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Retailers try to lure holiday shoppers on social networks, smartphones

By Danielle Douglas and Steven Overly
Capital Business Staff Writers
Thursday, November 25, 2010; 12:07 AM

Tech-savvy parents can chuck Toys R Us's 100-plus-page holiday catalogue and download the iPad app this year. If they check into the store on Foursquare, they could save a little extra on a Moxie doll or Sing-a-ma-jig. And those who sign up for the mobile mailings can expect a few scannable coupons sent to their smartphones.

This holiday season, more retailers will try to reach wallets by way of consumers' mobile phones and computers. Apps to compare prices, social media deals and location-based discounts are among the most tech-savvy efforts. But while mobile technology and social networks have become more popular, their use as a shopping tool remains in the nascent stage.

"There will be more people with their iPhones in hand shopping, and it's going to be the highest number ever, no question about that," said Sucharita Mulpuru, a principal analyst at Forrester Research. "But when you look at the big picture, most people aren't going to have their smartphones in hand."

Bar code scanning

Those banner ads trumpeting a store's "lowest prices in town" can now be verified in some cases with the snap of a phone's camera.

Best Buy, Target and Toys R Us are employing QR codes for shoppers to find information or competitors' prices for camcorders, blenders or robotic Bigfoots. The codes, scanned by a smartphone's camera, are also included in magazines and coupon circulars.

New York-based Scanbuy is among the companies offering such technology. Chief executive Mike Wehrs said its product was used to scan more items in the first six months of this year than in all of last year.

An online Forrester Research survey found that 18 percent of adults said they will use a mobile phone to compare prices. But not all, or even most, of those shoppers will be using scanning applications for price comparison. Many scanners require special bar codes that aren't yet found in all stores.

"I would say that its [use is] still very low, but we're seeing companies like Macy's and Gap do programs," Wehrs said.

Geolocation deals

Several retailers are partnering with geolocation services such as those from Foursquare, Yelp and Facebook Places to offer discounts or other incentives to customers who "check in" on their mobile device upon entering the store. Such services take advantage of Global Positioning System technology built into many phones.

Sports Authority will give away 20 gift cards worth $500 each to Black Friday shoppers who use their mobile phones to check in on Foursquare and then tweet their location to friends.

Other stores, such as RadioShack, are looking for a bit more engagement. To unlock the electronics dealer's "Holiday Hero" badge, visitors to the company's Foursquare page must check in at two "holiday" hot spots, such as a coffee shop or a gym, as well as at the store.

"Location-based services are particularly valuable because they allow businesses [to reach customers] when they're ready to make purchases. That's when you can hit them with a special nearby," said Foursquare spokeswoman Erin Gleason.

Although 16 percent of adults surveyed by Forrester said they intend to use their mobile device to locate stores, Mulpuru said she is unconvinced that they'll all be checking in or broadcasting retail decisions to Facebook friends.

"It's still in its experimental phase, and companies are looking for what the value is," she said.

Social network discounts

Networks such as Facebook and Twitter attract millions of consumers each day who connect with others to share ideas and experiences. For marketers, it can seem like a treasure trove.

Shop.org, the digital arm of the National Retail Federation, found that 72.5 percent of retailers invested more time and money in their Facebook pages before the holidays. About 43.1 percent have done the same for Twitter.

Follow Hhgregg, Gap or just about any retailer on Twitter, and you're probably in for a discount. But some analysts are skeptical. A deal broadcast on social networks won't be seen, let alone clicked on, by every user.

Still, some retailers are confident that social networks can reach potential buyers. Sears, which owns Kmart, has been among the more progressive retailers in social media. "We recognize that consumers are experimenting with, gathering information from and using all of these new tools," said Susan Ehrlich, president of financial services at Sears Holdings. "For us to stay relevant, we have to stay in front of them."

This year, the company launched a program called eGift Social, allowing Facebook users to purchase electronic gift cards in $5 increments up to $25. The cards are then sent to the recipient's Facebook wall or e-mail account, and can be redeemed online or in a store.

Neiman Marcus recently created the Presents Perfect Challenge, in which consumers can build online wish lists and submit them to try to win a $2,500 gift card. By mid-November, the retailer had about 1,900 entries.

Tracking the sales born of these marketing measures can be difficult, however, as there isn't always a coupon or gift card to redeem.

"Everybody is trying to establish what are the right metrics to be tracking, but if you don't have an audience and active engagement, you're not accomplishing anything," said Michael Crotty, senior vice president of marketing at Neiman Marcus.

Mobile commerce

A growing number of stores offer mobile-friendly Web sites to allow for better browsing and easier shopping. Victoria's Secret, American Eagle and Walgreens added mobile sites in the past few months.

But even as these new technologies get more use this season, the data vary on just how many sales will be completed on mobile devices. Sales from mobile shopping topped $1.2 billion last year, a marked increase from $396 million in 2008, according to ABI Research. Still, that constitutes a sliver of the $2.3 trillion in total retail sales last year.

Michael Becker, the managing director of the Mobile Marketing Association's North American division, estimates that 6 percent of consumers will complete a purchase on a mobile device.

"The technology is solid; it works. It's more consumer adoption and education efforts" at this point, he said. But "mobile commerce as a transaction and utility is in its infancy."

douglasd@washpost.com overlys@washpost.com

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