You’ve all heard about showrooming, where customers go to a local store to check out products they’d like to buy, then purchase the product for less online. It’s been going on for several years and is becoming more popular as technology enables instant comparison shopping.
Millions of consumers do it, scouting out everything from computers and televisions to books and vitamins before purchasing the item online for less.
Online stores often provide lower prices than brick and mortar stores because of lower overhead costs, no sales taxes (in some states) and free shipping offers.
Showrooming can be costly to brick and mortar retailers, not only in lost sales, but also in the wear and tear on products handled by people with no intent to buy.
Some retailers have tried to compete with showroomers by reducing prices. Major retailers like Target are trying to fight showrooming by making a deal with manufacturers to sell products exclusive to their stores.
Best Buy is taking steps to reverse the practice of showrooming by providing store employees with new training and mobile technology to better serve customers, expanding its technology services to both consumers and small businesses, and offering shoppers the best price whether they’re shopping in a bricks and mortar store or online.
Nevertheless, showrooming is on the rise and is becoming a concern for some retailers as the number of shoppers checking prices with mobile devices while shopping in a local store has increased.
A February 2012 ClickIQ survey reported nearly half (45.9%) of US online shoppers researched products in-store, only to ultimately buy online.
Comparison-shopping rates range from 59 percent of US smartphone owners (InsightExpress, 2011) to 25 percent of US mobile phone owners (Pew Internet and American Life Project, January 2012).
Threat To Brick & Mortar Retailers
Some studies suggest showrooming is a looming threat with huge implications for retail merchants. That’s because local merchants must hire staff, pay rent, utility services, janitorial services, real estate and sales taxes and invest in merchandise, and then wait for customers to come in and buy.
However, online merchants without the same expenses have become competitors, while consumer behavior has gradually changed, putting local stores at risk.
Does Showrooming Add To Or Take From Store Sales?
According to the 2012 Deloitte Retail & Consumer Spending Survey, Smartphones will influence 19 percent ($689 billion) of U.S. retail store sales by 2016. Smartphones already influence 5.1 percent of all retail store sales in the United States, which Deloitte predicts will amount to ~$159 billion in annual retail sales this year.
The study also found:
- 61% of smartphone owners who use their devices to shop have bought goods in a store
- Consumer in-store mobile activities add to, rather than take away from, in-store sales
- Smartphone users are 14% more likely to convert in a store than non-smartphone users
These findings run counter to the widely held theory that consumers are increasingly using local stores as showrooms where they can learn about and see products in person, and then buy from a competitor online.
Instead, this study shows that many shoppers use their smartphones to enhance their store shopping experience, rather than using the store as a showroom for online retailers.
How To Offset Showrooming
According to comScore, the leading mobile retail activities among people using smartphones are:
- Find a store (33%)
- Compare prices (21%)
- Look for deals (20%)
To avoid showrooming, brick and mortar retailers can use some of the in-store conversion tactics shown below.
Google also lets retailers bid by location, so you can run unique search ads based on proximity to your retail location. In the search copy, offer discounts or coupons for brands if a purchase is made in-store.
In a world where low prices are just a few clicks away, it is crucial for brick ‘n mortar retailers to offer attractive pricing that offsets the shipping delays that accompany online and mobile shopping.
This is an excellent way to encourage shoppers to buy from a retailer rather than comparing prices online. Google Shopping’s paid ads provide a link for downloading coupons. RetailMeNot has a new app for iPhones with money-saving features designed to help retailers keep consumers in stores with discounts.
Provide better customer service through well-informed sales associates. Retailers can leverage their built-in advantages of customer service and immediacy. An assisted sale vs. online self-service sales gives brick-and-mortar stores a huge advantage for certain types of sales.
Ensure your employees are well trained as salespeople rather than just clerks. When they stress the benefits of immediate delivery vs. online shipping fees and the hassles of returns/exchanges for online sales, this can go a long way toward mitigating showrooming.
Providing online chat helps promote sales either online or through local stores. Businesses with lots of SKUs can answer questions online to enable a sale through their local store on furniture items like chairs, which can be researched online and then tried out and purchased locally.
Merchandising is critical when fighting back against showrooming since it is nearly impossible to replicate online and through mobile devices. By using attractive displays and store arrangements that optimally display products, retailers can persuade consumers to make a purchase decision.
Retailers can ask for exclusive product deals from manufacturers agreeing not to offer certain products/models online. That strategy seems to be working for Target, which has made some exclusive product agreements with technology suppliers and has retaliated against Amazon for showrooming by discontinuing its Kindle sales.
Local SEO/SEM Can Help Drive In-Store Sales
The conversion tactics above require an investment of time and personnel, adding to your overhead costs. But multi-location retailers can leverage local SEO and SEM strategies to bring foot traffic into their brick and mortar stores from online searches.
By employing best practices for local SEO, along with location-based schema markup elements into both store location pages and local landing pages, to help drive in-store sales. For larger retailers, this may mean investing in an automated SEO solution to get the job done across hundreds to thousands of locations.
Below are aggregate results seen by a national retailer and a global dealership client, using an automated Local (Maps), Organic (SEO) and Mobile (Smartphone) SaaS solution, designed for enterprise multi-location businesses.
Online To In-Store Foot Traffic – National Retailer
- 60%+ of total Web users clicked on Operating Hours
- 16%+ of mobile users clicked on Maps
- 5% of total Web users clicked on Driving Directions
- 2.7% of Web users clicked on Shop Online
International Dealer Network Case Study
Incoming Calls via Call Tracking Numbers:
Over fifty-seven percent of total users called the Business Location with the following features:
- Call Tracking
- Time of Day
- Missed Calls
- Call Recording Capability
- Specialized Service Levels by Department
3 Recommended Foot Traffic Measurement Techniques
- Analyze current Store Locator Traffic.
- Apply current Foot Traffic quantities (Example: 1,000,000 Unique Visitors to Store Locator = Current Level of Foot Traffic).
- Measure increase in Traffic to Store Locator, then measure increase in Foot Traffic for the same month, applying the same equation with the expectation that the Increase to Store Locator will show an increase in Percentage of Foot Traffic.
Additional Foot Traffic Metrics To Watch
- Click Analytics on Coupons and Redemption Analytics to Coupons
- Click and Pick Analytics from Online to In-Store Pick-up
- Click Analytics on activities such as Maps and Driving Directions
- Click Analytics on Click-to-Call activity and telephone traffic
- Click Redemption Analytics on Promotions and Give-Aways
Profitable Retailers Are On The Cutting Edge
On the upside, most in-store researchers (35%) bought from the retailer’s store location where they were comparison-shopping, 19 percent bought online and only 8 percent went to another store (Pew Internet and American Life Project, January 2012).
Sometimes, immediacy is important for conversion, and there’s no substitution for the personal touch. Brick and mortar retailers can be more profitable by keeping up with and adapting to changes in consumer behavior while considering ways to cut overhead with the use of SEO and other marketing tactics to drive in-store sales.
In conclusion, gone are the days when retailing was relatively simple. Today’s retailers must not only know how to sell, they must integrate every online-offline marketing tactic available to gain advantage, as indicated in the information above.