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Wed November 21, 2012
Outsmart Crowds With Mobile Shopping Revolution
Originally published on Thu November 22, 2012 11:03 am
CELESTE HEADLEE, HOST:
We want to switch gears now. Tomorrow is Black Friday, as you probably know. That's when many stores offer massive discounts to shoppers who are willing to wait in huge lines and sometimes get into brawls in those lines. It's such a boon for businesses, that many stores are turning it into Black Thursday. They're opening their doors tonight.
With smartphones and tablets, though, more and more shoppers are buying gifts online. They're comparing prices online, and then charging items straight to their credit cards on the fly using apps on their mobile device. Here to talk to us about that, one of money coaches, NPR's senior business editor Marilyn Geewax. We turn to her regularly for advice on economics and personal finance. Marilyn, welcome back to the program.
MARILYN GEEWAX, BYLINE: Hi. It's great to be here.
HEADLEE: So tell us how big this segment is of people who are choosing to shop online, as opposed to in the physical store.
GEEWAX: Think about it. This really got started in 1995. Now, to me, that's not all that long ago. Amazon started out with selling books online, and then they pretty quickly moved into CDs, software, games, jewelry. And then pretty soon, everybody capitulated, and traditional stores like Sears, Wal-Mart, they all switched to sears.com, walmart.com.
So, you know, it really grew dramatically. In fact, at first, most employers were trying to use blocking technologies to keep employees from shopping during work hours. Now only about a third do that, because they know perfectly well that even if your computer is blocked, you can pull out your smartphone and keep shopping, anyway.
HEADLEE: Well, since you mentioned smartphones, there is a distinct difference between online shopping, where you're just sitting at home, right, and shopping from your desktop. And then there's people who actually take their smartphones in with them to compare prices and find deals and even look at reviews before they buy a product, right?
GEEWAX: Exactly. You know, the image of an online shopper just a couple of years ago was a woman sitting at home in front of her home computer after the kids went to bed and trying to do some shopping then. Today, the image of a shopper is you're waiting to get your hair cut and you're shopping with your handheld device. It's really changed the way people interact with shopping because they've got this, in effect, little computer right there in their hand.
HEADLEE: Many physical retailers may not be happy about this concept of show-rooming, right? I mean, because as it turns out, people are going into stores, they find a product they like, they look online. They either see reviews that...
HEADLEE: Or they find a better price online, right? So they decide to go home and purchase it from the online store instead of the physical store.
GEEWAX: You can understand how frustrating that has to be to a merchant. You know, you've got to pay all those bills to keep the lights on, keep the floors polished. You display things nicely on your store shelves in your showroom, and then people - I don't want to say me, but...
HEADLEE: But you just did. It's OK.
GEEWAX: ...some people might come in, take a look at what you see in the store and then, you know, step out to go get a cup of coffee and pull out your smartphone and do some comparison shopping and see if that's really the right choice for you. And it puts a lot of pressure on the merchants. They have to compete, so there's a lot of pricing pressure.
And you see that in the data. This year, the analysts are projecting that retail sales altogether will be up only about 4 percent, and that's not that much. This is looking like a somewhat disappointing year. It's not so much that people won't be shopping, but just that the sales won't be that high because they can't raise prices.
HEADLEE: If you're just joining us, you're listening to TELL ME MORE, from NPR News. I'm Celeste Headlee. We're gearing up for holiday shopping by looking at the ins and outs of shopping on a mobile device. We're talking with NPR's senior business editor, Marilyn Geewax.
You know, I found it interesting that a grocery store like Safeway, for example, has a mobile app called Just for You. And in that particular case, it's more than the loyalty card thing, right? If you sign up for this mobile app, you get even bigger coupons that nobody else gets. You have to have the mobile app to do that. So I wonder: Who are the winners and losers in that equation?
GEEWAX: Merchants understand how people are shopping. They see people walking around with those smartphones. They know that this has become part of peoples' lives, of having a cell phone in your hand. And they're right to think that. Nine out of 10 people have some sort of cell phone.
And, you know, at first you might think that this is something that discriminates against the poor, because you would think that...
HEADLEE: Because they may not have smartphones.
GEEWAX: ...they may not have a smartphone, but what the data is showing is that poor people are dropping their landlines. They don't have a hardwired phone at home. They don't have an expensive computer at home. But they do invest in having access to the Internet, because they know it's important for themselves, for the kids.
So even poorer families are moving towards smartphones because there are cheap models out there, and it's their all-in-one package. It's the family computer. It's the family phone. So we're seeing that poor people actually do kind of have access to those coupons. But where there's a bigger divide is age, because older people may have a cell phone in their purse, but they use it to make phone calls. So they're not as sophisticated with using...
HEADLEE: Make phone calls on your smartphone?
GEEWAX: Yeah, imagine that, taking a phone and using it to place phone calls. Younger people just know more instinctively, or they've just kind of grown up with it, and they know how to find those bargains on their smartphones in ways that older people don't.
HEADLEE: Are people more likely to overspend when they're shopping online than when they're in a physical store?
GEEWAX: It's pretty darn easy to shop online. On the one hand, that's very convenient. On the other hand, there's something to be said for that old fashioned way of going into the store, putting it on layaway. You don't take the thing home until you can really afford it and it's been paid off. One-click shopping with a handheld device at three in the morning is a good way to get yourself into trouble.
Now, you know, in the larger sense of what is this all doing to the economy, you know, this shift to online shopping is changing, in some ways, what happens at Christmas in terms of hiring. Retail stores, as I said, they have all this pressure to hold down prices, so they're tighter with their hiring. But the delivery companies...
HEADLEE: Yeah, FedEx needs lots of people.
GEEWAX: Right. They need a lot of people. UPS says that it plans to add 55,000 workers for the holiday season.
GEEWAX: It's an awful lot of people moving packages back and forth, you know, putting them onto the trucks, unloading them. And that's really an area of growth for the economy, but one last point I want to make about these deliveries: You know, that's someplace where there's a financial divide for people.
That is, richer people tend to live in safer neighborhoods. But for a lot of people, that last step in the online shopping process - that is, having a package sitting on your front porch all day - is really a problem. There are just many more concerns about somebody just picking up your box. So one of the things the delivery companies are trying to do is texting and emailing you, or alerting you in some way that a package will be delivered the next day, so that you can either reroute it or tell them wait, wait. Give me one more day. Or you can get a relative to help you receive that box. So that's one of the points that slows down online sales.
HEADLEE: That's interesting. That was NPR's senior business editor, Marilyn Geewax. She joined us from our Washington studio. Happy shopping, Marilyn.
HEADLEE: Thanks so much.
GEEWAX: Oh, you're welcome. Transcript provided by NPR, Copyright National Public Radio.