yet on whether many shoppers will take time to comparison shop with their mobile devices in the future. It was also not known if the comparison-shopping would be largely reserved to high-ticket categories.

The experts on RetailWire’s BrainTrust panel agreed that price comparison is alive and well. “Price comparison apps are yet another example of the customer taking control of the shopping experience, similar to a recent panel discussion about blogs and social networking,” said Richard Seesel, Principal, Retailing in Focus LLC. “The technology certainly brings transparency to the pricing process that wasn't there before; plus, the customer doesn't have to drive across town for the lower price if there is a direct link to a web site (with free shipping). The merchandising implications are profound, with increased movement toward exclusive brands and models to avoid just this sort of ‘wrong price’ situation.”

Another panelist said most American shoppers will embrace price comparison via mobile devices, and retailers will react.Retailers will respond the way they always have and that is to adjust their pricing,” said David Livingston, Principal, DJL Research. “The days of ad matching will be over and all a customer will have to do to negotiate will be to show the store they can get the item at a lower price — so match it or beat it.”

The bottom line, one panelist noted, is that technology is definitely changing the way shoppers behave, as they are empowered with more powerful and convenient technology. I don't agree with some who believe that service and selection can offset these trends and that these considerations are greater than price,” said Charles Walsh, President, Omniquest.Price comparison apps negate the attributes of selection and quality since these are held equal in comparing same items using price as the qualifying factor. Once the best price has been established then the last factor mentioned, service, may come into play for the buyer.”

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