Showrooming – threat or opportunity?
Showrooming has changed the way retail customers shop. Even if you are a skeptic like me, evidence suggests 82% of US and UK shoppers are doing it. Shoppers visit physical stores to research a product – to experience it first hand. The shopper compares prices online, and purchases from the vendor with the lowest price. If the retailer can’t beat or match the price, how do they get customers to buy from them?
Shop Outside the Box
In China, many retailers are becoming realtors. Yes, you read that correctly. They are selling space. But not to their shoppers. They’ve turned the oldest joke in retailing into a business plan. (Know the three secrets of retailing ? Location, location, and location.) The plan centres on a new store-within-a-store format. They rent space to vendors within their store and in turn, those vendors receive brand exposure – whether a purchase is made in-store or online.
To compete with Amazon, companies like Carrefour are changing how they use space to offer customers ‘instant gratification’ by offering same-day pick up or delivery from their warehouses. In my mind, Swiss grocery giant COOP has nearly mastered Click & Collect, using a mobile app backed by SAP software. Simply shop online, and drive up to a depot where its waiting for you.
Retail Feng Shui
In addition to the new floor plans in China, retailers doing business in South Korea are re-imagining the shop space too. With 91% of its population connected on 4G networks via smartphones, Tesco took the opportunity to offer Seoul subway commuters a ‘virtual grocery wall.’ Customers can scan-and-buy products on their way to work and find their groceries on the doorstep when they get home. Twitter brought me similar news. The London Underground proudly tweeted about the refrigerated grocery van at the train station – so you can order while at work, and it will be ready for you when you get off the train.
Customers showroom in competitors’ stores too, so retailers can use price comparison providers to offer special deals. When a product is scanned by a competitor, they can serve up a better price. Retailers are going further by offering unique products like Tesco’s Hudl and Amazon’s Kindle e-book reader. Loyalty programs can also make retailers stand out, and customers will pay a premium for those programs. In my opinion, success seems imminent for Canadian retailer Loblaw with their new PC Plus program.
The human touch
It is important to remember why customers visit a store in the first place. The human touch is something that online shopping can’t provide. Shoppers can pick up items, try on a garment and interact with store associates. Many retailers encourage showrooming by offering free Wi-Fi in their stores. Retailers many not always be able to compete on pricing, but they can create a personal experience with immediate customer satisfaction that will build their brand and result in future sales.
Retailers are keenly aware that stores are an essential part of the customer experience, along with e-commerce sites and mobile apps. Merchants are redefining the role stores and the staff play in the context of their overall customer engagement strategy. The battle for customer loyalty begins with a better understanding of the customer. Showrooming can be leveraged as another tool in the retailer’s bag to help maximize customer engagement and reinforce their brand. Is this right for you and your brand?
SAP can help you decide > http://bit.ly/1iJWAdz