Showrooming: part 1

Increasingly, consumers have smartphones and data packages that give them low cost access to the web outside their homes. As a result of this “showrooming” is on the increase.

Showrooming involves looking at items in a shop and then searching for the cheapest place to buy it on-line. This is seen as a major headache for many retailers who are simply acting as a showroom for shoppers who then buy elsewhere.

According to Pew research, over half of all shoppers use a mobile phone to research purchases while in a store and almost 30% of them either bought on-line or bought in a different store, a loss of 15% to retailers.

The good news is that these figures show that not everyone is a “showroomer”. In fact shoppers can be divided into:

  1. “maximisers” (who tend to be showroomers); these shoppers will focus on getting exactly what they want (price, features)
  2. “satisficers” (who tend not to be showroomers);  as the name suggests, these shoppers are happy with “good enough”.

And most people it seems are satisficers.

Also,  showrooming isn’t useful behaviour for quite a few categories. The lower the price, the less likely showrooming will happen; so greetings card shops and confectioners are pretty safe from this phenomenon. TV and computer retailers are much more affected. And fashion retailers, depending in part on the brand, are probably somewhere in the middle.

But nonetheless, if showrooming is taking away 15% of sales from high street shops, then it is a problem for many hard pressed retailers. Indeed some people have blamed the demise of Jessops and Comet on exactly this phenomenon.

And this behaviour is likely to increase as smartphone penetration increases and as more consumers learn maximiser behaviour.

Brands need to support retailers

Will the solution come from brands? Brands need high street stores so that consumers can see their products. Some brands like Samsung and Sony have set up their own retail outlets. But that won’t be possible for everyone.

In an ideal world, brands would help retailers to maintain high street sales, for instance by offering them items that are not available to on-line retailers. That might be part of the solution, but it won’t solve the problem on its own.

Shops need to find their own solutions

The solution lies in the hands of the retailers themselves. Charging customers for “just looking” or trying clothes on doesn’t seem sensible, although it has been tried. But there are plenty of other tactics that can be used.

The simplest tactic is to drive increased shop visits. In theory increasing shop visitors by around 17% should largely wipe out the effect of 15% showrooming. This might be done through localised marketing, including geo-targeted mobile advertising to the very people who are potential showroomers – smart phone owners.

Alternatively offering rewards for visiting a shop through schemes like Shopkick can pay dividends as well.

Once the consumer is in a store then a number of other tactics available. Price matching is perhaps the most obvious. In the USA Best Buy claims to be killing showrooming by offering price matching against local retailers and major on-line retailers such as Amazon.But that probably won’t be possible for smaller retailers.

Another important approach, which any retailer could embrace, is to make maximising behaviour more difficult or less attractive. Tactics here include:

  • Selling on service, rather than price; many people would say that this is what John Lewis do; despite their “never knowingly undersold” tagline many shoppers choose John Lewis because of service such as no-quibble returns, rather than because of price.
  • Emphasising things in-store that are hard to compare on line – brand values such as quality, complex sets of features; doing this can increase uncertainty that going on-line will result in the best deal.
  • Emphasising with overt in-store messaging the positive aspects of high street shopping: “the best choice”, “the best quality”, “the best service” etc.
  • Providing in-store give-aways to increase the shopper’s sense of obligation to the store (this won’t work with all shoppers of course).
  • Reducing the  “risk” of shopping in-store that maximisers perceive by providing customer endorsements about service quality and, if possible, price.

There are plenty of other tactics too:

  • Shops can implement in-store wi-fi that can connect shoppers to the shop’s own website before they are able to visit any other sites. And of course the retailer’s website can then display special offers or be used to up-sell and cross sell products.
  • Customer loyalty schemes may also have a place; while these can easily be neutralised by on-line customer loyalty schemes, it may be possible to provide loyalty schemes that have immediate benefits such instant rewards in-store.
  • High Street retailers can band together to provide reciprocal vouchers so that a shopper who purchase in shop A is given a voucher for shop B and vice versa.
  • There is a saying “Don’t give me choice; make it easy for me to choose”: on-line choice can be bewildering and stores can help people to choose through service and information.

Finally remember that for many people shopping is an important leisure activity. High Street retailers can enhance the shopping experience through added services, free gift wrapping, in-store events, a glamorous environment etc. They can even use data about the shoppers in store to “personalise” visits, either by encouraging customers to register and log into a store’s website, or even (as Burberry has been trialling with their “Smart Personalisation” scheme) by putting RFID tags in goods which can then provide a personalised in-store or after-store experience.

All in all, retailers don’t need to give up on showroomers. Instead they can use technology to drive more customers into their stores and convert them more effectively.

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