Are you “that guy” (or “gal”)? You know the one with tablet computer (or a smart phone) in the store comparing product prices, features, availability, shipping, taxes? Do you delight in running circles around the hapless associate who can’t seem to command the same volume of intelligence about the product in question? Able to compare multiple identical products and prices simultaneously?
That’s “Showrooming” in a nutshell. It scares the hell out of brick and mortar retailers, and probably should, unless they’ve made thoughtful investments in their people and stores, and often a complimentary (but separate) online selling strategy. But here’s a little fact about the concept of “Showrooming”: people have been doing it since the dawn of the Web in 1995 to shop for automobiles, consumer electronics, power tools, appliances, clothing and countless other products.
The Web has always been great at providing “perfect” information to consumers, establishing a level of transparency that has been virtually impossible to control. Early attempts in the ‘90s to sequester information about products, pricing, and availability by Big Box electronics retailers, automobile dealers, drug companies and DIY stores was largely a failure. Consumers, equipped with PCs and dial-up connections quickly came to have more accurate information than did retailers and staff, and unlimited choices of where to purchase. They printed everything out and marched into stores, better informed and better equipped for retail victory. The genie won’t be forced back into the bottle anytime soon…
Fast forward to today’s converged digital information channels, where the power of the web and all of its available data is concentrated in the consumer’s hand. Retailers still have few, if any, defenses from the well-informed consumers who come into their locations armed with mobile technology. And yet, consumers report that, given the chance, they would shop in a brick and mortar store given parity in pricing and selection. Interesting…
A study recently released by IBM of 26,000 shoppers released last week, following an IBM study conducted by Frost & Sullivan last year finds that consumers are in a transitional state. According to the IBM study:
- Today, 71 percent of global consumers are willing to use digital technologies, including mobile, to shop and make purchases
- Almost 50% of online purchases in studied categories resulted from “Showrooming,”
- 9% are ready to commit to making future purchases online.
- 35% of shoppers are unsure whether they would next shop at a store or online
- Online-only retailers account for 33% of Showroomer purchases, while 70% of Showrooming shoppers say they are more likely to buy in-store from a retailer with these mobile-friendly solutions
- Almost 25% of online shoppers intended to buy their item in the store, but ultimately purchased online – primarily due to price and convenience.
- Brick-and-mortar stores are here to stay, with approximately 92% of sales still taking place within the store.
- Mobile applications estimated to influence 5 percent of retail store sales today, growing to 17 to 20 percent of store sales by 2016
The Retail Pundits Weigh In
Acceptance of the disruptive changes wrought by integrative “bricks and clicks” in the retail marketplace seem inevitable. Just as the retailing world learned in the ‘90s that perfect information, and the transparency of the retail shopping environment, would even up the odds in favor of the shopper.
Jill Puleri, Global Retail Leader, IBM Global Business Services, “Today’s consumer is sophisticated and opportunistic, navigating between store and online environments interchangeably to meet their shopping needs of the moment.”
AnnaMaria Turano, executive director at Marketing Consulting Associates, “Showrooming has become consumer behavior now…and retailers need to understand it and accept that any shopper could be Showrooming,”
Jerry O’Brien, director of Kohl’s Center for Retailing Excellence at the University of Wisconsin-Madison, “Showrooming is the next evolution of retail”… “you might as well embrace the transparency” that online selling allows…”Bring in technology in helping customers understand products,” like online specifications, and price comparisons.
Despite being all too aware of this increasingly popular shopping tactic:
- Just 10% of bricks-and-mortar retailers have strategies in place to fight against Showrooming.
- Only 25% of respondents reported full integration between their store and online channels
- Only 15% of respondents share their full inventory online
Clearly there is room for improvement in terms of assessing the opportunities, developing a fully transparent marketing channel(s) with shared inventory access, and enabling enterprise intelligence through data collection and analysis.
What Retailers Can Do
The IBM study reveals that consumers are seeking a truly integrated shopping experience. The IBM Digital Analytics benchmark study found that 70 percent more consumers used a mobile device to visit a retailer’s site on Cyber Monday in 2012 than 2011.
How can retailers anticipate and react? Paraphrasing from the National Retail Federation conference held in early January 2013:
- Retailers must better connect their online and physical stores, blending benefits into both at various points in the shopping cycle — from research to purchase — to build brand loyalty and repeat sales. Embrace the technology available and deploy as appropriate within the path to purchase. Embracing cross channel integration as the lingua franca of retailing 2013 and beyond is a cultural shift retailers will need to make.
- In the store, retailers must infuse digital experiences, and enable store associates with the technology to save the sale and embrace consumer-owned technology. This could be the only way to combat comparison applications like Red Laser, Price Grabber, or Price Checker. It could also initiate a vastly different and well-trained retail workforce that embodies the brand in the sale.
- Online, retailers must optimize their websites for various devices. Nothing disconnects the shopper faster than being unable to compare the physical store pricing and the online merchant alter ego. Optimization means having effective SEO strategies in place, mobile-friendly m.com designs. It also means a crisp engagement through mobile web and traditional online channels.
Enabling all of these levels of mobile and POS technology is a great opportunity for Compuware.
Shout Out for Mobile Monday – Detroit
If you’re in the neighborhood on February 11th, Compuware will again be hosting Mobile Mondays at Compuware Corp. We’ll be examining “Mobile at Retail” and discussing the sea change technology is
bringing the retail marketplace. February 11, 2013 @ 5:30 in the Compuware Cafeteria.