I think this downward spiral would not happen because of the location-based nature - or only if there are many stores in one area having the exact same products. If I need a product RIGHT NOW (why else would I fire up the app and look for it?) I will walk into the next store and pay perhaps up to 20% more than the average price. I remember the time when I often forgot my micro USB cable when going to Uni, so someday I walked into the (ridiculously expensive) tech store near Uni and bought another one. Had I bought it over the internet I might have paid only half or third of what I paid there. This is also the reason why expensive lemonade stands at points of interest do so well - they are just THERE.