Why showrooming is the savior of retail

9 May 2013

Barry Moles

Barry Moles

Consultant

Showrooming is one of the biggest discussion points within retail, with a lot of doom and gloom in the press.  Is the phenomenon of shoppers visiting bricks-and-mortar stores just to do their research before ordering online at better prices a real problem or exaggerated?

The retailers' reaction to showrooming

Many retailers are deeply concerned about showrooming. In fact, it's becoming a big debating point in retail boardrooms.  In the UK, we've lost a series of high profile chains from the High Street in the last few years with Jessops and HMV only just escaping being the most recent.  People blame showrooming for the demise of traditional retail.

Some retailers are embracing showrooming by offering free internet in store. Yet, others are doing the opposite and trying to behave like King Canute, trying to turn back the tide.  An example of trying hold back the tide is a specialist retailer in Brisbane, Australia. The retailer is displaying a poster (according to a post on Reddi) that customers will be charged 5 AUD to come to the shop, although it's refundable on purchasing anything.  Other shoe and clothes stores in America and Australia have also tried a "fitting fee", with the fee taken off the bill when someone buys something.

In the US, the Minneapolis-based retail chain Target has tried another approach.  They are asking suppliers to create special products that would set them apart from competitors and shield it from the price comparisons and showrooming.  Where special products aren't possible, Target asked its suppliers to help it match rivals online prices.  Other retailers also are likely to take steps similar to Target's plan, according to Deborah Weinswig, Citigroup retail analyst.  Best Buy, one of the biggest electronics retailers in the US, is currently offering price matching; but this will affect their margins if they do nothing else, so watch this space.

Current research                                                                                                                                            

There has been a considerable amount of research directly and indirectly on the subject matter of showrooming and mobility.  A recent study by Anderson Robbins Research found that, while shopping in a bricks-and-mortar store, 67 percent of people do check their Smartphones to see if there's a better price elsewhere. Of these, the majority (62 percent) will leave a store and buy online for a lower price.  However, it all may be much ado about nothing, according to another report. The ForSee Mobile Satisfaction Index (Holiday Retail Edition) found that while people are using their mobiles in-store, 62 percent are actually visiting the store's own web site.  The details of the report were:

  • 62% accessed the store's website?
  • 37% accessed a competitor's website
  • 21% accessed a shopping comparison site
  • 20% accessed the store's mobile app?
  • 11% accessed a competitor's mobile app

It's clear that the reports are in some ways contradictory but it's clear that consumers are not always looking at competitor's sites for price comparisons but sometimes looking for more information or better selection.

Which products are vulnerable to showrooming?                                                                      

The first step to defeating showrooming is to understand what products are vulnerable. Not all products are good candidates for showrooming.  No one walks into a convenience store, spies a chocolate bar and runs home to buy it on Amazon.  Chocolate is a classic impulse purchase, intentionally placed near the register to capitalize on people's desire for instant gratification. 

On the other hand, televisions are perfect for showrooming. They are big-ticket items with prices that vary wildly from store to store and season to season.  For this type of purchase, it's worth shopping around.  TVs are also large and unwieldy, so most people won't cart them home right away, even if they do buy in-store. Plus, TVs aren't usually an impulse buy meant to satisfy a transient craving.  Consumers generally don't mind waiting for them to be delivered because they are probably a planned purchase.

Of course, a lot of products fall between the chocolate bar and the large screen TV, the most interesting of which are the products that consumers could choose to purchase either in-store or online.  People may have good reasons to buy them in a store, but they have equally good reasons to buy them online. Understanding which products fit into this crucial middle area is the next step to defeating showrooming.  These products include sports gear, small electronics, outerwear, office supplies and sunglasses, among many others but they will change over time.

Embracing showrooming                                                                                                               

Retailers need a range of different strategies to combat showrooming, including technology, personalised offer and offering some added value.

Technology:  By using GPS location software and personalised marketing, retailers can send out offers out to customers when they are near a store.  Stores can adopt mobile payment technology, in the form of mobile wallets, e-commerce apps etc, making purchases a one-click process or by combining payment with coupons, rewards and loyalty programs that incentivize people to buy items in a brick-and-mortar location rather than online.  Finally, technology can be leveraged to harvest big data in the fight against showrooming. The more a merchant understands about customers and purchasing behavior, the better equipped he will be to turn the showrooming tide in his favor and, with SAP HANA, the technology is available.

Personalised offer:  Signing-up customers becomes easier with showrooming.  You just offer free internet and capture their details, along with shopping with a retailer on line and in store.  Then personalise offers to customers offering discounts or promotions based on past purchases, or where customers are inside the store.  Make the experience personal, empower the sales people / assistants to provide a personal touch that online retailers can't.

Value added:  Good advice, superb service, guaranteed best value coupled with more in store theater is a great formula for success.  Some examples are retailers can work with suppliers to offer value added goods in store like multi purchases BOGOF (buy one get one free) in store only , or like the entertainer offer delivery to the customers in 90 minutes, now that's a game changer for some customers.

Conclusion 

Showrooming is inevitable. What matters is how retailers embrace it that will separate the winners from the losers.  If retailers understand how it works and why it happens, they can actually use the consumer behaviors that drive showrooming (including mobile technology adoption) in their favor. Technology is perhaps the best weapon that merchants have in the battle against showrooming. The important takeaway here, retailers, is to factor in that consumers are going to the store with mobile devices. So, work with it by collecting and analyzing data on their customers, retailers can convince them that they're better off buying in-store. Give customers exactly what they're looking for right when they want it, and you'll be able to turn showrooming in to sales.

So is showrooming really such a big problem and scary? No! It's about retailers grabbing this fantastic opportunity of additional footfall and maximising it.

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About the author

Barry Moles

Consultant

I am a retail expert, having spent more than 20 years in numerous managerial and operational roles including merchandise, supply chain, finance and marketing.

I bring a unique hands-on perspective to advising clients having worked in every retail category (food, electrical, clothing, telecoms, pharmacy, charity) across all consumer channels (out of town, online, shopping centres, department stores, concessions and outlet villages) for major retailers in the United Kingdom.

My passion, amongst many hot topics facing retailers, is helping senior executives and their teams plan and run omni-channel retail strategies.

When I am not with a client, I can either be found on the high street or travelling the world with my family.

Bluefin and SAP S/4HANA - welcome to the one horse race

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