As more consumers get smartphones and data packages that enable them to have low cost access to the web outside their homes, “showrooming” is on the increase.
Showrooming (looking at items in a shop and then searching for the cheapest place to buy it on-line) is a major headache for many retailers. 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 “maximisers” (showroomers) who will focus on getting exactly what they want (price, features) and satisficers who, as the name suggests, are happy with “good enough”. And most people it seems are satisficers.
Also, not everything is worth showrooming. The lower the price, the less likely showrooming will happen; so greetings card shops and confectioners are pretty safe from this phenomenon.
But nonetheless, this is a problem for hard pressed retailers, and one that is likely to increase as smartphone penetration increases and as consumers learn maximiser behaviour.
Are brands the answer?
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 all brands.
In an ideal world, brands would help retailers to maintain high street sales, for instance by offering them items that are not available on-line. That might be part of the solution but it won’t solve the problem on its own.
Retailers need to find 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 is to drive increased in-store footfall. Increasing shop visitors by 15% will largely wipe out the effect of showrooming. This can be done through localised marketing, including geo-targeted mobile advertising. 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.
Another important strategy is to make maximising behaviour more difficult or less attractive. Tactics here include:
- Selling on service, rather than price; many people would ay 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 online will result in the best deal.
- Emphasising with overt messaging the positive aspects to shopping in store: “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.
- Reducing the risk of shopping in-store by providing customer endorsements about service quality and, if possible, price.
There are plenty of other tactics too:
- In-store wifi 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 online 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”: online choice can be bewildering and stores can help people to choose through service and information. Making it easy to find things in a store can help here.
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.