First of all, what is “showrooming”? It’s when a shopper visits a store to check out a product but then purchases the product online. This occurs because, while many people still prefer seeing and touching the merchandise they buy, many items are available at lower prices through online vendors. As such, local stores essentially become showrooms for online shoppers.
Though showrooming is the nemesis of bricks-and-mortar retailers, has the phenomenon been over-hyped? The truth is it’s not quite as bad as we’ve been told. Acccording to a 2012 Price grabber Shopping Outlook Survey, the average shopper will make 53% of his or her overall purchases online, 42% from bricks-and-mortar stores and 5% from a mobile phone…so that leaves a lot of cross channel, omnichannel and showrooming opportunities.
That tells us that retailers simply need to adapt to the changing dynamics of the marketplace. They need to incent buyers to not only visit the store but complete their transaction in store…adding just the right amount of customer experience and value add to the mix.
But how to change? Well, for starters, don’t be like that store in Australia that instituted a $5 cover just to look in the store. A better example to follow is Best Buy:
In 2012, the electronics retailer seemed to be the poster child for “death-by-showrooming,” as sales plummeted and management made plans to close 50 stores. However, between 2012 and now, Best Buy found a way to stabilized its sales and (as of April) boost its stock by over 100%. The change is due in part to how Best Buy is dealing with showrooming: Best Buy’s strategy for showroomers was to improve the shopping experience for all its customers.
Best Buy’s first (and most obvious) effort was to implement price matching with its online competitors. Price matching is common among bricks-and-mortar stores, but it was a big leap for Best Buy to extend the policy to etailers like Amazon.
To get this aggressive on pricing means focusing on higher-margin items–those that almost require coming into the store. And it also means cutting waste out of the system. Retailers have had the luxury of being sloppy on inventory management. Inventory distortion—lost sales due to out-of-stocks plus losses from overstocks that must be deeply discounted—is a multibillion dollar issue. Cross-channel inventory management is part of the solution. So is integration between point of sale, stockroom, warehouse and pricing labels. All of this is a great starting point for any discussion of intelligent systems.
Best Buy also changed the in-store experience for its customers by enabling Samsung to operate special boutiques—Samsung Experience Stores—inside Best Buy stores. These Samsung outlets are staffed by highly knowledgeable and trained Samsung employees who are readily available to interact with customers. The Samsung stores are Best Buy’s way of mimicking the information-rich experience customers get online with comparisons and reviews. Customers have gotten used to having this sort of information available when they shop and by providing it, Best Buy is speaking their customers’ language. This method has great potential for other retailers as well.
Show rooming isn’t an isolated shopper behavior—it represents a permanent change in retail dynamics. How it plays out for each individual retailer remains to be seen, but anyone who is not taking it seriously is probably not going to stay in business very much longer. If nothing else, Best Buy taught us that.