Showrooming: Is It Really A Threat To Retailers?

How Big A Threat Is Showrooming?

Showrooming: Is It Really A Threat To Retailers?Depends on whom you ask – some retailers are terrified of the shopper who pulls out their mobile phone in order to comparison-shop online.  The customer’s logic is simple, why buy from the local store if you can get it cheaper online?

Other retailers feel less threatened by showrooming – they know their customers have always been comparison shoppers, it’s just that now the process is much more efficient.  Instead of spending an entire day driving from store to store comparing prices, consumers can explore their buying choices much faster online.

How Are Retailers Responding To Showrooming?

According to a benchmark survey on mobile in retail conducted by RSR Research, responses vary widely:

  • 37% of respondents say that they respond to showrooming by trying to be competitive on price
  • 32% say they haven’t seen a problem with showrooming
  • 13% stick their heads in the sand and ignore it
  • 13% try to match the online price
  • 5% actually try to beat the online price

Why Such A Wide Array Of Responses?

Showrooming: Is It Really A Threat To Retailers?Some of it may be attributable to what type of products a retailer is selling. Classic impulse purchases, like a tempting array of chocolates, are less vulnerable to showrooming because a hungry consumer does not want to order online and wait several days for the product to be delivered.

Big-ticket purchases are more likely to be researched online, particularly if it is a mass-market product that is available from a variety of retail outlets. TVs, home appliances, and consumer electronics are particularly vulnerable to showrooming.

But don’t forget that while some consumers are doing their comparison shopping in-store before purchasing online, there are others for whom the path to purchase runs in the opposite direction.

Some consumers do their comparison shopping online before heading to a store where they can purchase the item from a retailer they trust to be there tomorrow if they need service or support.

It Comes Down To A Matter Of Trust

Showrooming: Is It Really A Threat To Retailers?Now that the proliferation of mobile devices has made it so easy to comparison shop across channels, retailers must focus on building a relationship of trust if they want to win the sale.

If the consumer can’t count on you to offer them a fair deal, it is all too easy for them to find someone else who will.

Nikki Baird, Managing Partner at RSR Research suggests these three basic tactics for laying a foundation of trust:  

1. Maintain consistent pricing across all channels  

For years retailers have averaged their margin across categories, so don’t fall prey to the argument that brick-and-mortar stores have a different cost structure than online. Consistency is vital to building a relationship of trust with the consumer, yet only 15% of respondents said they maintained the same price online and in-store.

2. Make it easy for consumers at the shelf to shop your online offerings

If the consumer finds a limited selection on the shelf she is going to pull out her mobile device to see what others have to offer. Few retailers make any effort to direct the consumer to their online store, yet a simple sign with a QR code can easily direct her to your site rather than a competitor.

3. Make it easy to compare products in your online store by providing reviews and side-by-side comparisons

The number one reason that consumers pull out their phones is to get ratings and reviews. In addition to consistent pricing, make it easy for consumers to compare product features and shopper reviews. Consumers are savvy about weighing conflicting opinions – they know that a negative feature for one shopper can be a reason to purchase for another.

Look For Opportunities To Improve The Customer Experience

While there will always be shoppers who “cherry pick” products based on price alone, the vast majority of shoppers consider showrooming a matter of trust. They expect retailers to offer a good deal along with the information they need to choose the product that best suits their needs.

By leveraging the consumer’s mobile device to provide product information at the right time along with a fair price, they can reduce the threat of showrooming and improve the customer experience.

To learn more about the impact of mobile on retail and how to use the right mix of technology components to engage customers and build loyalty, be sure to check out the Mobile Commerce Guide from SAP (registration required).

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  • mohamed.amer@sap.com

    Elizabeth, enjoyed your blog.

    I fully agree that it’s about trust. Progressive retailers are viewing this as an opportunity rather than a fatal threat. There are even those that suggest there’s an opposite”webrooming” effect going on. Brick and mortar retailers will flourish when they embrace the total shopping experience inclusive of the digital realm.

    • Elizabeth Gaines

      Thanks for your kind comment, Mohamed – you’re so right about retailers who embrace the total shopping experience. It’s the best way to earn customer loyalty in a competitive market.

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  • Denise Keniston

    I agree as well, especially with trying to improve the customer experience and trust. Funny: What’s old is new!

  • http://www.valuestrategygroup.com/ Gerhard Vierthaler

    I agree with commenters below – it’s a huge opportunity! Retailers who worry that the sky is falling are missing out on innovative ways to digitally enhance the shopping experience. Evolving brick and mortar retailers have to be deep water thinkers and embrace the digital realm as an extension of their business model – or risk becoming a statistic. Sophisticated buyers are sitting in the driver’s seat in the customer empowered market of today – so building trust and a creating a unique value perception is key – along with fair pricing. Warren Buffet said it best: “Price is what you pay – Value is what you get”