As The Holidays Approach, Stores Need To Worry About Being “Showroomed"

As mobile Internet use has grown, so has the usage of smartphones in stores. Much of that in-store phone usage is innocuous — using store maps, for instance — but some of it is threatening to brick-and-mortar stores, particularly when shoppers use phones in stores to research prices.  While "showrooming" isn't a term that many consumers know (only 16% awareness according to com Score), it's nonetheless happening.   

The good news: Consumers with smartphones only “showroomed” prices in stores on average a few times in a 6-month period. Aprimo, an marketing service firm that surveyed about 2,000 consumers in October about their mobile price-checking behavior in stores for that datapoint.  I suspect that amounts to a very small percent (i.e., less than 5%) of shopping visits. The bad news: That survey (and comScore's) confirmed the worst of what many in the retail industry have expected -- that showrooming is here to stay. And it hurts stores. After all, most of the showrooming shoppers told us that they usually find cheaper prices online when they research them. Some highlights:

  • It’s not just consumer electronics and high-ticket items like appliances for which consumers research prices in stores. In fact, the second and third most showroomed categories: grocery (!) and apparel/accessories/footwear. Yes, I was surprised by that, too.
  • A whole lot of people say they’ll be showrooming more in the future. In fact, the segment that’s most likely to spend the most online in the future (18- to 34-year-old men) is the group most likely to do this type of mobile price research in the future.
  • A lot of people switch retailers when they find cheaper prices online, but keep in mind that some of that switching leads not to Amazon.com but to another brick-and-mortar competitor. Eighteen percent of shoppers said they actually went to another store and purchased the item they were researching; 15% said they went online to another store to buy. 
  • The most popular online destinations for price research? Not surprisingly, search engines (Google of course) and Amazon. Third on the list was the site or app of the retailer the shopper was in when showrooming; fourth was a barcode-scanning app like Red Laser. 

So what are retailers to do when faced with this growing trend? In the short term, online price-matching is critical, as Best Buy and Target have already launched.  That’s in fact what most customers expect when they see cheaper prices online. But in the long term, strong and unique product assortments in partnership with manufacturers that enforce UPP (unilateral pricing policy), clever uses of their loyalty programs (which most retailers now have), and improved store associate support will be critical to avoiding the ill consequences of showrooming. 

In short, retailers must seriously consider ways to avoid losing sales to mobile price research by using strategies such as price-matching, personalized in-store service, and loyalty programs.

Comments

Online price-matching is not critical, it's fatal

Ms. Mulpuru, you said "online price-matching is critical". You convey to your readers that this is a self-evident, prima facie conclusion.

The problem is that online profit margins are so slim precisely because online sellers don't have to pay for a comfortable, high-rent location with well-paid knowledgeable sales staff. Don't you realize that if brick & mortar retailers match online prices, then they are out-of-business?

And don't you also realize that if they go out-of-business, then there is no place for shoppers to try before they buy? Further, the very fact that shoppers still want to inspect the product demonstrates that they still need and want their brick & mortar retailers.

What technology is allowing is an ethical problem - and we don't call it showrooming. We call it theft of service because that is what it is, and it is unethical, just as unethical as taking your work product (the words you write) and plagiarizing them to profit myself in some other medium. I'm sure you would find such borrowing of your labor as disrespectful to you.

So please don't disrespect brick & mortar retailers by accepting theft of service as a foregone conclusion, doing nothing to dissuade shoppers from this unethical behavior, and suggesting that we ought to be able to provide the high level of service for the low-service-level price.

Let's think about this a little more, please.