Down to Business: Stores a free showroom for online sellers
I went searching for some “showroomers” the other day, but couldn’t find any.
It was a weekday at the tail end of summer, and the aisles at Best Buy were fairly empty. I circled around the display of laptops, tablets and e-readers several times, but no one was there trying them out while consulting their smartphones for better pricing elsewhere.
I’m told that’s what we consumers do these days: go to bricks-and-mortar stores to see and touch the products before purchasing them online. The behavior, called showrooming (after the sales floor), is the latest bane of retailers.
It’s similar to traditional comparison-shopping, but amped by technology that gives immediate access to product and pricing information — and purchasing capabilities — via the smartphone in our hand.
One market research firm, ClickIQ Inc. of Minneapolis, identified Best Buy, Target and Walmart as the most likely retailers to experience showrooming. In a February survey of 900 U.S. consumers, ClickIQ said half of them indicated they had investigated a product at their local retail store before buying it online — often from the likes of Amazon, where prices are lower because there are no physical stores to support.
“The underlying data suggest that retailers are providing a free showroom for online retailers and losing sales due to the online retailers’ ability to cut prices while offering a large assortment and availability of products,” according to ClickIQ.
The Wall Street Journal, citing studies by William Blair & Co. and KeyBanc Capital Markets, put Amazon’s prices 14 percent below Target’s, 9 percent below Walmart’s and 8 percent below Best Buy’s, even when including shipping costs as part of the equation.
Indeed, pricing plays a key role in showrooming.
Of the consumers surveyed by ClickIQ, 87 percent said that price was the dominant driver in their decision to purchase online. Another market researcher, GroupM Next of St. Louis, reported last month that “finding only a small price difference elsewhere using a mobile device is enough to entice them [shoppers] to leave the store and buy online.” GroupM said 45 percent of 1,000 consumers surveyed indicated they would leave if the online price were 2.5 percent lower than the in-store one; at a 20 percent discount, 87 percent would bolt the store.
But, GroupM said of its research, a bricks-and-mortar retailer that stays close to an online competitor on price may be able to sway “marginal showroomers” to an in-store purchase with such things as loyalty programs and attentive salespeople.
The National Retail Federation would agree.
The industry trade group, which labels showrooming “the No. 1 risk facing retailers today,” reported in its 2012 Shopper Experience Study that consumers “overwhelmingly desire personalized, in-store experiences” once the basics — product availability, efficiency and service — are met.
“To keep shoppers coming back, retailers need to put a fresh spin on the in-store experience, recasting stores as places for discovery and interaction with products, where associates can assist in the decision-making process and shoppers enjoy instant gratification,” the group said.
Using that yardstick, consumers soon won’t need to engage in covert showrooming. Instead of sneaking a look at online prices while checking out a television, laptop or major appliance, they’ll have their smartphone on display and handy as an in-store negotiating tool. And it’s likely the salesperson looking to close their purchase will be working with one too.