No one needs Macy’s Santa to tell them that skates are cheaper at Gimble’s anymore. The days of running around town comparative-shopping are gone. Now, customers simply come into the store to have a look at what they want to purchase and scan it with their Smartphone to see who has the same product at a lower price. Using apps like BarCode Reader, Price Check by Amazon, RedLaser by eBay and ShopSavvy, customers can connect to the best deals the internet has to offer without leaving the sales floor. Often the result is that a competitor or e-tailer has listed the item for less than the store where they are standing.
The practice of shopping local but buying mobile has been dubbed “showrooming.” It’s a year-round occurrence, but retailers are checking twice on how the trend is effecting Christmas shopping at their brick-and-mortar stores. Retail Info System (RIS) News explains, “Holiday season sales are a leading indicator of retail industry performance and consumer sentiment. Focusing on its expected impact during the holiday shopping season provides a window into what its overall effect will be in 2013 and beyond.”
This year 80% of retailers expect to be impacted by mobile showrooming over the holidays, with a projected 5% average loss of sales. This is a significant number considering the struggles many retailers are having with low margins.
Earlier in the year, a study by comScore found that 35% of Americans showroom when making purchasing decisions. It also showed that 50% of showroomers live in urban areas, and average between 25 and 34 years old. More recently, a Mashable poll suggests that almost everyone is doing it, or at least thinking about it. At the time this article was written, 78% of participants “showroom” and another 15% are considering trying it. A mere 6% feel that it’s morally wrong.
Electronics and apparel are the two sections of the industry hit hardest by this style of shopping. Estimates show 40% of Best Buy customers visit its outlets with no intention of buying anything at all. Steve Gillett, Best Buy’s president told Forbes, “You have to embrace the trend of showrooming. You want to take advantage of customers coming into our stores. We definitely have room to improve. The performance over the past few years has been unsatisfactory. There’s not one person who walks around thinking that we’ve hit it out of the park in the past few years and quarters.”
Gaurav Pant, Research Director, Edgell Knowledge Network agrees, “Showrooming is a phenomenon that's here to stay. One in four shoppers used their mobile phones to compare prices while in the store during the 2011 holiday season, and those numbers will only grow."
Pant realizes the severity of the situation but is still optimistic, "The good news is that retailers can put strategies in place to help counter the effects of showrooming by engaging showroomers actively, integrating their online and offline channels, and prioritizing their investments to counter showrooming."
Retailers have been rallying ideas on how to keep up with this new brand of clientele. Price matching and rewards benefits have been the go-to weapons of choice for those battling showrooming in their stores. It’s a good start but both of these processes can become cumbersome and leave customers skeptical. Currently the two most successful devices used to combat showrooming seem to be apps and associates.
Smartphone apps can appeal to customers’ sense of urgency and frugality by instantly sending coupons, discounts and alerts whenever someone in the area is researching a product on the shelf. Awesome staff can connect with customers in ways computers can’t. Employees that go the extra mile will bring more business back into the store. Giving consumers more than a product, but an experience as well will win and endear customers and increase return traffic.
The evolution of how people are purchasing products has some people wondering how long it will be before retail stores are gone altogether. However it is unlikely that physical stores will become extinct since there is always that part of human nature that channels the inner two-year-old that wants what it wants right NOW!
Stuart Wilson of Channel EMEA wonders if showrooming could “eventually lead to a new retail channel model that fuses physical retail and e-tail together in a sustainable and profitable union.”
He explains, “Imagine going to a physical store where you can try out all the latest devices, make a decision, choose the e-tailer you want to purchase from, complete the transaction online and pick up the item there and then.”
Image courtesy of Stuart Miles at FreeDigitalPhotos
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