Article

Four ways to fight showrooming with data

A thorough understanding of the practice can lead to strategies that help thwart the loss of customers to online competition.

November 14, 2013

In the old days of e-commerce, the Web was a great place to conduct a little product research before driving to the store to make a purchase. Now the opposite holds true, and it’s driving retailers batty. Whether with intent or completely unaware, consumers are participating in a phenomenon called “showrooming.” More than three quarters of shoppers have examined merchandise in a brick-and-mortar store and ultimately purchased that merchandise at a lower price, online. According to new data from CFI Group’s Holiday Retail Spending Survey, more consumers showroom all or most of the time than those who don’t at all, and 40 percent acknowledge that showrooming will be a go-to strategy for holiday deal-finding this season.

Among shoppers who intend to spend more than half of their holiday gift budgets online, three quarters are confirmed “showroomers.” But, showrooming intent and trends are even more alarming—and more valuable—when examined along the lines of age, gender, price consciousness, and tech savvy. Which shoppers are most likely to showroom? What motivates consumers to do it, and how can retailers de-motivate them from searching online for lower prices on competing websites? While there’s really nothing a retailer can do to altogether stop consumers from showrooming, a thorough understanding of the practice can contribute to proactive strategies that help thwart the loss of customers and sales to online competition. Here’s a look at showrooming by the numbers according to the 2013 Holiday Shopping Survey from CFI Group, along with four tips on how understanding the data can minimize the negative effects of the phenomenon.

1. Focus on men.

Retailers that cater to men get showroomed most. Worse, those who sell electronics to men are being chronically victimized by showroomers. Nearly one third of men say they showroom all or most the time, and half say they do it sometimes. Their distinct propensity to seek e-commerce deals on electronics—but only after examining those gadgets in stores—is particularly troubling to the brick-and-mortar consumer technology retailer. A full 60 percent of men said they showroom electronics, followed by apparel and accessories a distant second (12 percent).

Women, on the other hand, are less active and far less predictable in their showrooming behavior. Only 22 percent of women indicate they showroom all or most of the time, and when they do, their merchandise preferences are more diverse. At 34 percent, electronics still lead for women, but apparel and accessories slide into a closer second at 20 percent. What’s more, while men and women both name price their primary motivator for showrooming, women will showroom for a deal at virtually any price point. By and large, men begin looking for a better deal via showrooming once the merchandise they seek hits the $50 mark, with another spike in activity for items costing more than $200. When women showroom, they don’t discriminate on price.

2. Consider the generational impact.

When we dig into generational preferences for showrooming, it becomes clear that the trend is gaining a full head of steam with the Millennial generation. A full 38 percent of 18-to-34-year-olds said they’re likely to showroom all or most of the time. The killer combination of male and Millennial causes that figure to jump to more than half, and a majority (56 percent) of male 18-to-34-year-olds say they plan to showroom this year.

When compared to Baby Boomers, a massive generational dichotomy in showrooming intent is revealed. Only 15 percent of 45-to- 56-year-olds say they showroom all or most of the time. To mitigate the impact, retailers must develop strategies to engage young consumers in stores and give them cause to consummate transactions in the present.

3. Show them the savings. Or don’t.

In theory, showrooming consumers are only a true concern of retailers that knowingly and willingly compete on price. Those retailers will need to contend with consumers’ high expectations for online savings to avoid letting sales wander out the door. Asked how much they expect to save for their showrooming efforts, 44 percent of shoppers said 11 percent to 25 percent, while more than two thirds said they expect to save between 25 percent and 50 percent. When online discounts run that deep, price matching is dangerous business. For some, the question becomes not will we match that price to save the sale, but instead are deep-discount-seeking consumers the customers we want? It’s a tough balancing act in a price-conscious environment. Those retailers convinced that price wars are nothing more than a race to the bottom can best mitigate losses to price-conscious consumers by creating an experience worth paying a little more for.

4. Ramp up your social engagement.

While only slightly more than a quarter of consumers admit that social media influences their buying choices, a closer look at the data reveals an important link between social sharing and showrooming. Among consumers acknowledging a strategic intent to showroom, 44 percent say social media influences their buying decisions. Armed with this knowledge, retailers should make every effort to identify their most mobile and social-savvy shoppers. They’re your most likely showroomers, and a bit of social engagement could go a long way toward bringing them into the brand fold.

In any event, retailers must acknowledge the exacting choreography required among brand presence, price optimization, target demographic, and customer experience differentiation in the effort to beat showrooming. While digital customer engagement is important, in-store engagement is key. More than half (52 percent) of admitted showroomers who are assisted by handheld- or tablet-wielding in-store associates ultimately make their purchases from the store. When a tech-assisted associate does not engage showroomers, that figure drops to one third.

This holiday season, the throngs of e-commerce-savvy shoppers in your stores present the ideal time to let data guide good customer engagement habits.

This report courtesy of CFI Group. Read more about consumer behavior.