A Brave New World of Retail

There is an interesting article in the Times about the resurgence of haggling in big retail stores like Best Buy and Home Depot:

Savvy consumers, empowered by the Internet and encouraged by a slowing economy, are finding that they can dicker on prices, not just on clearance items or big-ticket products like televisions but also on lower-cost goods like cameras, audio speakers, couches, rugs and even clothing.

The change is not particularly overt, and most store policies on bargaining are informal. Some major retailers, however, are quietly telling their salespeople that negotiating is acceptable.

This is pretty interesting to me, because for a while now it has seemed to me that the retail economy hasn't quite caught up with mobile technology and the internet. I mean, here we are, all equipped with little computers on our person, and yet when I go to buy a TV at Best Buy there is no way for, say, Circuit City across the street to say: Wait a second, we'll beat that price!

When you go to buy something at a retail store, other stores should be able to make competing offers for the same (or a similar) product. This reverse-bidding system could be easily implemented as a mobile application, especially if we move in the direction of the Japanese, where the cell phone itself is used as a method of payment (i.e., you can swipe it like a credit card). Everything could be integrated right there in the device--so if Circuit City were to offer a better price on the TV, you could purchase it from within the application and then walk across the street to pick it up. Or, alternatively, the store you are currently at may lower its price as a counter-offer to the competitor, netting you a discount without having to do any extra legwork at all.

If this idea worked, it would improve the efficiency of the retail economy, because stores would be dynamically setting the optimal price for each purchase. Of course, old-fashioned haggling serves the same function--but I bet having the whole process automated and integrated with the consumer's cell phone would work a whole lot better. (Side-note: unlike with a lot of Web 2.0-ish business models you come across, this one would not have any kind of "critical mass" requirement in order for the service to be valuable. In fact, it is just the opposite--the less companies that participate in the service, the better it is for participating companies. E.g., if only one company participated, it would have the luxury of being able undercut the competition without itself ever being undercut. And so I think it would be easy for the whole thing to get started, with major retailers participating in the service.)

I am aware that this sort of reverse-bidding model already exists on the internet--for example, I believe this is essentially how priceline.com works for plane tickets and hotels and such. However, I think it's clear at this point that internet purchasing will never completely supplant the bricks-and-mortar retail stores, and so I think it would be worthwhile to introduce the price-efficiency tricks we see on the internet into the world of bricks-and-mortar retail by developing mobile applications like the one I outline above.