Mobile Scan 'N Scram: How Worried Should Retailers Be?
If you attend the Consumer Electronics Show or any mobile-focused conference, a notion prevails that physical retail locations are becoming "showcases for products" rather than places where people actually buy those products. The story goes that consumers everywhere are using smartphones to scan barcodes while in store to compare retailers to get the best price. If the store they are in doesn't have it, they walk—or worse yet, buy it from Amazon on the spot. Several retailers mentioned it as a concern when I interviewed them for the Ad Age Insights trend report, Mobile Marketing: M-Commerce.
I heard it cited by a panelist in a session on tablets and smartphones at CES. The literati have also jumped into the fray and in-a much forwarded op-ed in the New York Times, National Book Award-winning novelist Richard Russo decried scan 'n scamming in respect to books as the true death knell of bookstores (didn't Amazon ring that about 10 years ago?) and a behavior any right-thinking individual should be morally opposed to.
As an industry analyst covering mobile, I'm always suspicious of behaviors that aren't yet mainstream but since they are common among the denizens of Manhattan/Brooklyn and San Francisco/Silicon Valley are deemed to be an absolute trend. (For the past two years, the "hot but not really" behavior was location-based check-ins. This never went mainstream despite what people who go to South by Southwest or fund mobile start ups wanted to believe.)
To investigate just how big scan 'n scram is , I asked InsightExpress to field questions regarding it in its quarterly Digital Consumer Portrait, a survey conducted through random online recruitment which derives a nationally projectable sample of 1,300 people. Interestingly, the behavior is not growing as a percent of total over the past year: 6% of all smartphone owners admitted to doing it and even if you take the sample of guys 18-29 who are mobile (who in this group isn't), the number only pops to 10%. (InsightExpress noted to me the small sample sizes they were able to isolate for the behavior itself, so this question should be asked on a bigger sample, but their difficulty in finding the usage proves my point.) InsightExpress delved deeper into the behavior and yes, it does pop highest with young guys, but even more to my point, when they pulled out where these people are living, guess what: they're most likely to be in New York. Yes, we have fed, our own hype cycle.
To the "shame on you" issue of this behavior and its potential impact on retailers we know and love, it also turns out that those doing it feel little guilt. Only 21% said they felt somewhat to extremely guilty doing it while 45% felt no guilt at all. 71% of those doing it identified with the statement that "the price was better elsewhere and it's my right to get the best price whenever possible" and only 9% acknowledged that it might have an impact on their local retailer. It also turns out that this behavior is less likely to impact a local retailer: 56% of those who scanned and left did it at a national/chain store and only 42% did it at a local retailer.
There is no doubt that since people now are walking into stores with portable computers – i.e. the smartphone -- and they can get so much information including competitive pricing it is a wake-up call to physical retailers to improve the experience and give consumers a reason to buy it then and now. How can they do this? As detailed in Mobile Marketing: M-Commerce, retailers like Sears are giving salespeople mobile devices and encouraging them to show consumers product info on complex purchases like appliances. Kohl's has launched location-based opt-in text messaging programs that can give loyal customers a reward/incentive for purchasing as they geo-fence the store location and trigger the offers when a customer comes in range. While scan 'n scram is not the mainstream activity you might believe, it is an emergent ones that will hopefully encourage retailers to use mobile to keep people in stores rather than sending them packing.