Google promised to bring local inventory data to online and mobile shopping and the company has started to roll the program out. According to a post on the Google Mobile Blog today:
if you're searching for a product that is sold by participating retailers, including Best Buy, Sears, Williams-Sonoma, Pottery Barn, or West Elm, you can just look for the blue dots in the search results to see if it's available in a local store. If you see a blue dot, you can tap on the adjacent "In stock nearby" link, and you'll be taken to the seller's page where you'll see whether the item is "In Stock" or has "Limited Availability" near you. You'll also see how far away the stores are from you -- as long as you've enabled My Location or manually specified your location.
It's big boxes and major retailers for now, but Google is inviting any and all retailers to participate. This is the "killer app" for Google Shopping, which has generally been a lackluster destination.
This is currently available only for mobile and on high end mobile devices, specifically iPhone, Palm and Android. It's also US only.
There are others that already do this in the marketplace, including Krillion and its various distribution partners, Milo.com, NearbyNow (although its model has changed) and Channel Intelligence (for a few retailers). It's very much a feature consumers want and will use so this is a smart move that will send Google's major competitors scrambling to match it.
Update: I've spoken to Google about this and have a more detailed post at Search Engine Land.