The term "showrooming" is the new buzzword in the dictionary of retail. It refers to the act of consumers literally shopping on their smartphones while in the aisle of a retailer. Consumers using mobile devices to shop in aisle has been noted as particularly impacting consumer electronics retailers like Best Buy. In fact, it has been portrayed that bricks and mortar retailers have become "helpless has beens." But, Best Buy and others are fighting back. There are 5 ways that retailers can beat showrooming by changing the consumer experience.
Showrooming — Myth, Reality or fait accompli
A review of our past blogs and the retail headlines indicates that "showrooming" is a direct reflection of a consumer centric world. Consumers have been empowered with access anytime, anywhere. They expect to be able to use their smartphones in the bricks and mortar stores' aisles to "showroom" — which means to check other sources online for information, customer reviews or better prices. Amazon has in fact promoted holiday discounts for consumers purchasing online from bar codes they scanned in someone else's stores.
There is no question that today's mobile consumers are shopping online and using their smartphones. A recent Nielson survey has shown that consumers do in fact use their mobility to "showroom," and that they do it most often in electronics stores:
However, the Nielsen survey shows that consumers may in fact be using smartphones in store to search for more information or other consumer reviews, not necessarily to purchase elsewhere. There is in fact research to support Best Buy's claim that showrooming has less of an impact than previously claimed, because much of the in-store search is for more information to make the in-store purchase decision.
Rollover and die … or fight back by differentiating value for consumers
Don't look now, but Best Buy is coming back. While the onslaught of Amazon and other online retailers at first seemed insurmountable, cheaper prices online is NOT the only issue. While consumers are not stupid and they do not want to pay obscene price premiums … they also highly value experience and service IF the retailer will make an effort to provide them. If the in store experience becomes "personal," then consumers are most likely to vote for "Me-tailing," where their needs are addressed by a human being versus a computer screen.
We and others have said it before … today the new normal is an "omni-channel" world. Consumers will shop and check multiple channels, including social media. But, traditional store based retailers do in fact have an advantage of offering both an experience and a relationship. The smart retailers are realizing that there are in fact ways that they can beat showrooming and remain competitive.
5 ways stores can beat "showrooming" sales loss to Amazon and ecommerce
1. Confront price differential head on.
Best Buy has new management who have made some tough choices. Bloomberg has reported that Best Buy has drawn a line in the sand and has made holiday price matching guarantees permanent. This tends to erase or diffuse consumer perceptions that they can get it cheaper at Amazon. But, it also has a tremendous burden on the retailer to have the buying prowess and expertise of being able to matches Amazon's efficiencies and business model.
2. Embrace omni-channel instead of fighting it
In the words of Cheryl Berinato, Director of consumer insights at Macy’s:
“You should bring technology into the store, instead of having the consumer go home and use their own technology.”
This means that the retailer needs to accept that consumers will search in store so they need to make Wi-Fi accessible. Or, they need to adopt the strategy of retailers like John Lewis who makes internet capable kiosks available throughout the store.
3. Make the store Associate the most powerful consumer tool
The RSP (Retail Sales Person) is one of the most powerful "personalization" tools in the retail store arsenal … IF retailers recognize and equip them. It starts with a philosophy and script of store staff creating a personal experience. It also means equipping RSPs with technology at least as good as what the consumer has available. Best practices means that stores provide staff with smartphones or tablets, which enable them to look up information with consumers, search for reviews for consumers, and even check stock availability in store or online.
4. Make an "App for that" … leverage the store brand through convenient search
If you look at the consumer search data in the store aisle, many consumers are simply searching for more information, consumer reviews, or comparable products. Retailers need to make it easy for consumers to search within their brand by providing a retailer app for that. Macy's, Target, Best Buy and even Walmart now have their own apps. In addition to providing convenience, apps enable very targeted offers and promotions to the best consumers who are indicating their intent to purchase … standing right there in the aisle.
5. It’s an omni-channel world … so have it YOUR way!
One major advantage of Amazon and ecommerce is the "long tail", which provides more choices than can ever be stocked in stores. Most retailers sell online so they need to make their virtual shelf readily available to consumers in store. Amazon provides quick shipping to homes. Retail stores can offer the consumers more choices by purchasing in store and ship to home, or purchasing online and picking up in store, or some combination thereof. Choice and convenience of having it your way are very powerful motivators for purchasing here … now.
BONUS – SERVICES, SERVICES, Service On-going
While Amazon can offer quick ship, free shipping and easy returns, they do NOT offer services to diagnose problems or fix something. Consumers have a need for quality service, especially in electronics. The one huge differentiator in Best Buy and their mobility stores is the Geek Squad. Not only can Amazon not offer tech support, Geek Squad services are highly profitable. What most electronics retailers are missing is the CRM (Consumer Relationship Management) to leverage value, support and personalization after the initial sale.
In this ME-tailing, consumer centric world there are a number of ways that Best Buy can beat showrooming. The key is that it takes planning, effort and consistent execution that consumers value over just pure price.
To paraphrase Mark Twain:
Declaring the death of Best Buy and big box retailers is premature … IF and only if they are proactive in getting consumers to "showroom" back to their own stores and websites.
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Chris H. Petersen, PhD, CEO of Integrated Marketing Solutions is a strategic consultant who specializes in retail, leadership, marketing, and measurement. He has built a legacy through working with Fortune 500 companies to achieve measurable results in improving their performance and partnerships. Chris is the founder of IMS Retail University, a series of strategic workshops focusing on the critical elements of competing profitably in the increasingly complex retail marketplace.