NEW YORK (AdAge.com) -- At 10:30 one morning last week I found myself dodging tourists around the corner from American Eagle's Times Square flagship. Shopkick, the location-based loyalty app, had gathered a small group of journalists and partners for a demo of the product that is now rolling out in hundreds of stores around the country.
We were each given an iPhone 4 and instructed to open the Shopkick app before following co-founder and CEO Cyriac Roeding and his team around the corner and into the store. After taking a few steps inside American Eagle, the phone picked up the inaudible signal emitted from a discreet white box near the ceiling. A green bubble then popped onto the screen announcing I had just earned 75 Kickbucks, Shopkick's proprietary currency. I was also shown various deals, like a 15%-off coupon and a buy-one-get-one-half-off jean and T-shirt sale. Deals served up by Shopkick are redeemed at the register by showing the cashier a code.
For some shoppers, just walking in and securing the deals will be enough. But for those who decide to play the game, Kickbucks can also be earned by scanning barcodes on products or posters around the store. In the case of American Eagle, we were provided a rack full of leggings to scan for 25 Kickbucks. We were then herded into a dressing room where a poster featuring a barcode could be scanned for 35 Kickbucks.Kickbucks can be donated to charity or redeemed for Facebook credits, DVDs or gift cards. And, sure to resonate with millennials, they can be used at any of Shopkick's partners, which include American Eagle, Macy's, Sports Authority, Best Buy and Simon Malls.
By the end of the 15-minute demo, I had wracked up 140 Kickbucks and clicking on a Rewards page showed me that I could redeem 25 Kickbucks for one Facebook credit or donate 13 Kickbucks to fight breast cancer. I was woefully short of the 4,400 Kickbucks needed to get a "Twilight" DVD. But within reach was a $2 Best Buy gift card for 500 Kickbucks.
The technology is cool and it's easy to see why it's appealing to retailers. Shopkick gets paid using a performance-based model. And set-up costs are minimal, with the boxes costing less than $100 each, Mr. Roeding said. The boxes need only a power source, no internet connection or WiFi required.
Michael Dupuis, VP-marketing and operations for American Eagle's direct business, said Shopkick is now deployed in 52 stores and will be chainwide in a little over a year. The program is considered a marketing expense, he said.
Mr. Roeding said retailers have between a 20% and 95% conversion rate (the number of shoppers who actually buy) depending on their category. Apparel retailers are closer to 20%, while a grocery store is closer to 95%. So, the theory goes that any offers retailers can serve up in the store can boost that conversion rate. Likewise, retailers know that shoppers are more likely to make a purchase once they've entered a dressing room, so why not dangle an incentive, in the form of Kickbucks, to get them to try something on?
All in all, it's intriguing. But is it the future of shopping?
Maybe, maybe not, but Shopkick sure thinks so. And judging by the flood of loyalty apps coming on the market, it's only a matter of time before serious competitors emerge. Shopkick, however, does enjoy first-mover status, as well as the backing of major retailers and the largest mall operator in the country. That, Mr. Roeding said, should help his company to stay at the front of the pack.