Meet the Enemy: Price Comparison Apps
By Tom Ryan
According to an article in Wednesday’s Wall Street Journal, the use
of smartphones inside retail stores to comparison shop prices in cyberspace
is growing and “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 smartphones and as shopping
apps become increasingly sophisticated. The article points to recent stats
from IDC Retail Insights showing that about 45 percent of customers with smartphones
had used them to check on a store’s prices. Also, Coremetrics found that consumers
using mobile devices accounted for 5.6 percent of visits to retail websites
used on this year’s Black Friday, up from just 0.1 percent 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
Through a growing multitude of price comparison apps, consumers now have the
ability to see whether “specials are really so special,” the article
states. 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
websites. 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 Wal-Mart, 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 websites.
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.
Discussion Questions: What obvious and less-obvious threats do price-comparison
apps present to retailers? Will most Americans eventually be comparison shopping
in-store online? What categories appear to be particularly vulnerable?