Retailers have been scratching their heads wondering what the brouhaha is about  smart phone apps.

Scratch no longer.

Google Wallet and American Express/Foursquare have taken the lead and are showing retailers what it looks like to link automatic discounts with real life items.

Google Wallet, announced May 26, is a partnership between Citi, MasterCard, First Data and Sprint. Basically it’s an app that will make your phone your wallet, Google says. The downside on Google Wallet is that you have to be a Citi and Sprint customer, but Google says you can  prepay with other credit cards if you want to play. Google says:

Because Google Wallet is a mobile app, it will do more than a regular wallet ever could. You’ll be able to store your credit cards, offers, loyalty cards and gift cards, but without the bulk. When you tap to pay, your phone will also automatically redeem offers and earn loyalty points for you. Someday, even things like boarding passes, tickets, ID and keys could be stored in Google Wallet.

Add in the excitement over Google+, and Google scores significant persuasion points.

At first blush, the American Express Foursquare partnership seems more accessible. American Express has long been offering discount to members of its Open Network.  Now U.S. holders of  U.S. American Express OPEN cards who synch their cards with FourSquare will see special discounts when they check in with FourSquare at participating retailers and businesses.

This sounds persuasive  since I and many of my friends have acquired the Four Square habit. It’s a partnership that will drive revenue for both companies. But Amex has some listening to do among its long-time customers who are feeling slighted, like Jeff Jarvis, who announced today that he is kicking his Amex habit.

Retailers who have just gotten online and started using social media must be suffering  vertigo from the rapidity of change in the online world. Apps mov the action from the Internet to the “cloud.”  But recent research from Forrester Research, Inc., shows that search engine marketing, SEO, continues to be the hands-down favorite,  with 90% of retailers operating online citing it as the most effective source for acquiring customers in 2010.

Forrester’s report — The State of Retailing Online 2011— also found:

  • Some retailers are having greater success acquiring new customers through social networks.
  • Retailers are planning on increasing their spending on social networks in the future.
  • Social activity excels at delivering qualitative feedback for retailers; the primary ROI is in listening.
  • Web marketing spending at this point in the mobile world is not significant but retailers say they expect to increase their mobile spending.