The prevalence of mobile phones has changed the way customers live their lives. Instead of having to wait until they go home to do their research, consumers can reach into their pockets, take out their smartphones, and find out whatever they need there and then.
Unsurprisingly, this trend has revolutionized shopping habits. Prior to the era of smartphones, shoppers had two main choices when they came across a product they liked in a store-they could either buy it there and then or try to remember what it looked like, perhaps aided by some notes or a photo, and look it up when they got home.
But this is no longer the case. Armed with their smartphones, shoppers can do their research while they're in the store, allowing them to not only get more information about the product they're interested in and read other customers' reviews, but they're also able to compare prices. And it's not uncommon for customers to find the same item cheaper at an online store, which, until now, doesn't have to charge tax unless it has a physical presence within the state.
Customers have learned how to play the system. Even if they've already seen a product they want to purchase online, often they will locate it at a nearby store and go see it in person before parting with their money. The concept of showrooming is no longer a rare occurrence, but something that happens regularly. In fact, research by analytics firm ForeSee shows that during the last holiday season, almost 70 percent of mobile users used their mobile phones while in a retail store. And while the majority-62 percent-used their phones to visit the website of the store they were in, almost 40 percent accessed a competitor's site, while 21 percent checked a shopping comparison site. According to ForeSee's findings, more than half of customers were looking up price information, 40 percent were comparing products, while almost 30 percent were looking up product specifications and viewing product reviews.
Further, research by British firm Foolproof found that almost one-fourth of shoppers in the United Kingdom showroomed during the 2012 holiday season. More importantly, a tenth of all British customers, or 40 percent of those who showroomed, reported buying items from a competitor after using their phones to compare prices. Foolproof estimates that this "sales leakage" meant about 500 million (more than $760 million) worth of sales were switched between retailers in the penultimate weekend of 2012.
Fighting showrooming doesn't work
Earlier this year, a specialty food store in Brisbane, Australia, made the headlines after a customer shared a photo of a sign announcing the retailer would start charging browsers a $5 fee.
This seemed to anger some customers. Comments underneath an article in The Huffington Post showed skepticism about this policy, with some readers calling it "stupid" and several others saying the store would end up out of business. HuffPost super user Roberta Bebko notes:
While this might sound extreme, other retailers are trying to combat showrooming. There have been customers who claimed that some retailers block mobile phone signals since they cannot connect to the Internet while they're in certain stores.
Such a strategy might work for a short time in some cases, with customers making a purchase since they cannot check for the product elsewhere. But such measures to combat showrooming alienate customers and cannot be long lived. Instead, organizations need to find ways to make the most of this phenomenon--that is seeing customers walk into their stores and finding ways to transform their experience so that they will want to do business with the firm rather than shop elsewhere.
Instead of combating showrooming, experts believe that retailers should welcome this phenomenon. "It's a natural behavior that should be embraced," notes MJ Crabbe-Barberis, director of global product marketing and CRM at Infor. Bill Loller, vice president of IBM Smarter Commerce, agrees. "Retailers need to stop looking at showrooming as just a problem that needs to be stopped but try to embrace it and even give customers the tools to do it." Loller believes that rather than trying to stop customers from using their mobile phones while in store, retailers should offer them free wi-fi and alert them to it as soon as they walk into the store. Especially if customers are required to identify themselves, retailers will be able to follow their journey through the store to understand what they're interested in. This insight will allow retailers to push relevant coupons or offers to customers while they're in the store, enticing them to make a purchase there and then. "Real time coupons work well to turn browsers into buyers," says Henry Helgeson, CEO of Merchant Warehouse.
Leverage a Captive Audience
Retailers that are determined to combat showrooming have forgotten an important concept: Customers have willingly entered their store and, as Crabbe-Barberis notes, given the right circumstances and right service delivery, they are likely to make the purchase there and then. Therefore it's up to the retailer to provide walk-in customers with the excuse they need to leave the store with the product. One important way is to greet customers as soon as they walk into the store and ask if they need assistance, balancing proactive help while making sure not to appear intrusive.
Customers who do require assistance or are looking for something in particular will appreciate the associate's help. However, retailers need to make sure that associates are equipped with the information to satisfy customers' needs. "Arm them with the knowledge to help the consumer," Loller asserts. For example, if a customer walks into a store looking for a television, associates need to have the information to not only show them what they're looking for, but also be able to give added information that the customer won't get just by looking at a product. This might include a comparison between different television sets, making sure that a particular set will be compatible with other components the customer already owns, or, especially for high-value customers, offering to send a technician to set up the television.
Patriot Outfitters is also using technology to create an endless aisle experience. Although the tactical and military gear retailer sells about 6,000 different products, it cannot stock everything at its 25 brick-and-mortar locations. But as Pete Iserman, one of the company's owners, explains, sales associates do their utmost to interact with customers and help them find what they need. At times this means ordering a product online and having it delivered to the customer, even overseas if he's about to be deployed, or else have a product delivered to the store.
But the company doesn't stop there. True to its mission to help the troops, customers are referred to competitors when the company cannot supply them with what they need. "Our mission is to help our soldiers," Iserman stresses. "We do whatever's best for the customer because we want to build a long-term relationship." And according to Iserman, customers remember this gesture and will go back next time.
As Branden Jenkins, NetSuite's general manager for Etail/Retail, notes, customers have certain needs when they go shopping. "They want extended product information, they want to make sure they don't get gauged on price, and they want the endless aisle experience that they're used to online," he says. Outdoor gear and apparel retailer Moosejaw Mountaineering is one organization that is leveraging showrooming instead of combating it. Eoin Comerford, the company's CEO, notes that the company decided to embrace the fact that customers are using their smart devices to check prices. One of the initiatives was the introduction of the endless aisle, which allows shoppers to see all products available at the retailer's warehouse rather than restricting them to what's available in store. In order for this concept to be successful, Moosejaw had to equip its associates with mobile POS devices that allow them to access the inventory. And Moosejaw's experience shows that the endless aisle is a winning strategy since these types of sales are making up to 11 percent of all Moosejaw's in-store sales.
Experts recommend going a step further and encourage retailers to equip themselves with the technology to identify customers. Shoppers are used to online stores knowing their browsing and purchasing history and using this information to customize their experience. If they realize that brick-and-mortar retailers are giving them the same personalized attention, customers will be more willing to self-identify, for example by sharing their loyalty account number or email address with an associate. As Loller points out, arming associates with product information together with insights into shoppers' history and preferences will give them a great opportunity to connect with the shopper. "It allows them to engage with the customer at a more intimate level," he says. This increases customers' likelihood to purchase from the company rather than a competitor.
Discounts aren't always the answer
Human beings are impatient and given a choice they will try to get anything they want immediately. If they see a product they like in a store, their instinct will be to buy it there and then. This quest for immediate gratification is one of the first benefits that brick-and-mortar retailers have since buying the same product online will lead to a wait time before receiving the new purchase.
With price comparison being a big part of showrooming habits, retailers might be tempted to offer a price-match policy. Best Buy is one company that has gone down this route. The company's low price guarantee reads:
But experts believe such a strategy can be counterproductive. "The price game isn't one you want to play," Helgeson says. "This doesn't push loyalty," stresses Mike Romano, senior vice president of sales and client services at Genesys | Soundbite. Crabbe-Barberis agrees, pointing out that customers might be abusing the system when they need to buy a product from the store but use such a policy to get a cheaper price although buying it online and waiting for the item to be delivered was never an option for them. Crabbe-Barberis notes that a way to avert wasting money in this way is for associates to have a conversation with customers to really understand what they're looking for and what will convince them to make a purchase.
Romano recommends leveraging loyalty programs and explaining to customers what a purchase would mean for their loyalty status. For example, a customer who was considering making a purchase online to save a few bucks might be converted if he realizes how many points he will get if he buys the same product from that retailer. Another solution, he notes, would be to bundle a second product that is discounted. "The challenge is kicking the traditional mindset of discounting and taking a more innovative approach that is relevant to customers' lifestyles," he says.
Finally, brick-and-mortar retailers need to make sure they're delivering memorable service that makes customers want to return to do business at that store. Creating a one-to-one connection with customers needs to be a differentiator that makes shoppers want to go back to do business with these organizations.