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These Retailers Are Profiting From the Smartphone Revolution

http://www.fool.com/investing/general/2012/09/10/these-retailers-are-profiting-from-the-smartphone-.aspx

Tamara Rutter
September 10, 2012

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Forget everything you've heard about social-media trends. These days, mobile devices are the real drivers of retail sales, at least according to a new study from Deloitte. But before we delve into the juicy details, let's first take a look at the ways in which technology is changing the retail landscape, and how investors can grab a piece of the action.

A new wave of shoppers
Today's consumer is more informed thanks to the rise of smartphones and advancements in mobile technology. As a result, retailers have to work harder than ever to build brand loyalty and connect with customers. Unfortunately, some retail chains are finding it difficult to remain competitive in this new retail environment.

It's no secret that big-box companies including Best Buy (NYSE: BBY  ) and Wal-Mart have suffered lately at the hands of so-called "showrooming." The electronics retailer in particular saw its most recent quarterly profit decline by 91%. Yet for much of 2012, Best Buy brushed off the growing threat posed by online merchants such as Amazon.com (Nasdaq: AMZN  ) .

Because Amazon doesn't have a physical storefront, it's able to keep overhead costs down. Ultimately, this allows the e-commerce giant to offer consumers more competitive pricing on similar products sold in stores like Best Buy. Last winter, the e-tailer changed the game again when it released a smartphone app that let shoppers compare prices of in-store products with those listed on Amazon's online marketplace.

Armed with such mobile apps, consumers can hunt the best bargains. In fact, new research from Yankee Group suggests that "46% of U.S. consumers use their smartphones to check prices and reviews while shopping at retail stores." But what Best Buy and others don't understand is that this doesn't have to be bad news for bricks-and-mortar businesses.

Embracing change
The companies that are most responsive to change will be the same ones that thrive in the years to come. Some of the top U.S. chains are indeed using the disruption of smartphones to increase in-store sales and drive more traffic to their stores. Target is especially proactive in its efforts to adapt to the changing world of retail. The discounter started aggressively expanding its mobile reach in 2010 with initiatives such as My TargetWeekly, which lets consumers customize alerts for special in-store product promotions.

Not to mention, Target took its partnership with Shopkick to the next level earlier this year, when it made the smartphone couponing app available in all 1,764 of its U.S. stores. Today, Target's mobile strategy consists of everything from a dedicated mobile site and SMS loyalty program to special iPhone, iPad, and iPod Touch shopping apps.

And it isn't just fashion retailers that are getting ahead with smart tech strategies. Starbucks (Nasdaq: