Showrooming is increasingly on the agenda of marketers and retailers, as the practice becomes more and more popular among shoppers around the globe. Multi-brand shops selling cosmetics, books and especially gadgets are most affected by this activity, where people go to stores to check and feel smart phones, tablets and MP3 players, but instead of buying in-store they look for a better deal online. In the US, for instance, 21% of consumers use mobile phones to check online reviews/pricing while at retail outlets.
What are the implications of this activity for marketers? What kind of impact is showrooming inflicting on the marketplace? Are any companies already changing as a response?
Globally, almost half of all consumers in the world are spending their money more carefully according to Roper Reports® Worldwide (RR®W). At the same time, technology in the form of smartphones has empowered consumers by giving them the information they need to compare products, specifications and prices in the palm of their hands when they are in a store. This offers a clear advantage for e-commerce retailers, which usually sell at lower prices. But before buying more expensive items such as electronics or shoes, consumers need to look, feel and test the products to avoid any surprises from relying on a small online picture and description.
Companies like Amazon and e-Bay are clearly benefiting from this practice, while bricks-and-mortar stores are losing sales. Best Buy is already taking action by deciding to lose their profit margin instead of losing the sale, so they are now matching online prices to make sure consumers don’t leave the stores empty-handed. Jon Sandler, a spokesman for Best Buy, told the New York Times; “showrooming is now dead to us”.
Other interesting steps are being taken by certain shoe and clothing stores like Bumps in Australia, also affected by showrooming, who now charge a fitting fee for consumers to try on their products if they don’t buy them in-store.
Matching prices doesn’t seem to be the only or definitive solution, however, as physical stores usually have much higher overheads than online retailers – not a level playing field. Consumers are also of course unhappy and unwilling to pay a ‘fitting fee’, as this can’t be linked with a good ‘shopping’ experience at all.
Another possible consequence would be a change in the negotiation between manufacturers and retailers to have products being sold at much closer price points, if not the same, at any retail channels. Apple is a good example of this, whose products are always sold at a fixed price point, even on Amazon – so there is no point in showrooming.
I think, however, that the most important action that bricks-and-mortar stores can take is to focus on the shopping experience. Not only as a reaction to showrooming, but also because consumers are increasingly demanding it. Some stores like Burberry, Luxottica, O2 and Puma are already taking this to a next level, offering an interactive and/or a fulfilling experience to their customers, including iPad’s and full-length screens that convert into mirrors, maintaining high standards of customer service with well-informed staff, so customers are keen to get the full experience, and to feel they are unique and important. Offering comprehensive websites and smartphone applications, with reviews and product information (that could even be accessed from inside the stores with free Wi-Fi, via QR codes for example) would also help prevent clients from looking elsewhere. When consumers ‘escape’ the store environment via their smartphone screen, fully interactive stores can therefore ‘bring them back in’ with reviews, coupons, loyalty programs and so on.
Retailers offering this level of experience are looking ahead and minimizing the impact of showrooming. According to the RR®W 2012 study, 46% of global consumers agree that experiences are more important than possessions, whilst 45% agree that the look, feel and smell of a product is very important to them. As I said at the beginning, consumers want to feel they are getting a good deal, but this is not only about price, but also overall value, and overall customer experience and quality have an important role to play here.