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How mobile technology is revolutionizing in-store shopping
CNBC.com | January 15, 2013 | 01:29 PM EST

There's mobile technology-driven change brewing in the way you shop in brick-and-mortar stores.

Disappearing are the days when you walked in and headed blindly for the sales section; or located a much needed item then headed straight for the checkout counter. Retailers from Bed, Bath & Beyond [ BBBY 65.52  +0.39 (+0.60%) ] to RadioShack [ RSH 1.03  -0.03 (-2.83%) ] are investing in new e-commerce technology that encourages consumers — often with smartphones in hand — to shop strategically for deals inside physical stores.

By "checking in" with your mobile device after you walk into a retail store — and offering some personal data including your location — shops in turn offer targeted digital deals right to your smartphone for immediate redemption. Retailers see enormous potential in marrying the physical-store experience with our growing dependence on smartphones. And that's why a growing crop of startup software and technology companies are mining this fast-evolving e-commerce space.

Digby , a small company of 50 based in Austin, Texas, was founded five years ago and has been working with brick-and-mortar stores to leverage technology that includes location-specific messaging to target consumers on the ground. "The more profound opportunity for them is how mobile is going to impact how they engage with customers in and around their stores," said David Sikora, Digby's founder and chief executive. "The smartphone is so personal that you'll never go anywhere without it."

(Read more: NYC Grows as Hub for Small Digital, Entertainment Businesses )

Rapidly evolving mobile commerce is among the key trends at the National Retail Federation 's annual New York City expo and convention, which runs through Wednesday. (See video: CNBC's Steve Liesman on NRF's Retail Sales Data )

Shopping on Smartphones, Tablets

To be clear, the mobile platform solutions offered by Digby and its competitors don't directly tackle the issue of shopping on phones.

Smartphone screens are small and navigating your way to a shirt, for example, to final payment isn't a consistently seamless experience yet. Despite the room for improvement, mobile devices accounted for about 11 percent of total U.S. retail e-commerce sales in 2012, according to eMarketer research . The figure is expected to grow to 15 percent this year, with shopping using tablets also gaining ground.

More stores, meanwhile, are migrating to digital payment platforms. PayPal this week announced it is expanding payment service to more brick-and-mortar retailers such as RadioShack [ RSH 1.03  -0.03 (-2.83%) ] and Dollar General [ DG 63.86  +0.39 (+0.61%) ] stores. PayPal, EBay [ EBAY 51.61  +0.65 (+1.28%) ]'s payments subsidiary, already is accepted at Foot Locker [ FL 57.98  +0.85 (+1.49%) ] and the Home Depot [ HD 90.27  +0.89 (+1.00%) ] among other retailers. Separately, PayPal has launched a pilot program in Emeryville, Calif., with smoothie chain Jamba Juice that lets customers order ahead using a PayPal app.

Apps. Tablets. Smartphones. Mobile technology is marching forward and physical retailers don't want to be behind.

"In retail, we are seeing a new wave of technology adoption as retailers with physical locations look for ways to provide a better shopping experience," said Anders Gustafsson, chief executive of Zebra Technologies , based in Lincolnshire, Ill. With some 2,200 employees, Zebra's portfolio includes a mobile payment system that allows store associates to greet, follow and checkout a customer after they walk into the retailer.

While the actual scanning device is provided by Motorola, Zebra's technology platform on the portable device allows sales associates to shadow customers and help them pay for goods anywhere in the store — not just a cashier counter. Beauty retailer Sephora offers a similar mobile-driven experience with sales associates.

(Read more: How the Hunt for Cheap Prices Is Hurting Retail Loyalty )

Of course not all customers like to be followed around by sales associates or want to offer details on their physical locations. But the technology companies stress customers always have the option to opt out.

But when it comes to contextualized, location-based marketing, industry speak for this emergence of mobile deals and interaction, consumers are willing to participate — especially if there's a price break involved.

Digby's technology was used to offer a mobile deal at a retailer on Black Friday last year and the participation was double forecasts. Users not only opted in, but forwarded the digital deals to friends and family using their smartphones. "We find the opt in rate is pretty high, the 70 percent range for marketing," Digby's CEO Sikora said. He declined to disclose the retailer.

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Fast-Evolving Retail Space

And if JC Penney [ JCP 10.90  +0.05 (+0.46%) ]'s weak "uncoupon" strategy is an indication, shoppers love a discount on any platform from print flyers to digital platforms.

In the future, Sikora envisions plastic rewards cards being phased out by apps that allow consumers to "check in" inside a store with, access individualized deals to that location and pay for goods — all through smartphones.

Gustafsson of Zebra said we can expect more retailers to use mobile technology to bypass brick-and-mortar stores for mobile trucks, similar to popular food trucks.

The potential for evolving e-commerce platforms is just getting started. "We're at the door step now," Sikora said.

Written by CNBC's Heesun Wee. Follow her on Twitter @heesunwee

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