How Showrooming can be Harnessed by Brick-and-Mortar Stores this Holiday Season
With the holiday season about to reach its crescendo, marketers are expecting an overwhelming number of shoppers both online and offline. This is the time of the year when many consumers flock to brick-and-mortar stores to search for products. Unfortunately, many of them will only go to brick-and-mortar stores to examine merchandise, and will then opt to purchase the merchandise online. This practice, known as showrooming, is widely popular because many online retailers offer cheaper prices, as they do not have the same overhead costs as brick-and-mortar stores.
Improvements in smartphone technology and the growth of mobile phone usage have fueled the practice of showrooming. According to a recent study by the Pew Research Center, as of January 2014, 58% of American adults own a smartphone. Smartphones are used to search for deals, compare prices, research products, locate stores, and access coupons.
Showrooming not only diverts business from brick-and-mortar stores to online retailers, but also damages stores’ product samples, as consumers will visit brick-and-mortar stores to examine merchandise with no intention of buying them. As a result, retailers are going to great lengths to combat showrooming and woo customers back to their stores.
According to an online survey designed by Columbia Business School, entitled “Showrooming and the Rise of the Mobile-Assisted Shopper”, consumers are enthusiastic about showrooming primarily due to the lower prices being offered by online retailers.
As shown in Figure 1 below, the online survey reported that more than half of respondents (69%) said they practice showrooming because online retailers offer lower prices, while 47% cited free shipping from online retailers as their reason for showrooming.
According to CFI Group’s “2014 Holiday Retail Spending Report,” 66% of consumers this holiday season will use the Internet predominantly for price comparison, which in turn leads to consummated transactions. M-commerce is also gaining ascendency: In 2013, 59% of consumers acknowledged making retail purchases on their smartphones in the past six months. This year, that figure has grown to 71%. [See Figure 2]
While showrooming presents serious challenges to proprietors of brick-and-mortar stores, many proprietors don’t realize that showrooming can actually be harnessed to their advantage.
Combating Showrooming with Omni-Channel Retailing
Retailers can combat showrooming by harnessing the power of omni-channel retailing. Omni-channel retailing attempts to create a seamless consumer experience by utilizing all available shopping channels—such as brick-and-mortar stores, direct mail, mobile internet, and computers, among others. By utilizing the omni-channel strategy, retailers and marketers can supply the information consumers need whenever and wherever they need it.
According to LivePerson’s “Converting Browsers (Everywhere) Into Buyers (Anywhere)” whitepaper, omni-channel retailing “breaks down the walls between e-commerce and in-store sales, with a unified platform and processes, and the ability to engage shoppers when, where, and how they prefer. This human touch restores an emotive connection with the shopper, and the overall experience improves brand loyalty.”
If retailers and marketers can reach consumers both offline and online during any stage in the consumer decision journey, they’re more likely to reinforce brand loyalty and influence consumers’ purchase decisions. When regarded in this context, showrooming can actually be advantageous to retailers and marketers.
The power of omni-channel retailing is recognized by Scott Falzone, Industry Director of Retail Specialty at Google. In an eMarketer report, he observed that “[omni-channel retailers’] interest in digital is increasingly focused on driving customers and shoppers into their store locations as well as continuing to have a growing ecommerce and mobile commerce presence.”
On the other hand, while the rise of smartphones has changed the way consumers research and compare products, and complete their purchases, showrooming hasn’t exactly evolved into an insurmountable threat for most retailers. “Retailers should take care not to overreact to every consumer that uses a smartphone in their store,” notes the aforementioned online survey designed by Columbia Business School.
According to the online survey, 75% of mobile-assisted shoppers aren’t consistently showrooming. Of this percentage, 30% aren’t showrooming at all, and 45% purchase in-store even though when they know that a product is being offered much cheaper online. Once shoppers armed with mobile devices step into the store, retailers can help these mobile-assisted shoppers find the information and incentives they seek (such as free shipping and special discounts) to encourage them to complete the transaction in-store.
While approximately 25% of mobile-assisted shoppers may require discounts and other incentives to drive in-store purchases, a significant majority can be encouraged to complete their purchases in-store via information assistance, engagement strategies, and loyalty rewards. These incentives create a more memorable and pleasurable in-store experience for consumers, and prevents them from taking their business to online retailers.
As convenient as online shopping can be for consumers who value privacy, affordability, and a less tedious shopping experience, an overwhelming number of consumers still enjoy shopping in brick-and-mortar stores and would be sorry to see these stores close down due to competition from online retailers. “While technology is rapidly changing how we interact with the world around us, people still want to live in a world that balances online and offline interactions,” states the online survey designed by Columbia Business School.
If you Can’t Beat ‘em Join ‘em
Many far-sighted businesses aren’t resisting showrooming and other consumer mobile browsing habits. In fact, prominent businesses, such as Walmart, have incorporated showrooming into their multi-channel retailing strategies. Walmart’s stores are “geo-fenced” and the company’s app is location aware. This means that when a customer walks into a Walmart store, the Walmart app installed on the customer’s phone will enter “store mode”. Once this mode has been activated, the customer will have access to an interactive version of the weekly on-sale circular for that store.
Customers can also access information about new products, scan bar codes with their phones’ camera for prices, and keep a running list of items added to the cart so that they’ll know the total cost even before they get to the register.
The Walmart app also allows customers to “flip” between physical and digital stores. This way, customers who find an item out of stock in a physical store can easily order the same item from Walmart.com. By acknowledging the reality of showrooming, Walmart was able to update its multi-channel retailing strategy and protect its sales.
Walmart and other businesses that embrace mobile browsing while in-store are very much in touch with the needs of consumers. According to NinthDecimal’s “Mobile Audience Insights Report: Q2 2014 Spotlight on Retail,” 61% of consumers prefer to receive mobile ads with discounts or sales information while in-store.
Meanwhile, Crazy Egg’s “5 Smart Tips for Ecommerce Sites Selling Physical Products” advises proprietors of brick-and-mortar stores to “create a seamless retail experience” to target shoppers that engage in showrooming. The retail premises can be upgraded to make it more “personable, friendly, one-on-one and unique.” Other strategies include offering free Wi-Fi to shoppers in-store.
What other consumer mobile browsing habits can be adopted by brick-and-mortar stores to drive their multi-channel retailing strategies? Let us know in the Comments below.
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