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Smart phone revolution won't dramatically increase retail sales this year

NEW YORK — The smartphone will likely revolutionize the way you shop, but don't expect it to boost overall retail sales much this year.

That is the message from the retail industry's annual convention in New York City.

The 24,000 retail executives gathered here this week are trying to figure out how to survive a world of dramatically changing shopper behavior, cellphones that function like souped-up credit cards and new online "flash websites" that appear out of nowhere to snag huge groups of obsessed consumers.

Kings Lane (onekingslane.com), for instance, generated $100 million in sales in its second year by posting "take it or leave it" half-price offers to its members on selected furniture and home decor at 11 a.m. daily.

Those kinds of enticements contributed to general merchandise sales rising 4.1 percent to $471 billion during the two-month holiday season, according to the U.S. Commerce Department. That was better than the 2.8 to 3.8 percent forecasts, but the National Retail Federation now expects sales to grow a more modest 3.4 percent to $2.5 trillion this year. And that's assuming Congress decides to further extend the Obama administration's payroll tax withholding bill worth about $1,000 a year in take-home pay.

"People spent beyond their income gains (during the holiday season), which is a sign of some consumer confidence," said Jack Kleinhenz, the National Retail Federation's chief economist. "But I don't see them making the mistake again of taking on too much debt with so much other uncertainly out there."

Economists cited the usual suspects for consumer spending reticence: unemployment, the troubled housing market and the unsettling European debt crisis.

But former President Bill Clinton offered another factor.

"When I was young, I was always confident that I could find another job," Clinton said in his keynote speech at the convention. "That's just not true today. We cannot continue to rely only on consumer spending to bring our economy back."

Retailers also launched a "Retail Means Jobs" PR campaign to convince politicians that helping their industry, which accounts for one in four jobs, is key to accelerating the anemic economic recovery.

A coalition of retail clerks unions counter-punched with a study of 436 randomly surveyed rank-and-file retail workers in high-wage New York, including employees at Abercrombie & Fitch, Banana Republic, Target and Victoria's Secret. Half earned less than $10 an hour, only a third had company health insurance, and erratic schedules of what are often part-time jobs have made child care a challenge, according to the survey compiled by the City University of New York's Murphy Institute.

More than 400 vendors at the trade show are trying to talk retailers into buying a plethora of technologies. Many slice and dice reams of shopper behavior data to get a leg up on shoppers who are now equipped with smartphones that enable them to make price comparisons as they walk store aisles. Intel even came up with a vending machine that uses a camera to figure out and record the age, sex and height of whoever is using it.

The industry also promises a lot more experimentation with smartphone-powered mobile commerce this year. The smartphone, often cited as the biggest thing in payment systems since the magnetic stripe reader in 1982, continues to blur the lines between selling online and inside a store.

The industry, however, still struggles with what is just flash and what will benefit retailers and shoppers in the long run.

Smartphone technology is available to allow customers to check themselves out of a store without ever stopping at a register or service bay. But will enough retailers embrace it?

Retailers can also use GPS technology to see whether customers are in or near their stores and send a coupon or advertisement to entice them to buy. But could the idea of being "followed" alienate too many shoppers?

Dan Kilgour, senior development manager for Isis Mobile, a joint venture of AT&T, Verizon, T-Mobile and Visa, believes more smartphone retail applications are inevitable.

"Mobile is a question of when, not if," Kilgour said. "I see thousands more stores offering it this summer and our being widespread in 2013."

Mark Albright can be reached at albright@tampabay.com or (727) 893-8252.

Smart phone revolution won't dramatically increase retail sales this year 01/16/12 [Last modified: Monday, January 16, 2012 10:06pm]
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