Showrooming, as a consumer behavior, is important to understand in order to identify retails mayor ongoing challenges.
The term Showrooming is used when customers are using another retailer’s physical store as a showroom for the Internet store from which they intend to purchase an item.
Showrooming is said to keep CEO´s awake at night. Retailers are claiming e-commerce pure players like Amazon is indirectly benefiting from their stores, leaving high street retailers with the cost, and Amazon with the profits. Consumers will chose Amazon because they are cheaper, and product is the same. Showrooming seen in this light, would be only about price, but thats just half of the truth.
From my point of view, it’s that we live in a world of one-click convenience and no one really needs what you sell anymore. They do however, need why andhow you sell it. But if your store isn’t substantially differentiated or remarkable enough to hold a distinct and powerful position in the consumer’s mind and win their love and loyalty, you’re going to lose sales to online players every day. Not because consumers are sneaky. Not because showrooming is rampant. And not because technology is evil. But because your business and the shopper experience you’ve offered simply aren’t compelling enough to command the sale. So don’t be taken in to believing that you’re being afflicted by some new, obscure condition. And don’t look for a pill to miraculously cure you. There isn’t one I’m afraid. Instead, go back to the drawing board and ask “What does my business offer the world that it can’t get elsewhere?” If you can’t come up with an exceptionally good answer, showrooming isn’t your real problem at all. (Doug Stephens)
Internet is changing commerce, and challenging traditional players who needs to adopt to new customer expectations. The outcome of the struggle between online and offline commerce will define the future of retail by totally redefining commerce as we know it. Internet is not trying to get rid of Target, BestBuy, Wallmart, or their likes, Internet is just exposing their business models for all to see, and the customers are voting by punishing the retailers that cant adapt fast enough.
Retailers are sometimes so busy running their operations that they lose sight of who they are running it for and neglect acting on insight. (Ian Foulds, Integrer)
Here is some facts.
- 60% of US consumers deliberately visited a brick-and-mortar store to gather information on a product while knowing they planned to buy that product from another outlet (Placed/Gartner).
- According to the recent Pew Internet & American Life Project survey, only a low amount of shoppers actually do showroom. In fact, the survey found that only 28% used their smartphone to look up product reviews and only 27% used their mobile device to compare pricing during the 2012 holiday season. In addition, less than half phoned a friend for product advice. All in all, 58% of mobile phone owners used their phones to “try” one of these activities while in a store. Keyword: try. And, unsurprisingly, shoppers that skew younger (78% of shoppers 18-29) and own smartphones (72%) led the pack (POPAI 2013).
- In the UK a study by Foolproof found that during the 2012 Christmas shopping period 24 % of consumers was actively Showrooming. With one in five shoppers saying it was something they had done, and nearly half of those ending up buying elsewhere, nearly 10% of sales are walking out of the door as a direct result of showrooming activities. So it is no surprise that those retailers who seem least well equipped to deal with that loss are finding it hard to stay in business.
- 90% of consumers who showroomed a product at a brick-and-mortar retail location did not purchase the item from that retailer online (Placed/Gartner).
- 50% of the total population have a smart phone in their pocket while they walk into the store.
- In the fourth quarter of 2012, about 36 percent of consumers engaged in showrooming, according to a report by ComScore. Of those consumers, 74 percent said price comparisons were driving their behavior.
- According to a new study from the Google Shopper Council, a group of shopper marketing experts, 84 percent of mobile shoppers use their phones to assist them in their shopping while in physical stores. Interaction with a smartphone has replaced interaction with store personnel. The study found that one-third of respondents would rather consult their phone than ask a person for information in store (Mobilepaymentstoday).
- A new TNS study across 43 countries suggests that 21% of shoppers use smartphones in store to ‘showroom’, 43% read reviews, 31% compare prices and 25% seek advice before they buy from friends and family.
- New Parago study: We found in this study that showrooming, the practice of comparison shopping on a smartphone while in-store, is up 400% over last year and this consumer shopping behavioral shift is occurring across all income levels and retail categories. Amazon is the #1 way US consumers compare prices on their smartphones at physical stores. Not only is Amazon #1, but it is used for showrooming 2x more than the next option, Google. However, there is a silver lining: when a retailer matches e-tailer prices with rebates, customers will buy in-store.
How many retailers will start a (digital) conversation with their customers using all the powerful tools the smart phone represents in fulfilling the customers needs for information, recommendations, price comparisons, etc?
So the consumers walks around looking, touching the products, maybe asking for advise and details from the shop floor personnel (if you can find them). The salesperson gets a bonus by selling – for him or the store – the most profitable product. There is no confidence coming out of this relationship, no trust.
The consumer will be thanking for the help he got in the store, but not by buying a product in the store. He will complete his or hers shopping at home, online. Not because he want´s to, but because that’s where he will get the final answers into making the final buying decision. If that could have been done in the store, it would have been done in the store. So why isn’t it like that? The answer is that it will be, when the retail experience matches the possibilities that are highly available around us and actually more and more expected, is put to the right use in the store and not only online. That´s when we merge online with offline, and get something new.
The retail-war will not be won by either online or high street retail, this is the last war where the old world last fight over “territory” that is all ready lost to them. While the retailers throw all they got into the (wrong) struggle, a new breed will emerge and disrupt their business.
Today’s shopper wants a higher level of personalisation in their interactions with retailers, thanks to their experiences online. And our study found that shoppers are willing to help retailers know what they’re looking for. Eight out of 10 UK respondents said they would spend time providing information on their preferences for what they buy, the channel, and mode of communication – but they are only willing to provide this information once. After that, they want the retailer to learn from their activities and provide them with personalised offers and communications.
Providing more personalised marketing means that retailers will need to analyse the information they hold about customers and their buying patterns across all channels. Retailers will hold huge amounts of structured and unstructured data, such as customer feedback, reviews and so on, and we see big data analytics as a major as-yet-untapped opportunity.
It’s clear the store still has a vital role to play, and that capitalising on advances in technology can allow retailers to embrace the showrooming trend. By offering a personalised experience across every channel, based on a deep understanding of customer preference, we believe UK retailers can use the growing trend of showrooming to connect with their customers, thus increasing loyalty and boosting sales (Martin Butler, IBM) Get IBM´s report on Showrooming here.
Cross-channel: Tomorrow’s market winners should be able to deliver an experience that is crosschannel by design, allowing customers to search, buy and serve seamlessly across multiple channels and touch points, and that is able to deliver products and services that are not only highly relevant to the individual customer, but also timely in nature. The success of a company in delivering that experience depends on their ability to collaborate and align their business processes with multiple enterprises, from content providers to supply-chain partners to selling partners. Download Oracle latest White Paper on the future of consumer jouney here
Macy’s describes omnichannel retailing as providing consumers a consistent shopping experience across multiple retail channels, including the ability to view updates of all available inventory whether shopping online or in stores. In the past year, for example, Macy’s has been equipping hundreds of its more than 840 stores to fulfill orders customers place online, providing online shoppers with products that might not otherwise be available via the web. Macy´s hired a Omnichannel manager in 2012 (InternetRetailer)
What role does mobile play in an omnichannel strategy? “Mobile is the bridge that goes between the channels,” Van Vuuren explained. Retailers shouldn’t see mobile as a single device but rather as an experience – to which Anand added, “Mobile is an experience strategy, not a device strategy.” Retailers need to think how design for enhanced usability and seamless browsing and shopping. As one example, if you think about the “virtual basket” that goes with the customer across channels, the retailer needs to understand whether the customer just wants to save an item for later consideration or if he/she is ready to buy on the spot. (NPR, Shop.org)
What do consumers get from retailers?
A Kellogg Manegment School survey from 2012 found that 59 percent of participating shoppers said they received poor or average service in the stores where they’d recently shopped. Among shoppers who said they engaged in showrooming, 40 percent reported that they actually never intended to buy online, but they were driven there after experiencing poor customer service and support in stores.
So Showrooming is not only about low prices, it is also about service. Macys turnes out to be a good example of how to fight Showrooming without focusing only on price. Read this BetaFool article.
IBM released a report on omnichannel and showrooming at NPR in January.
With so many visitors and benefits, retailers must work to maintain the store’s advantage. However, they must, as well, be able to reach consumers along multiple touch points. They must build and maintain a seamless omni-channel consumer experience. By blending omni-channel benefits into both local shopping trips and online shopping trips, retailers will provide a shopping experience that can lead to brand loyalty and repeat sales.
What will a stores look like in 2020?
“Stores will become more theatrical, more immersive, and more of a life experience rather than simply a place to get something,” said Christopher Studach, creative director at KRS. “As much as they are selling products they will be selling a good time, a lifestyle.” (BusinessInsider)
Also, read Business Insiders list of companies that are changing the way we shop
Signals of what is to come:
- Nomi: How would you improve your business if you had the same kind of data about your store that Amazon.com has about its e-commerce site? Nomi provides the latest in offline analytics technology – which allows you to measure, analyze and optimize your store experience in real time.
- Biffle “What consumers need is something they don’t easily get today – instant access to the best price in a safe and secure environment,” Fusz says. “Until now, when consumers search for the best price, they have to choose between the lowest price found – often from an unfamiliar vendor – and buying from a vendor they know and trust, like an Amazon. With biffle, consumers don’t have to make that choice – because the lowest price is now available from a trusted source.” (from Forbes)
- Service-in-store: Regus (BusinessHub) to open in Staples stores: Whether it is a ten minute stop to check emails or to co-ordinate a meeting, our Business Hubs at Staples will offer a flexible workplace with access can be gained with the use of a Regus Businessworld Card, or a pass purchased at Staples from as little as £5 per day.
- 3D Print Retail: Staples and others are testing to offer 3D printing in their retail chains (starting in Belgium and the Netherlands Q1 2013). Could inventory and logistics in the future change drastically when it is possible to in-store-print what ever the consumers needs.
- Pop Up Stores: (Adidas)
- New take, but same old business model: Aetherapparel
- JCpenny helps customers to find lowest price in stores via SMS
- Store-in-store: Not new, but could be large retailers way out of their troubles. The concepts is to see the store as a framework/marketplace for different brands to sell in (like a mall). Every brand gets a space and provide the sales resources. This will give the one owning the marketplace freedom to focus on geting customers in to the store, and see to that they get what they came for and more. JC Penny hired Apple Stores CEO, Ron Johnson, and Forbes writes that store-in-store is what they are working on right now. Google has also tried out the store-in-store, or more like it, popup-store-in-store with Best Buy in US and here (2011) in the UK. Latest: Samsung partners up with BestBuy to educate BestBuy´s customers in what could be another take on the emerging store-in-store concept to battle showrooming - Read more
- Best Buy Geek Squad: One way of fighting Showrooming is to offer special services that online retailers will find hard to match. Best Buy´s Geek Squad is one such service, Apple Stores Genius Bar is another.
- Profitero gives US brands and retailers live, updated price data in order for them to see how their products are priced compared with competitors on and offline.
- E-commerce (app) in-store at Wallmart: How it works: When you open Walmart’s location-aware main app in a store that has iPhone self-checkout, the so-called “Scan & Go” option becomes available. You scan the barcodes on items as you put them in your (physical) shopping cart, and the app keeps a running total. When you’re done, you go to a standard self-checkout station and choose the “mobile” option on the terminal next to the card swiper. A QR code appears on the screen. Scan the code with your phone, and the app transfers over the contents of your (virtual) shopping cart. Pay as usual, and you’re done (Walmart has a video that explains the process). Read more >>
- Brand Stores/Concept Stores: Google Store hype: There have been som speculations that Google will establish physical stores in the near future, just like Microsoft has done (with not so good reviews and some more open minded reviews). Thats a great signal of things to come in retail, even if it turns out to be just a Apple Store copy to begin with. It makes you think: what can a Google Store be like (not only showing Google glasses)? Google’s executives understand that retail is about more than just sales; it gives a face to your company – a physical connection a web page will never offer. Here are som speculations on this from the experts: The Age, Marketplace.org, MyBroadband, TechCrunch, and Forbes.
- A NEW high-end Brisbane retail butchery which opens for business this morning provides glimpses of possible future trends in independent meat retailing in Australia, blurring the lines between traditional butchery and food service/restaurant functions.
- Munich-based Wash & Coffee, pairing a Laundromat service with a café, and now New York’s Aksel Paris is combining its clothes retail store with an art gallery and social cause support center (via Springwise).
Google need permanent hubs. They need central locations in cities around the world where people know they can go for all their Google needs. They need people in those stores to play with their products. And they need Google-trained employees there to answer any questions. It’s not good enough anymore to see a spec sheet online. We’re in an era of new usage paradigms. Hands-on time is key. (TechCrunch)
Apple CEO Steve Cook on retail (9to5Mac). “There’s no better place to discover, explore and learn about our products than in retail. Our team members there are the most amazing, awesome, incredible people on earth. It’s the best retail experience. It’s a retail experience where you walk in and you instantly realize this store is not here for the purpose of selling, it’s here for the purpose of serving…
There store acts as a gathering place. It’ a place that has an important role in the community. If you look at an agenda for an Apple store on any given day, you might find that there’s a youth program going on. You might find a local musician entertaining people in that store. It’s incredibly exciting what these stores do. I’m not even sure store is the right word anymore. They have taken on a role much broader than that. They are the face of Apple for almost all of our customers. People don’t think about the Cupertino headquarters, they think about the local Apple store. Last quarter, we welcomed a 120 million people in our stores. It’s so huge that some of our stores aren’t big enough. We’re closing 20 of our stores, moving them, and making them larger this year. In addition to that 20, we’re adding 30 more… disproportionately outside the U.S. First store in Turkey gets us into 13 countries.
I don’t think we would have been nearly as successful with iPad if it weren’t for our stores. It gives Apple an incredible competitive advantage. Others have found out it’s not so easy to replicate. We’re going to continue to invest like crazy. The average store last year was over 50 million in revenue.”
Ways to “fight” Showrooming:
- Membership incentives to shop at the store: the Sam’s Club model
- Consistent pricing and promotions: retailers are more successful when offering the better deal at the store rather than online
- Cancel shipping costs for in-store purchases
- In-store pickup for online orders
- Same-day service: most recently trending at Walmart and Google
- Price Match Guarantees: in January, Target announced it will match the price offered on Amazon and Walmart.com on purchases, within a week of purchase with proof in form of website or printed ad.
- 5 ways to win agains Showrooming (POPAI)
- Deliver best in customer service, not sales: Make sure everyone leaves with a smile whether it’s because of a problem solved, a product bought or an enjoyable shopping experience in the store.
- Be bold and unafraid to leave space for shoppers to mill, breathe and reflect: It’s good to see Tesco differentiating beyond price by starting to create spaces in store to change the tempo, from coffee shops, to Giraffe restaurants, to blow dry salons.
- Where you can, edit your portfolio and messaging: Obviously this is easier when you don’t make or sell a thousand different lines, but it has been well documented that too much choice is confusing and even paralysing. It may be no coincidence that retailers known for their edited lines such as Lidl, Zara and John Lewis are enjoying such success.
- Instore WiFi
So, is showrooming the fault of the Internet or the retailer? Probably a bit of both, but there’s no question that some companies have done a good job of fighting the trend with above average customer service. The success of Macy’s and Wal-Mart seems to suggest that if a retailer can’t pull off cheap, then it had better treat its customers like rock stars.
More consumers, 58 percent, consulted their phones during the 2012 holiday season, compared with 52 percent in 2011. Young shoppers, wealthy shoppers and smartphone owners were the most likely to leverage their cellphones while shopping.
About 12 percent of those who used their phones to look for cheaper prices opted to buy the products online, about the same percentage as did in 2011, according to the report.
But the report contained some good news for retailers: Almost half of the people who comparison shopped with their phones, 46 percent, still ended up at the cash register, an 11-point increase from 2011.
That likely reflects retailers’ efforts to combat the growing appeal of online sales. Many major retailers now match online prices. Target puts online reviews on shelves next to electronics. In November, Best Buy’s new chief executive, Hubert Joly, told employees to step up because “once customers are in our stores, they’re ours to lose.”
Showrooming – The business model
Price matching online offers is not a viable long-term strategy for many retailers, making it important to source exclusive products. A combination of product exclusivity, convenience and loyalty will keep customers buying in store.
It´s really easy, if your business and the shopper experience you’ve offered simply aren’t compelling enough to command the sale, you will not make it.
The sad fact is, people need to use their mobile phones while shopping because customer service is a thing of the past. Instead of salesmen, we have cashiers whose whole purpose seems to be getting you out of the store faster. From a business standpoint, that doesn’t make sense.