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By Mel Duvall
Department store retailer JC Penney is testing technology in the Houston metro area that will allow consumers to download electronic coupons to their cellphones and ring up the savings by having the coupons scanned at the register.
The retailer announced Thursday that the initiative would be rolled out at 16 JC Penney stores in the greater Houston region and the results will be gauged through the fall and holiday shopping season.
"These mobile coupons are the ultimate in customer convenience, because there's no need to clip or carry around a printed coupon, and they can be instantly scanned from a cellphone," chief marketing officer Mike Boylson said in a statement.
JC Penney is partnering with a San Jose, Calif. company called Cellfire to deploy the technology involved in the program. Consumers download an application from Cellfire, which allows them to automatically receive and store coupons. There is no charge for the application although standard cellphone usage charges would apply. JC Penney is installing coupon scanners from Motorola at its registers, with the capability of reading paper, or electronic, coupon bar codes.
Cellfire is currently working with a number of retailers on cellphone-delivered coupon programs, including Safeway, Kroger, Payless Shoes, Sears and Hollywood Video. However, it says the JC Penney rollout is the first of its kind due to the installation of scanners at the register which can read the two-dimensional electronic coupons directly from the cellphone.
"We believe this will be the first step in taking this technology to a variety of markets and industries," said Cellfire CEO Brent Dusing.
While still relatively rare, deployment of mobile electronic coupon systems is expected to grow significantly. A report by research firm Frost & Sullivan notes that paper coupons cost retailers an average of 25 cents to 40 cents per mailed coupon, with average redemption rates of about 1 percent. The firm estimates that consumer product companies spend $7 billion per year on the printing and distribution of coupons.
By comparison, the relatively low implementation cost of cellphone-delivered coupons has many retailers looking at standalone implementations or incorporating them into their wider advertising campaigns. Frost & Sullivan noted that one of the challenges preventing wider adoption of barcode-based mobile coupons was the cost of implementing scanning hardware at the till. However, as more retailers deploy the technology and costs are reduced due to higher volumes, adoption should become more widespread.
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