Target, Wal-Mart to Test New Mobile-Pay Tech for Holiday Shopping

This holiday season many retailers are introducing experimental payment technology — but will shoppers, stressed and desperate, find benefit in these experiences or stick to methods they know?

Target Corp., known as a technological innovator, is trying to get consumers to use quick-response (QR) bar codes to order products online while they're standing in the store's aisles. The retailer labels its top 20 toys with QR codes customers scan with the cameras in their phones. The items are then shipped anywhere in the U.S. for free.

“Retailers are uniquely qualified to deliver the best mobile payment option,” says Eddie Baeb, a Target spokesman. “We know how consumers shop and can develop a payment system that’s best for their needs."

This isn’t the first time Target has dabbled in payments technology. Target’s mobile coupon program launched in 2010 as a way for customers to receive offers on their mobile devices redeemable by scanning the phone at checkout.

Target has also functioned as a laboratory for other payment technologies. Starbucks' mobile-pay app first gained nationwide use by expanding to Starbucks locations built inside Target's stores. American Express first tested its low-fee prepaid card in Target's stores, and shopkick says it relied on Target's retail expertise in fine-tuning its mobile-shopping technology. 

Target is also a participant in Merchant Customer Exchange, the retailers' mobile-payments venture. 

Wal-Mart Stores Inc., working with Mattel Inc., launched virtual pop-up stores in Canada recently. Located in Toronto’s underground walkway, the PATH, each virtual store displays pictures of toys with QR-codes attached. The system works like Target’s, with free shipping for toys purchased through the use of the mobile app. Wal-Mart and Mattel both declined to comment on the initiative.

With experiments such as Target's, “there’s plenty of opportunity for retailers to form a consumer habit," says Dave Kaminsky, an analyst at Mercator Advisory Group.

Retailers are likely fighting a trend called showrooming, where shoppers visit a store to handle a product in-person but purchase the product online. Some apps, such as Amazon.com's, allow consumers to order products online by first scanning bar codes in stores.

To fight this trend, “some companies use their own barcodes as labels so customers can’t match what they have to other offerings quite as easily," Kaminsky says.

The approach Target and Wal-Mart are taking goes a step further by making it easier for the consumer to buy from their websites instead of a rival's site.

“The pop-up store is an interesting way for traditional brick and mortar retailers to use mobile payments instead of show-rooming,” Kaminsky says.

Target and Wal-Mart's use of QR-codes purposefully and effectively makes it more difficult for consumers to match their prices with other stores.

Online retail makes up about 50% of total sales, says Adrianna Bustamante, commerce channel development at RackSpace Hosting, an open cloud company. About 24% of a business’ total sales, both in-store and online, are made on the Monday following Thanksgiving ("Cyber Monday"), according to RackSpace’s national survey of e-commerce decision-makers.

“Companies are leveraging technology and innovation to have a competitive edge this holiday season,” Bustamante says.

QR codes can provide convenience to consumers that know how to use the technology. Even the consumers that don't understand how QR codes work can use their phones to sign up for location-based offers and coupons, says Kaminsky.

In other instances, notably the Apple store, employees carry mobile devices that allow them to accept payments anywhere in the store. Retailers such as FinishLine, Pacific Sunwear and Guess are taking a similar approach.