One of the biggest threats to traditional retail is “showrooming”, where consumers check out products in a store, but then go online to buy.
Mobile devices have made prices fully transparent to everyone. Since traditional retailers carry higher overhead than online retailers, it’s a real marketing challenge. Do retailers drop their prices and cut their margins, or do they find a way to justify the premium versus online?
Many retailers opt to drop their prices. Electronics chain Best Buy first tried to make it harder to comparison-shop by changing their in-store bar codes. When that didn’t work, they tried to match Amazon prices over the last holidays.
But you can’t out-Amazon Amazon, at least not in the long run. The last time I shopped at Best Buy, I ended up buying at Amazon, but not because of price. I really wanted to buy from Best Buy, particularly after I’d invested the time to travel there and preferred to have the product the same day. But the store experience was so transactional and it was so hard to find a knowledgable sales rep that I gave up. Best Buy could have won me over with a better retail experience, but they dropped the ball. They were trying so hard to be like Amazon on price, they didn’t excel at what could have made them different.
Petco CIO Herman Nell had an interesting point of view on “showrooming”:
“We have the best defense against showrooming that you can think of — puppies. Anyone who comes in with the intention of showrooming looks at that puppy’s eyes and the showrooming is over. A product offering needs to be differentiated. And, if possible, it needs to bring out an emotional connection. That’s what a puppy does. Every puppy is unique, and some can strike a chord with the consumer. And people have emotional connections with different things — from shoes to smartphones.”
It will be interesting to see how different retailers weather the effects of showrooming. The lines between physical retail and online retail will increasingly blur. The winning retailers will be the ones that create a meaningfully unique experience.
Or as the new Best Buy CEO Hubery Joly put it recently: “Once customers are in our stores, they’re ours to lose”.
(Marketoonist Monday: I’m giving away one signed print of this week’s cartoon. Just share an insightful comment to this week’s post by 5:00 PST on Monday. I’ll pick one comment. Thanks!)
Copywriter Kevin Francis says:
Great cartoon, as always! These retailers are discovering that they never really had much of a business or real customers, just a series of transactions that they used to be able to rely on because they controlled distribution. The internet has utterly destroyed that business model.
No easy answers but the key, I suggest will be to adopt the direct response marketing mindset of creating a long term customer. How many of these struggling retailers actually have a list of customers or prospects, I wonder? Meaningful differentiation and adding value will be essential. Your BestBuy experience shows how far behind some retailers are.
Thanks again for the weekly “marketing chuckle”. Always brightens up my day!
Rob Cottingham says:
I wonder how long before we see a retailer experiment with trying to capture some of that Amazon revenue? I could see them posting prices – “Bring it home now: $119.99 – Or buy it on Amazon” – with a QR code (for an URL that includes their affiliate ID). If that proved to generate a reasonable income without excessively cannibalizing sales (and that’s a big “if”), you could then see Amazon offering carefully selected bricks-and-mortar affiliates a bump in their cut.
Has someone already tried that?
What Herman Nell says is fine if you work in a pet store… but what happens when you don’t have control of the product offering and you sell a multitude of products? You have to trust in the work of the brands you stock to have create that emotional connection through external advertising and marketing?
It’s not really answering the problem that high-street retailers have when they’re not a brand store. The high-street closure epidemic isn’t really affecting the brand stores because those stores ARE by definition, ‘show room’ stores. They can go away and live online if they really want to, and stock their products elsewhere. The ‘show room’ store is a luxury for a brand.
But a store that sells it all ala Amazon… the problem remains.
Jon Sumroy says:
I recently bought a new TV. I planned to ‘Showroom’ but … by jove … if they didn’t persuade me to buy from them (a big box retailer) and they weren’t cheaper. How? You may well ask. Here is the story …
The staff were attentive and knowledgable. I bought a Samsung TV and the sales agent could explain the difference between the ranges and the models. I did not understand the difference from the Samsung website(!) and he was managing to clarify between several brands. He took the time to work out what I needed and he did not try to ‘upsell’ me to a more expensive option.
Finally, when I had decided which one, I pulled out the iPhone to price check. He interrupted me and asked if I wanted to use one of their computers. He even offered a few different sites to check.
I found the same TV from a reputable store for 15% less than their sticker price. The agent said that he would not negotiate vs. that site because he showed me that their warranty was not from the manufacturer. I found another site, 10% cheaper, with a real warranty and free ground delivery.
The agent offered half that as a discount and had someone help me carry the box to the car.
It was that simple.
and charging a reasonable modest premium for it all
… and I know where they are.
Shaun F says:
It is the latest trend, last holiday shopping season over 1/4 of shoppers showroomed while browsing stores for gifts. The most common showroomed items were luxury clothing and large electronics; no wonder Best Buy is making moves to accommodate consumers. Who is doing anything in the clothing retail and department store arena??
Boris Borchert says:
I like that article (and of course the drawing) very much. In the end it´s about how I feel when I shop. Is it a waste of time for me to shop in a real store or a good experience. If I like being in the shop like a lovely bookstore where I can sit down and look through books I am interested in, it won´t feel like a waste of time. If I wait endlessly untill a helpful person is showing up and I wait much too long to be able to buy it in the end I will try not to visit the store again if I am able to avoid it. And getting the item of desire instantly is really a plus.
Marcel Rietveld says:
Great cartoon! As in many branches stores have to add value to a customer. In my opinion stores CAN add value in terms of (extra) services. I always buy my shirts at a store where I feel welcome (they know who I am, I get a nice cup of coffee etc) and they always customize my shirts, so it perfectly fixed.
From an added value point of view, it seems that prospects are destroying value as the sales guy in your cartoon did please him but the prospect prefers to buy it at a cheaper price (and hasn’t paid for the service).
One solution: get the salesguy to be smarter and close the deal (through additional service?). Good article from Wired on the showrooming topic: http://www.wired.com/business/2012/11/mf-best-buy-comeback/2/
Anoterh solution: open a store where you send after the shopper elsewhere (close to Rob’s comment). That’s a pure new business where you just sell the lead to another store who will close the deal.
Jeffrey Slater says:
Loved the cartoon as always.
I had a showrooming experience a few months ago when I too went to Best Buy. You hit the nail on the head – they missed an opportunity to capture me. In fact, they really ignored me as a human being. They aren’t using their greatest asset- people and human connection. Pity.
Karl Sakas says:
I have trouble finding well-informed Best Buy salespeople, too. I suspect it’s the dark side to Best Buy’s “no commissioned salespeople” strategy — fewer pushy salespeople, yes, but if salespeople aren’t naturally motivated to help customers and they don’t have a financial incentive either, they’re just showing up to collect a paycheck.
In contrast, I just bought a pair of running/workout shoes from a specialty athletics shoe store. During the fitting, the salesperson focused on being consultative rather than being transactional. I planned to buy a pair of shoes from them regardless, but she made me feel good about the choice.
I wasn’t planning to showroom because 1) my personal trainer had recommended I buy from them or a second store (with lower Yelp ratings), and 2) I needed new shoes and didn’t want to waste time shopping around.
There’s still value to being able to walk out of the store immediately with what you want/need.
Susan Goldstein says:
As the cartoon demonstrates: it is not just the customer service. It is the idea of saving money, the thrill of finding it for less. Some stores already offer reward memberships, to encourage loyalty. But if there could be a connection made between the clerk and the customer, perhaps if the clerk hands the customer their card and tells them, “just call me when you realize that you need [the item] immediately, and I will put it aside for you. I can hold it for 24 hours” or something that might make the customer realize that it is far more simple to just buy it right then and there.
Michael Boamah says:
Well, I guess it can be an issue for brick-and-mortar stores but it can also be a fabulous opportunity for those able to embrace it.
Let me elaborate on this : consider your stores as showrooms where customers can touch the products, ask for information… Retailers should provide them with a great experience to keep them coming back.
But it should not be a massive problem to have customers buy the products on their website instead. If you look at all the benefices of e-commerce (product reviews, open 24/7, instant comparison, Paypal …), you can’t beat them. So just create a similar great online experience so that when customer buy online, they buy from you.
And if your cashier desks look too empty, well I guess you just have to provide unique additional services in the store that you can’t get online.
Perception Research Services says:
While the digital age has changed the retail landscape, it does not mean the end of all brick and mortar stores as we know them. It does, however, mean that retailers and manufacturers need to adapt to a world in which shoppers are armed with a tremendous amount of information at their fingertips (literally) – about the brand to choose, the price to pay and the place to buy. Retailers know that they will continue to lose a certain amount of sales to online purchases, and they must accept that some showrooming will occur. The key is to find ways to capitalize on those opportunities in which shoppers are in their store examining products, and make it compelling for them to make purchases there rather than go online – or to some other retailer – to do so. And manufacturers must go beyond simply communicating features and benefits, and find ways to more fully engage shoppers by creating communities in which shoppers feel cared about and spoken to – via the various communication channels that are now part of their lives.
Peter Ballard says:
Nailed it with the cartoon
We (Foolproof) conducted some research on the last shopping weekend before Christmas, polling 1000 shoppers on whether they had showroomed, and more importantly, what did they do next if they had.
The stats showed that 1 in 5 had showroomed, and half of those had gone on to buy elsewhere (either online or another store)
But what got me thinking the most was that at least half of those who had checked a product or price out using their mobile whilst in a store, had continued with their purchase. This either suggests they couldn’t find it cheaper elsewhere, or more interestingly, there are things to do with the store experience that can turn browsers into buyers.
The results should give encouragement to both retailers, and their online alternatives, the battle is out there to be won, but in requires some genuine understanding of changing consumer behavior to create experiences to meet their needs.
Shreyas Shah says:
That is the difference between products and services. When I am buying a product, I don’t give a crap about the service. I’m buying a product and the product provides services (apple customer service vs. samsung customer service). When I buy services (i.e. att vs. sprint), then I care about the “puppy” effect. When I hire a home contractor, the soft side makes a difference.
Interesting that no one has mentioned the one thing that gives online retailers a huge advantage. In most of America, online shoppers don’t pay state sales tax. When that playing field is finally leveled, I’d like to see what that does to showrooming. My guess is it will decrease to some degree.
Michael Michaels says:
Interesting article and a real problem for the shops. Amazingly enough, one shop seems to be doing well regardless. John Lewis like for like sales were up almost 15% on the lead up to Christmas. Not sure how much was from online sales though but would guess it’s not a negligible amount, but still, pretty impressive results. They obviously know something that works, but I wonder, how long for?
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