Rumor has it that retail exchange traded funds (ETFs) have been ailing as consumers cut back on spending. But smartphone-based incentives for those who are shopping may help them pick up the slack.

The trend of personalized service seems to be benefiting both smartphone companies and retailers as new application allow them to tailor deals and promotions to your own specific wants and needs.

Internet services provided by Scvngr, Stickybits, Shopkicks, Foursquare, Gowalla, Booya and Facebook to digitally “check in” in real time, and smartphone-centered services allow walk-in businesses to better tailor goods to an individual’s needs in the digital age, write Brad Stone and Barret Sheridan for BusinessWeek.

It’s all in the conversion rate – the proportion of people who walk in and purchase an item at a store – which is higher than it is for e-commerce. Smartphone apps encourage more foot traffic by offering gift certificates or other prizes after a certain number of check-ins. [ETFs to Play the Smartphone Wars.]

Other applications include a barcode scanner that can be done by taking a picture of the barcode, which helps to compare prices, win prizes or write reviews.

Companies like Starbucks, Best Buy and American Eagle have been participating. If you want to play this trend using ETFs, look for funds with weightings in companies that are participating in the personalized service movement. Retailers who reward loyalty might be in a better position to benefit in these tough times. [Alternatives to the Closing Luxury ETF.]

For more information on retail, visit our retail category.

  • SPDR S&P Retail (NYSEArca: XRT)
  • PowerShares Dynamic Retail (NYSEArca: PMR)
  • Vanguard Consumer Discretionary (NYSEArca: VCR)

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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