The shoppers are showrooming but retailers’ best hope is in helping them
In this guest post, Ed Commander warns that consumers are using their smartphones to beat the retailers, but mobiles still offer new opportunities.
Two weeks ago I had, yet another, miserable, frustration-filled shopping experience in Sydney. I won’t go into it, but it was the usual (service, selection, value, environment).
While the rumours of retail demise are greatly exaggerated, I find myself acknowledging that it’s fully sick. And not in the good sense.
Yes – the strong Aussie dollar is driving people to purchase online. The danger to physical retailers is that those who never used to shop online, are getting used to it.
They’re (maybe) discovering that the choice, value and convenience suits them and it’s possible that they’ll stick with it long after our dollar returns to historical norms, because online shopping will still have both more selection and more convenience.
Particularly with mobile.
M-Commerce (including sofa shopping using tablets) is absolutely having an impact on shopping and the path to purchase. The point of sale is just as likely to be in a shopper’s hand as it is in-store.
And there is evidence that shoppers are using mobile more in the latter stages of the purchase funnel – i.e. for evaluating and buying. According to Ipsos in Europe, 28% of those surveyed vs 5% in 2010 not only researched, but went on to purchase via a mobile device.
M-commerce is compressing the path to purchase. Multi-channel shopping behaviour that often took days, can now be completed in a matter of hours or minutes, anytime, anywhere.
And that’s where Showrooming comes in.
To ‘Showroom’ means to visit a store – online or offline – for research purposes only and then purchase elsewhere, wherever the best value can be found.
In fact the incredibly scientific poll among our under 30’s in the office revealed that nearly all the women had showroomed AND purchased in store through m-commerce. That is…while in the change room, they tried something on, liked it, went online and purchased it for less online.
Crimany!
It’s a shame really. It’s all becoming very transactional and delivering yet more data that gets shoved under the proverbial marketing mattress or leaned upon lamp-post style, like David Ogilvy’s drunkard.
Now I am not suggesting for one minute that Bob is standing in Woolies comparing the price of washing powder. But for higher engagement purchases, the evidence is there.
As more purchases are made from handsets and tablets, this is simultaneously transforming the role of stores from retail outlets into product showrooms for prodding and poking around the purchase options.
But Showrooming presents as much opportunity as it does threat.
Retailers can explore how they can best enable the shopper to make their purchase decision using m-commerce, not disable it. Think 3G/4G signal boosters in store, mobile charging points, virtual mirrors and store specific apps and tools.
Are they risking losing a sale? No more than if they do nothing. And with it there are price-matching opportunities, automated support, the power of ‘now’ (i.e. take it home today), and of course the peer group affirmation that mobile allows.
Walmart for instance, recently revealed that @Walmart Labs – their social media / ecommerce unit, has purchased Small Society, a company which develops leading edge apps. Lets see what they come up with…
For brand owners, one of the keys to understanding how to address this trend will be understanding the purchase decision journey – verifying and then mapping the shopping missions, mindsets, purchase triggers, decision steps and barriers to purchase across multiple categories and channels will help identify where and when the points of influence need to be.
It can also pinpoint how, where and when to deliver the right levels of interaction – physical, virtual, social, mobile or otherwise. The days of 360 degree communications are over where the goal was to simply surround the consumer with a message and then fashion a tactical sharp end at POS.
It’s now more important than ever that retailers, brand owners and their agencies to simplify mobile for shoppers and understand what best-in-class shopper marketing effectiveness looks like for mobile.
Ed Commander is the managing director of G2. Note: With thanks to Phil White – G2’s shopper marketing planning director from whom I have stolen bits.
Good article. I recently purchased a washing machine at a retailer who had embraced their web based competition in a realistic way. I found the washer I wanted and as I began describing the best on line pricing I had researched to the salesman, he had clearly done his homework too (he knew his enemy) and said he would not only match the best price but also deliver at 10am tomorrow morning plus take away our dead washer.
He knew the online retailer could not match that delivery timeframe and so I bought it on the spot.
Yes, his margin was hit but he was enthusiastic about addressing the issue head on which means a sale won.
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Mobiles do indeed offer amazing new opportunities, but unfortunately no app is going to cure the tabacco fuelled cancer that his ‘vice’ agency promotes.
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Another puff piece for m-commerce and e-commerce based largely on a chat with ‘the girls’ in the office. There is plenty of data to support the growth of commerce activity outside of the traditional retail environment. There is also plenty to support ‘showrooming’ which is just another word for shopping or browsing isn’t it. What is it with that. The fact is we are not limited to the traditional retail environment to make price comparisons we can now add the online environment to that.
I think it is a bit of a stretch to say
‘That is…while in the change room, they tried something on, liked it, went online and purchased it for less online.’
The kind of behaviour you are commenting around rarely happens in this environment. The majority of the ‘showrooming’ (God I hate this kind of marketing talk) behaviour is exhibited when purchasing higher ticket items and relatively rarely in the clothing vertical. Travel, electronics, electrical, white ware, music, gaming are the sort of verticals impacted by this phenomenon. There is plenty of actual survey data to support this. A handful of the retailers in a traditional shopping mall are affected by this to any great extent. That is not to say this won’t change.
I still find the idea of the ‘women’ in my office being able to wait for a delivery until Tuesday (at the earliest) of some new threads they found whilst at the mall on a Saturday morning (which they are probably dying to wear that night) to save $5-10, a bit ridiculous really.
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Great article, been thinking along similar lines and I must confess I too have ‘showroomed’ (nice buzzword by the way).
I don’tthink enough thinking has been done about what retailers can do to combat this, and even less is actually done about it. But I’m sure that will change.
I’ve read 2 articles which have proposed alternate solutions for the retailer:
(a) Charge for entry.
The one thing retailers will always have over online stores is personal human interaction, service, and INFORMATION to help the customer make a decision. Why give it away for free ? Retailers could charge say $20 to enter the shop, and in return get a $20 voucher to spend on something instore. This way it helps stop people freeloading information from a salesman, tying them up for half an hour, and then walking away and ordering it online somewhere else. Suitable for Good Guys, JB Hifi, etc type of stores.
(b) Reverse the online/offline price strategy.
Stop making things cheaper online and more expensive in store. You’ll probably never be the cheapest retailer for a particular product unless you manufacture it yourself, so you cant win the online battle on price. Reverse the strategy. Put in a competitive price online, but put it in huge bold font or something all over your site “ALWAYS CHEAPER IN STORE – COME IN FOR A BARGAIN”. Imagine if JB Hifi stopped automatically giving away 10% margin on its online channel, and reinvested that as an extra 10% margin to play with in the salesman’s hands at the point of sale. Giving good salespeople more margin to work with to close the sale will always yield better results, and drive people in store.
Am really interested to see how retailers develop a response to ‘showrooming’ over the next few years.
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@Researcher – I absolutely agree with you that electronics, electrical, etc. have been far more impacted by the trend. No argument from me. However, I make no bones that my ‘chat with the girls in the office’ was indeed…nothing more scientific than a chat and therefore holds no statistical robustness in itself. But the fact remains, that they do engage in ‘showrooming’ (I know…) for clothes.
Its hard to believe, as like you, I frankly don’t have the patience and can’t believe they do either. But given the number of packages that arrive from Asos in this office, and many others around the world, it would appear that lots of other people do.
But my commentary isn’t meant to be limited to clothing retail.
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Online – good if you know exactly what you want and it is generic but not so great for impulse purchases or things that actually need to fit. I still remember buying some hiking clothes online nearly 10 years ago. When they arrived it was WTF is this??? It was too expensive to ship back and it looked nothing like the picture.
I agree with offering an incentive to go in the shop and the old Clive Peeters knew this. They would match prices (even on-line) but whilst in there I would often buy much more than I intended to. I even bought a $500 radio from them because I heard the amazing sound whilst picking up an appliance from their warehouse. I can’t say I would do that online.
The other big difference is service. I am willing to pay more for a knowledgeable salesperson who helps me select items. (That is someone who will say – that doesn’t look good but try this, and did you know it also comes in brown and blue NOT oh that looks fantastic – no.. it looks like I have s@!t in my pants). Again I will go to those people and happily spend more than I would online.
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Is advertising some perverse form of anti-economics?
It’s pretty simple, producers (whoever they are) can now go direct to consumers (where-ever they are), cutting out middlemen (who are doomed).
As one of the most middlemen saturated economies, this is causing havoc in Australia, which is why the advertising industry is in such a state at the moment. It’s going to get much worse as we burn off the remaining redistributers, repackagers, rebroadcasters etc who now have no real role to speak of, but a fondness in people’s memory of how things used to be.
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“showrooming” absolutely happens in the fashion vertical. maybe not when you’re talking about saving $10 from an item from witchery, but if you’re talking about any imported brand then the savings are absolutely worthwhile. asos, shopbop, netaporter.. my wife orders from any or all of these at least once per month.
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Good discussion
@ Jim Ward – Good luck with your price for entry model, predict a retialer doing that would not see out a year
I agree with Davereporter, service (and personal service at that) is what the bricks and mortars guys have over online if (big if) they use it. Ever been in into a store with no intention of purchasing something and walked out with something the salesperson reccomended? You don’t feel dudded you feel like it was a good experience.
So many stores get this wrong they pay their staff peanuts and get monkeys that don’t care and invest zero in staff training (product knowledge anyone??)
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@simon
Costco seems to be doing pretty well with its price for entry model, or are they not going to see out the year either?
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“Researcher” You need to get out more…girls are sitting on couch’s, buses and change-rooms all over the place purchasing from Mobile Apps and sites like eBay, Etsy, SteetHawk etc.
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Just to add some depth to the analysis … the insights our agency are working to are that 22% of people have changed their mind about a purchase whilst in store, after a product review on their smart phone (whether quality or price comparison) (over last 3 months)
Showrooming is real and gathering momentum fast.
And more and more of the brands who have protected their retailer distribution platforms (and vowed never to sell online) are reviewing their strategies.
MC
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@Simon, it’s Catch 22, if people do not come to shop the bricks and mortar stores, then there’s no money to invest in good staff.
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Beware the internet pricing systems – http://www.economist.com/node/21557798
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@ B – Point taken however I think Costco demonstrate value in the cost of entry which is an annual membership not a per visit model
@ Crikey – Agree but to use another analogy it’s chicken and egg theory (which needs to come first)
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@ Just sayin… – I get out plenty, you actually seem to be telling me I need to be stalking in people’s homes, shop changing rooms and buses. No one you know seems to go out at all or even stand up. I am picturing some rather robust ladies who need the internet to find the niche sizes they require. Now this is an area where online retailing has been very successful.
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Hey Researcher, if you hate the marketing talk so much, why then in the following sentence use the term the clothing “vertical”?! What is that anyway? Sounds like that’s about as jargonistic as you can get! Just saying.
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