Skip to content

Will Retailing Ever Be the Same?

November 24, 2011

A person with a smart phone can scan a bar code in Best Buy or Macy’s, check the price, and order from Amazon or Target on the spot. So Amazon could receive an order from a customer that was stimulated to buy while in Best Buy.

This may revolutionize retailing and cause considerable consternation and ultimately dislocation for several players.

Remember when the Internet arrived and customer who was savvy gained the power to check prices of all the options. Especially for durables, that power led to sensitivity to prices and resulting price pressures.

The smart phone’s ability to scan SCAs and buy items from competitors on the spot adds a step function to this pressure. The driver is the availability and use of smart phones. Over 40% of all wireless phones now are now smart phones and this number is growing fast. A new report from Experian Simmons estimates that nearly 20% of smart phone users scan barcodes and the same percentage make purchases directly from their phones.

These numbers are enough to change the profitability of particular retailers significantly either positively or negatively. And they are growing quickly. There will be a tipping point, that probably has already occurred in some contexts, at which time there will be a dramatic change in the nature of retailing. There will be winners but the strategy of some retailers to provide value added services will become problematic and others will be forced out of business.

There are a host of implications. Consider a few. Amazon and other retailers with a strong brand and Internet commerce strengths and following will benefit. Retailers with a cost advantage may benefit as price becomes more important. Those with a strong private label line with distinctive attributes will be affected less because the items will not be found elsewhere. National brands will have a harder time maintaining price discipline in the marketplace. Those like Apple with distribution control will well-positioned.

The world has before exaggerated the impact of technology. The checkless society was a solid prediction a half century ago and the electric razor was expected to kill off safety razors.

However, smart phones may be the real thing.

David Aaker

David Aaker is the vice chairman of Prophet and the author of Brand Relevance: Making Competitors Irrelevant. He writes the davidaaker.com blog on branding.

Advertisements

From → Retail, Technology

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: