How Can Retailers Combat Showrooming?

In this previous post, I discussed how the retail landscape has changed since the introduction of online retailers such as Amazon. I highlighted how consumers tend to prefer online shopping because of the wealth of information available to them, which leads to a threat in retail due to ‘showrooming’.

What is Showrooming?

Showrooming is defined as an act wherein customers examine products in retail stores before buying them for a cheaper price elsewhere, which often tends to be online. A survey conducted by Harris Interactive showed that:

• 43% of all U.S. adults participated in the act of showrooming
• 28% of Men preferred to showroom at BestBuy
• 23% of Women preferred to showroom at Wal-Mart

These numbers were further corroborated with a survey conducted by Foresee Results, which reported that during the 2012 shopping season:

• 70% of respondents used a mobile phone while in a retail store
• 62% of consumers accessed the store’s website or app
• 37% reportedly accessed a competitor’s website or app.

The threat of showrooming does exist and is evident, but how can retailers combat this phenomenon? What options are available for retailers who wish to drive in-store traffic and prevent consumers from showrooming on their sales floor?

Three Case Studies of Retailers Combatting Showrooming

1. Cross Channel Shopping Experience

Eric Feinberg, Senior Director of Mobile at ForeSee, says, “Mobile is the ultimate companion channel, making showrooming as much of an opportunity as it is a threat.” In the same survey, Foresee found that nearly 57% of respondents claimed to visit the company’s website as their first step in their shopping experience.

Consumers begin their shopping experience online, and this interaction sets their expectations for the duration of their interaction with a retailer. This makes it very important for retailers to not only provide an immersive experience online, but also match that experience in-store. Retailers need to maintain a customer’s initial brand perception by incorporating features from their website into their stores.

• One of the incentives of shopping online is the ability to purchase from a wide selection of products. Retailers cannot match this variety due to the physical constraints of their store, but they can combat it by offering seamless cross-channel integration. Retailers’ would no longer need to showcase a large volume of products; instead they would have to simply carry a variety of popular brands. Retailers could use their physical space as a showroom and guide customers to their website, where they could complete their purchase.
• Retailers could take advantage of customers’ need for information by providing their very own app. Given that customers are constantly looking for product reviews, recommendations and wider product selections, retailers should encourage this behavior with their own websites and apps.

A great example of such integration is evident with CVS Caremark and Walgreen Co. Both retailers have the highest positive ratings for their Apple iOS and Android mobile apps. As this Forbes article mentions, the success of their apps can be attributed to the “immediate actual utility” it offers. Customers are able to manage prescriptions, locate deals, and even place orders for in-store pickup.

2. Improving Customer Experience

Providing great customer service and improving customer experience is vital for retailers. Implementing a successful customer experience strategy is very important for retailers who wish to differentiate themselves from their competition.

According to Kyle Murray, author of The Retail Value Proposition, two of the critical factors for creating a unique customer experience are the environment and the level of engagement. Retail stores offer something that is not often discernable in the online space: a credible and viable source of information, namely salespeople. A knowledgeable sales associate is not only an important contrast from the “noise” prevalent online, but also an important opportunity for retailers who wish to persuade consumers into making a buying decision.

Retail grocery store chains such as Publix, Trader Joe’s, and Aldi rank at the very top for customer experience in 2013. All three retailers focus on providing consistently good customer service, and high quality products for an affordable price. Their customer-centric approach is evident in their marketing efforts and the training set in place for employees.

3. Deliver a Brand Promise

A 2011 Gallup study, consisting of over 10,000 in-store consumer electronics shoppers in the U.S., showed that less than 1% of shoppers intended to buy products online. This does not represent showrooming, but rather indicates retailers’ inability to deliver a “compelling and different brand promise.” The study further illustrates that nearly 15% of fully engaged customers who did not purchase anything said “they intended to or had already purchased the items at a competitor’s store.”

Consumers may interact with a retailer in-store, by phone or online, but it is essential that all three interactions are consistent in delivering a brand promise. Retailers can build excitement around their brand through innovative advertising and marketing efforts, but it is important to match that level of excitement across all their customer interaction channels.

A great example of delivering on brand promise is visible at Crate & Barrel. The brick and mortar retailer uses a non-traditional shopping and browsing experience that is evident across their catalogs, stores and website. The company offers a consistent brand experience by integrating all three channels together and allowing customers to navigate between them.

Conclusion

Showrooming is a serious threat for retailers and while it does negatively affect in-store sales, there is an opportunity to engage consumers and promote brand loyalty. Retailers can engage consumers by building and delivering a consistent brand promise, providing a superior customer experience, and empowering their associates and shoppers with information. The evolving nature of technology will continue to pose new problems for retailers, but the focus for now needs to be on adopting a consistent, customer-centric approach that can differentiate a retailer from its competitors.