App Developers Target Retailers With New Options For In-Store Promotions, Payment

Half of retailers surveyed in December indicated they plan to build mobile apps this year, and many are evaluating whether to cut checkout lines by allowing shoppers to scan and pay using smart phones.

The technology allowing shoppers to pay for in-store purchases with their smart phones has arrived, and grocers are inching toward adoption.

Mobile sales using smart phones will hit the critical point this year, predicted Daniel Burrus, chief executive officer at Burrus Research in Milwaukee. "The time of experimenting has passed. Now it's a matter of falling behind if you wait any longer because your competition is going to do it," he said.

About 14 percent of retailers surveyed in December 2011 said they had a mobile app for in-store use, and half said they plan to build apps this year, according to a survey conducted by Retail Touchpoints for Boston-based AisleBuyer, which provides mobile apps for retailers, including a self-checkout application.

Checking out mobile
One in four retailers said they plan to add mobile self-checkout apps this year, the survey suggested. Regional grocer Big Y, based in Springfield, Mass., plans to use AisleBuyer's technology, said Andrew Paradise, chief executive at AisleBuyer. "We think 2012 is going to be the year of mobile self-checkout," he said. "We have proof of concepts and pilots with more than $40 billion worth of grocery retail we haven't announced yet," he said.

AisleBuyer's mobile app already is in use at other retailers, including Magic Beans, which sells baby gear. About 18 percent of Magic Beans' in-store customers checked out using the AisleBuyer app on Black Friday, Sheri Gurock, co-founder of the Brookline, Mass.-based retailer, said in an e-mail interview. AisleBuyer's mPromo app also encourages add-on purchases by suggesting related items when a shopper scans a product. At Magic Beans, the app might recommend buying batteries when a consumer scans a battery-operated toy, Gurock said. "We love the possibilities this allows," she said.

Magic Beans encourages shoppers to use the app through in-store signage and promotions. "It's nice to be a first mover in the space by offering technology that adds a new level of customer service to the Magic Beans experience," she said.

Triggering in-store promotions
Consumers can scan merchandise using their smart phones before they put the items in their carts, AisleBuyer’s Paradise said. The scans also trigger in-store promotions, such as coupons delivered on smart phones. In addition, brands can use the app to provide more product information. When consumers are done shopping, they can hit the "check out" option and complete the order using their phones, he said.

While some retailers are concerned about theft with a self-checkout app that allows for payment directly through a smart phone, Paradise said AisleBuyer uses an algorithm that evaluates about 50 criteria to determine whether a transaction is likely to have involved fraud. For example, the app tracks a shopper's behavior, such as the aisles frequented and the amount of time spent in the store, and matches it with the consumer's final purchase. The more consumers use the app, the more information the software has to evaluate their purchases for signs of fraud.

Retailers also can learn more about how their customers shop from the app, said Gurock. At Magic Beans, sales associates are trained to check bags and receipts before shoppers leave the store. "Someone who is intelligent enough to use an app as the basis for shoplifting would find another way to steal if that app didn't exist," Gurock said.

Watch for an in-depth article about mobile apps in a future issue of Retail Leader magazine.

Source: RetailLeader (http://goo.gl/YxD72)