5 things retailers can do to fight Showrooming
‘Showrooming’ is a useful US term for window shopping at a physical store then buying online, probably from a different retailer; and the practice is gaining pace, fuelled by mass smartphone ownership and improvements in bandwidth and mobile devices.
Yet research from BDO published this week suggests that nearly 90% of retailer CFOs are not concerned about showrooming. Complacency? Perhaps all these CFOs are justifiably confident that their multi-channel strategies are in good shape.
What is clear is that this trend is not a minor irritant, it is a re-drawing of the rule. There’s overwhelming evidence that shopper habits are being changed by ‘always on’ access to the mobile internet. An Econsultancy report published last month showed that 43% (up from 19% last year) of UK shoppers use their smartphones while on the move to compare prices and read product reviews.
So what can bricks and mortar retailers do? Here are 5 top-level strategies for coping with the Showrooming storm to come.
1. Be cheaper
This is not possible for most bricks-and-mortar retailers vs online… Surely there will only one winner in this fight?
Perhaps not. Asda has announced that it is installing free Wi-Fi across its 550 UK stores. Clearly this makes price comparison easier, so it is a confident step by Asda to allow more shopping-time scrutiny of their prices (the Asda Price Guarantee is also a very confident, head-on approach to this issue, more on this later).
2. Don’t be comparable
Change the product name
In January 2012 Target sent memos to suppliers asking them to change product names for Target to make price-comparisons more difficult, a move that caused some derision from retail commentators. In a socially networked world it’s hard to see this strategy having a positive effect, at least other than in the short term. You can’t fool all of the people all of the time, and when they find out they have been fooled…
Modify the stock for uniqueness
While Target’s attempt to thwart comparison might be seen as misguided or at least short-sighted, it is not a million miles away from what retailers like John Lewis (in support of their ‘never knowingly undersold’* promise) have done for decades: working with suppliers so that stock lines are exclusive to your stores.
Be both supplier and retailer
There’s no point in showrooming at an Apple Store. Apple products are proprietary and discounting is almost non-existent. The same goes for Kindle (the enemy’s weapon, currently banned from both Walmart and Target because of Amazon’s widespread encouragement of showrooming).
3. Make it easy to compare
Hang on, doesn’t that argue with 2? Yes it does, but strategy choices can be profoundly divergent, the point is to understand the context for the choice and how it could deliver on an individual retailer’s brand promise.
Increasingly, customers want a multi-channel experience when they are shopping. There are many research reports that suggest free Wi-Fi brings customers into your store, keeps them there for longer and encourages larger basket spend.
This is not a long-term solution though; once free Wi-Fi has become a given, the competitive advantage that it might offer to Asda (see 1.) over the next 12-18 months will inevitably decline.
Provide your own comparison service
We see the Asda Price Guarantee service mentioned earlier (which is growing in significance – see Google Trends figures for growth) as a shining example of how to take a grip on the showrooming issue. It’s not a new programme, having first run in the mid-1990 before reappearing in 2010, reconfigured for the digital, mobile age.
4. Add value through physical space, service and add-ons
Use the physical space
The new ‘Audi City’ showroom in Piccadilly, London, launched in July 2012, doesn’t actually have any cars in it (OK one, some of the time). In effect, the showroom is like getting inside a website, with a charming and well-trained guide. Visiting Audi City is a very contemporary experience – and using virtual technology is both true to the Audi brand and highly practical, because it means that Audi can bring their brand experience to the high street in much smaller, lower-cost spaces than traditional car retail requires. Audi UK plans to open a number of other Audi City showrooms.
Shopping online is social: you can share the fact you’ve just bought a dishwasher on Facebook! Er, no, that’s not exactly a brilliant scenario, or very credible, is it? But going to the high street is intrinsically social and always will be: you have to talk to people when you make your purchases, and, more than that, the weekly shop as a form of ‘social routine’ is part of the fabric of community.
So how can ‘social’, physical retail fight showrooming? Surely you can meet your mates for a latte after scanning the barcodes in the high street and order from Amazon or eBuyer? Saves lugging stuff around, too.
What if you could combine social activity, education and retail? Jamie Oliver has, with his brilliant Recipease concept. Recipease is an multi-dimensional approach to the use of retail space that allows and encourages people to get closer than ever to the fresh-baked, oily-handed (cold-pressed oil, natch) heart of brand Jamie. Why would you buy your ingredients somewhere else after you’ve had your cookery classes at Recipease? And it’s a great place to meet for lunch, coffee etc…
5. Get out of retail.
Sounds a bit fatalistic, but read what Wharton (University of Pennsylvania) professor Z. John Zhang has to say:
Wharton marketing professor Z. John Zhang suggests that showrooming may also prompt some retailers to completely rethink their business model. He says this will lead to the adoption by some players of the “store within store” format where retailers essentially rent space out in stores to other vendors. “If you go to Asian countries, most retailers there are really real estate property owners,” Zhang says. “Those vendors pay both a straight rent and also fees based on sales revenue. If you do that, you can control for the showrooming effect because if customers go to the store [to browse] but buy online, you still get rent. In addition, vendors themselves do not mind the showrooming effect, as long as consumers buy their brands online or offline. I think that is the future.”
How the Internet Can Save thee High Street – report from Econsultancy, Sept 2012.
Asda to roll out click and collect grocery service to 100 shops by year end : Retail Week, 9th October 2012
Why retailers need to embrace mobile internet in stores : Econsultancy, 7th February 2012
Some good ideas are emerging on ‘showrooming’ : Retail Week, 9th October 2012
Turning the Retail ‘Showrooming Effect’ into a Value-add : Knowledge Wharton, 26th September 2012
Audi opens first digital showrooms : Marketing Week, 16th July 2012
http://www.warc.com/LatestNews/News/Retailers_relaxed_about_showrooming.news?ID=30468 – BDO research published 8th October 2012
* “Never knowingly undersold” was first used as a price promise by John Lewis (Peter Jones) in 1925, but its roots can be traced back to 1846 when a subsidiary of John Lewis called Bainbridge ran an advertisement that stated ’Bainbridge and Muschamp are resolved that they will not be undersold by any House in the Kingdom’. Source Wikipedia. Price comparison is not new.