Last week, I went out in search of a TV for my new apartment. After looking at all of the big box stores, I stood in the aisle at Target not overly pleased with the selection I was seeing. All of these stores had similar TVs, but how did I know I was getting the best deal? I pulled out my phone, and began comparing the TVs n front of me with what was online. I left Target finding a much cheaper alternative on Amazon. In this instance, I joined the 55% of retail shoppers who have used a mobile device to research a product while in-store. Once consumers have a product in mind, they are increasingly looking online for cheaper alternatives, leading brick and mortar having to confront this emerging trend.
Showrooming is becoming increasingly popular because of a few different factors: poor in-store customer service, the product is unavailable in-store, or the price is cheaper online. Moreover, when showrooming occurs, retailers loses out on immediate revenue and potential future revenue from additional purchases.
To mitigate the risk of customers buying online at a lower price, retailers need to think strategically about how to capture in-store sales. We've outlined four recommendations for how retailers can begin to thwart showrooming:
- Price matching. An excellent example of this is Nordstrom’s Price Match Guarantee. Consumers can go into Nordstrom’s and show the price of an item they would have paid online, and Nordstrom will match that price. In addition, Nordstrom also offers price match based on coupons from the competitor. By utilizing this strategy, Nordstrom retains its customers despite the option of a lower price elsewhere.
- Unique Product Selection: E-commerce has the advantage of being able to offer thousands of different SKUs as opposed to only a few hundred in store, making it easy for consumers to find the same product that is in-store online at a cheaper price. Retailers need to find ways to differentiate the in-store experience and one way to do this is by offering a unique product selection that cannot be found elsewhere.
- Leverage In-store incentives. As showrooming becomes a bigger compomant of retail, brick and mortars need to take a more aggressive approach to driving customers in-store. One way to do this is by offering incentives that can only be used in-store. For example, a retailer could offer free in-store returns so the customer will not have to pay to ship their item back. Retailers could then have a discount or specific offer waiting for the customer based on their shopping habits. While we are not suggesting that retailers compete with showrooming solely on discounts and offers, Incentives when used strategically offer a good way of driving foot traffic to a brick-and-mortar store.
- Create an unmatched in-store experience. Beyond product selection, one of the reasons shoppers go in-store to make a purchase is because the experience that they receive in-store cannot be match by the Internet. To do so, it requires retailers to take a customer-centric approach and focus on the relationship between a customer and the in-store associate. Fostering a positive in-store experience can be done in a number of ways, such as having trained employees who can answer any questions the customer might have and provide specific product recommendations. Alternatively in-store technology such as clienteling applications can be used to enhance the in-store experience and create a personalized and tailored experience.
As traditional brick and mortar retailers start to lose business to showrooming, there is an increased need to understand this trend and how to manage against it. By utilizing the strategies mentioned above, retailers can create happy, profitable customers that continue to purchase in-store.