Bricks vs. Clicks: Retailers Combat Showrooming
Target, Wal-Mart, Best Buy, Staples – the big names in big box – have all faced showrooming, a consumer strategy that undermines their brick and mortar sales. Shoppers with a smartphone can easily scan a bar code for pricing and product specifications and then compare that price with what’s available online. The savings could be 10 percent, 15 percent, 20 percent or more, and in many instances, the consumer will simply walk out and click for the better deal.
A nationwide study conducted by Anderson Robbins Research for Linkable Networks noted that, while shopping in a physical store, 67 percent of people check their smartphones to see if there’s a better price elsewhere, either in another retail store or online, and 62 percent will leave a store and buy online for a lower price. Recognizing that mobile commerce is rapidly becoming the norm, these stores and others are aggressively investing in data technology to interpret consumer behavior and meet mobile commerce issues head-on.
[Photo credit: Ian Muttoo]
Best Buy, for example, has long been known as the poster child for showrooming’s negative impact, but the company is fighting back. As one of the largest electronics retailers, they have price-matched their competition, and many now also offer in-store “boutiques” for products such as Samsung and Apple. In-store customers can instantly approach a Best Buy staffer, show the results of the on-line comparison shop on their phone, and in most cases receive the same price in the store. Target will also price-match certain items sold on Amazon.com, BestBuy.com, Walmart.com and ToysRUs.com, as well as on Target.com, year-round. While there is some fine print to Target’s program, it is clearly designed to counteract the effects of showrooming sales losses to Amazon, a major competitor.
A New York Times blog recently recommended three ways for brick and mortar retailers to fight back. First, they recommend strategic conversations between brands and retailers. As the blog notes, right now these entities operate in different silos and often end up competing against each other. Both must work together on offering custom solutions that meet their shoppers’ needs. For example, Wild Things Gear, a technical outdoor gear company, recently entered into a customization program and worked to launch a similar program for their largest retail partner, Moosejaw. Such collaboration ensures that both are able to meet their customers’ needs and offer specific product sets that reflect their particular focus. A second suggestion is to embrace customization as a key area of strategic growth for all teams within the organization, from marketing to IT. And third, focus on the customer experience. A study by Forrester suggests that 35 percent of shoppers are interested in purchasing custom products, particularly in categories where they can stand out from their peers. Giving your customers exactly what they want will cement their loyalty and engagement, the blog states.
Wal-Mart, Amazon, Staples and RadioShack, among others, are either testing or have in place programs that allows online shoppers to have their merchandise shipped to a “locker” in their or a companion’s physical store with no shipping costs. This brings mobile customers into the store itself, with the expectation that in-store sales will increase.
[Infographic below from IBM:
IBM Survey: Shoppers poised to dramatically expand purchasing power beyond the store; 1/3 consider options other than the store for next purchase; Showrooming drives 50% of online sales
Full release: www-03.ibm.com/press/us/en/pressrelease/40138.wss]
Aside from the big box chains mentioned earlier, there are others that are vulnerable to showrooming, according to a study by Placed, a mobile analytics company. Those include Bed Bath and Beyond, PetSmart, Toys ‘R’ Us, Sears, Kohl’s, Costco and J.C. Penney. The study relied on Placed’s panel of more than 14,000 mobile phone users.
Retail stores with even moderately sophisticated point of sale (POS) systems can use the data collected through their systems to their advantage. Savvy merchants will look at several factors, including historical purchase data and results of customer loyalty programs and other incentives. They will survey customers to ascertain what they are buying on line and at what cost. Merchants who may be too small to price-match can make up the difference in personalized customer service – a value that many consumers don’t find online.
Amazon has fought back with a mobile app that allows consumers to scan a product’s QR Code or type a barcode into a smartphone for comparison shopping while in a retail establishment. Besides the convenience of comparison shopping on the fly, consumers benefit from the service they receive in the order and delivery process. Sometimes this means that buyers will choose convenience and service over a matched price or deal, especially if the customer experience inside the store is sub-par.
Smart business owners will leverage technology to reach out to smartphone customers and entice them into the store. Location technology – for example, GPS, near field communication (NFC) and others – can offer deals to customers when they’re near the store, piquing their interest and getting them excited about shopping – and saving.
Another key technology is mobile payments. Shoppers immersed in mobile commerce find comfort and convenience in a one-click payment option. If they can find these options in a brick and mortar location rather than online, they may be more likely to patronize that store.
A recent study by the Gartner group found that 60 percent of shoppers practice showrooming, and the majority of those people end up buying products somewhere other than the store where they first go to shop. And – a key ingredient to successful sales closure – if customer service has been an issue, some shoppers will opt to shop online rather than buy the price-matched item in the store, even if it means waiting a few days to have the item delivered.
Traditional merchants who are unresponsive or blind to the changing needs of the consumer will have a problem with showrooming. “Old school” will not cut it in today’s rapidly changing world of technology. A wise business owner will embrace the technology because he or she is embracing the next generation of shoppers. The Gartner study notes that shoppers between 18 and 29 have a “foundational belief” that online retailers have better pricing, meaning they will likely opt for online shopping, with traditional retailers having to prove they can compete. Customer loyalty has shifted from traditional to online retail. Perception plays a huge role, too, as Amazon is perceived as a bargain basement for an endless array of merchandise options.
Retail is changing at a dizzying pace, and will continue to do so as long as technology and the consumers’ hunger for the most current and “coolest” shopping apps come on the scene. Smart big box retailers recognize and understand these changing currents, and have taken steps to meet the needs of today’s consumer.
Best Buy boutiques (Forbes)
Target announces price matching (Target)
Placed White Paper – Aisle to Amazon (Placed)
Amazon QR/Barcode App (Amazon)
Gartner Showrooming study (Gartner)
Written by Suzi Harkola
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