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Beating the showrooming blues

April 11, 2012 by Jeff Weidauer — Vice President, Marketing & Strategy, Vestcom International, Inc.

Today's Wall Street Journal carries an article on what's being called "showrooming." This is a relatively new activity where shoppers go to a local brick & mortar retailer and check out a product, and then order it online. In many cases, this is done right in the aisles of the store from a mobile device, adding insult to financial injury.

Amazon has done much to promote this behavior with offerings like its "Price Check" app that allows shoppers to scan a barcode on the product and check the price on Amazon. Red Laser, now owned by EBay, was one of the first to offer an app that provided pricing at both local and online retailers based on a UPC barcode scan.

The pricing info offered by these apps is getting more accurate, with Amazon even adding an option to input a local store's price. Location-based info lists the store, and the shopper just inputs what the store's shelf price. By enlisting shoppers to assist in the price-gathering process, Amazon has changed the game for brick & mortar retailers in ways no one would have guessed five years ago.

The response from retailers has been both slow and ineffective. According the WSJ article, Target is pushing to create "unique" products that are only offered in its stores. Walmart has instituted a program it calls "Endless Aisle," which allows customers to order online via Walmart.com and pick up in-store. Neither of these approaches is likely to be effective.

The problem is that these changes only address the symptoms, and not the underlying illness.

People shop online for a couple of reasons. Price is certainly one of them; the WSJ quotes differences of nearly 10% when free shipping and no taxes are accounted for. But there's another, bigger problem in brick & mortar retail: lack of service.

Retailers have spent the last 30 years cutting all the labor out of their stores. This has been especially true for food retailers, but it applies for big box players as well. The net result of all that cutting is apathetic, uninformed and uncaring employees who can stock shelves, but not much else.

Apple gets credit for being the lone growth story for brick & mortar retail. The company's success has much to do with the appeal of its products, but the fact that Apple Store employees are equal parts enthusiast and evangelist is a major contributor to the unprecedented growth.

The steps Target is taking are much like the steps the music industry took before iTunes changed the world: block access and force the old model. We all know how that worked out.

To really put companies like Amazon on their heels, traditional retailers need to offer something the online merchants can't, which is service, knowledge and expertise. This means increasing the spend for labor and paying more than the local fast food joint for employees who have a passion for what they do and know what they are selling.

Consumers will pay a little more if they feel they got more than they paid for...that could be service, or expertise, or simply a smiling face. All of those are in short supply in retail today, whether online or off; the difference is that offline retailers can respond in ways that online players cannot.

The way out of this mess will take investment in people and a willingness to change the existing model. Retailers aren't good at either of those things, but drastic times call for drastic measures. Trying to block the will of the shopper won't work, nor will trying to compete on price. The only viable route is to step up and compete directly in ways that online retailers can't copy.

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