The next online threat to Myer, JB Hi-Fi and David Jones

Publishers, credit card companies, media companies, grocery stores are all coming after the profits of traditional retail stores. In a wave of recent experiments, manufacturers and content producers are finding new ways of selling their goods. Starting with this month’s Wired, Vanity Fair and Esquire magazines, people reading on tablets will be able to purchase the goods they see in the magazines by simply tapping a shopping cart icon on the page.

Touted as ‘in-content’ purchasing, the process is possible through the use of the ShopThis! App along with Mastercard’s Masterpass technology. Purchases from the magazine will be added to a shopping cart hosted by retail partner shopping, which the customer can pay for once they’ve finished reading. ShopThis! has been developed within Mastercard Labs, Mastercard’s R&D division.

The potential reach of the technology could be limitless; it could be applied to television ads, movies, TV shows, billboards, bus stops or games. US grocery delivery service Peapod has adopted one such application, a smartphone app that allows users to scan barcodes at home that triggers an order to be placed in their online carts.

If the order and payment system takes off, it could be bad news for traditional retailers such as David Jones (ASX: DJS), Myer (ASX: MYR), JB Hi-Fi (ASX: JBH) and Harvey Norman (ASX: HVN). The future may see electronics retailers selling phones or stereo systems from TV advertisements, or furniture retailers selling lounge suites used as props in movies.

Luckily for Australia’s retailers, this type of technology is still in the very early stages of development and larger retailers may eventually be part of the solution if they can couple with content providers and advertisers.

Foolish takeaway

The Internet has forced retailers to change the way they operate. JB Hi-Fi has responded the fastest and best so far, operating a comprehensive online store alongside its successful bricks and mortar stores. David Jones, Myer and Harvey Norman are slowly improving their online offerings but continue to be outperformed online by their overseas and online-only Australian companies. These companies will have to respond faster and faster in coming years, or risk being left behind.

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Motley Fool contributor Andrew Mudie does not own shares in any of the companies mentioned.

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