How showrooming may hurt holiday retail sales

By Marcia Crosland, Ph.D., Director, Customer Experience Consulting Group, NCR Corporation

The holiday shopping season is upon us. Retailers everywhere are decking the halls for the busiest time of the year. But if every holiday season has a scrooge, then this year for retailers, it’s showrooming. 

With showrooming, a consumer visits a brick-and-mortar store to research a product first-hand. But what happens next stops the sale in its tracks. Empowered by mobile information, the consumer finds a better deal from a competitor and strolls away—not a penny spent at your store.

If you’re a retailer with a brick-and-mortar store, you can bet showrooming will impact your revenue. But just how concerned should you be?

In a January 2012 Pew Internet & American Life Project report, The rise of in-store mobile commerce, by Aaron Smith, store shopping behavior was observed around the 2011 winter holiday season. The findings show that over half of U.S. cell phone owners used their phones while in the store to seek help with purchasing decisions: 25 percent to gather price comparisons; 24 percent to look up online reviews; and 38 percent to call a friend for advice. In addition, 19 percent of those who searched for a better price via phone eventually bought the product online. That’s a sizeable hole in the brick-and-mortar store’s revenue.

Retail segments hit hardest 

While most retailers are not immune to showrooming, there are some segments that can breathe a little easier. Grocery stores and retailers that offer everyday staples run a low risk, as well as retailers that offer goods at a set price, like in the dollar or pharmaceutical segments.

However, if you’re a retailer of electronics, technology, media, toys or big ticket items—pay attention. Showrooming is proving to be a big issue for these segments. These retailers must be vigilant to create a showrooming strategy to retain a competitive edge. The good news? You don’t always have to fight with price.

Showrooming enablers

Online access, particularly via smartphone use, is driving the trend. Using comparison apps, shoppers can scan bar codes with the smartphone’s camera to initiate an automatic look-up of prices and reviews. Wish list builders and pricing alerts make these apps even more attractive. Combine this with navigation apps and one-click ordering, and it’s easy to see why the digitally enabled consumer is changing the game.

Keep in mind there are flaws. Localization of pricing and product availability isn’t always up to date and accurate. For some regions, the apps simply don’t work at all. Plus, the scanning technology isn’t advanced enough to capture all bar codes. While app issues may be frustrating for consumers, this also buys a bit of time for retailers to implement a strategy to address showrooming. 

Three powerful anti-showrooming strategies

#1: Enhance the in-store experience

A positive in-store experience can still trump online discounts. Retailers must focus on empowering their associates to deliver better service and improve the overall consumer experience. 

Ensure associates are equipped with strong product knowledge and the ability to upsell and cross-sell. Mobile point-of-sale (POS) devices can provide an even stronger associate presence with the ability to conduct inventory checks, deliver items from other locations, or place an item on back-order. Incentivizing associates to “sell beyond the aisle” can be a powerful approach.

A retailer can also offer incentives for consumers, like free shipping, exclusive items, easy returns and other loyalty perks. Technology can also be deployed to enhance the experience, such as digital signage or other in-store virtual tools. 

#2: Social influences

Social media can help consumers see value in visiting a store and sharing that experience with their peers. Create displays that encourage “liking” merchandise or posting pictures via Facebook, Twitter or LinkedIn. Use events and promotions via social media to strategically drive revenue. Geo-location apps that encourage “checking in” can also drive loyalty, especially when coupled with coupons or freebies. 

#3: Price match

While it’s not the only option, price matching is a valid approach. Above all, retailers should ensure consistent pricing across their own channels. Consumers can become highly frustrated with an inconsistent experience, leading to lost sales and broken trust.

In-aisle price matching is also gaining popularity. In this approach, QR codes are placed on the product label, and when scanned a price-matching e-coupon is immediately sent to the shopper’s smartphone. When approached the right way, this immediacy can work wonders for conversion.

Recommendations 

One possible answer for fighting showrooming lies in the “e-fairness” bills currently under consideration. This legislation would require online stores to collect state sales tax, creating a more balanced marketplace. Proponents of the bill suggest writing to your U.S. representatives and state governor to voice your support. 

The ultimate responsibility, however, lies with the retailer. Taking your showrooming strategy seriously begins with fully considering the unique challenges and opportunities for your store, and understanding the shopping experience from your consumers’ point of view.

A proper strategy must be put into place spanning associate training, the in-store experience, online presence and more. And, in this world of converged retailing, all channels and efforts must work together seamlessly.

Before you feel overwhelmed, consider this: Retail Systems Research’s Omni-Channel Benchmark Report 2012 noted that “retail winners” aren’t mastering channel convergence on their own. In fact, winners have a greater willingness to get help from outside integration partners than in the past: 56 percent now compared to only 25 percent in 2011. To combat showrooming this season, look for a partner with the right dedication, expertise and experience.

Marcia Crosland is the Director of the Customer Experience Consulting within NCR’s Global Consulting Group, which works with retailers around the world offering insights and expertise to achieve maximum results. (Photo by Michele Ursino.)

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User Comments – Give us your opinion!
  • Bob Phibbs
    45824848
    I would beg to differ. Price matching allows someone else to determine your profitability. Conversion is not the holy grail - profitability is. It does start with who you hire, how you train and schedule them. Cut costs to afford price matching and you'll watch your theft rise.
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