Retail Showrooming is Dead
By David Coleman, CEO and founder, Brandoogle
According to a recent IBM report, retailers should no longer feel threatened by the practice of retail showrooming. Agreed, and also great news for traditional brick-and-mortar retailers.
Retail showrooming is a known margin killer.
While I agree with the IBM report that retail showrooming is dead, unfortunately, that’s not the story. The IBM report completely misses the elephant in the room … while retail showrooming is dead, virtual showrooming is exploding (virtual showrooming is the practice of comparison shopping and purchasing online without ever visiting a store).
Retail traffic was down an alarming 15% this past holiday season, retail sales were generally flat to down, and internet purchasing was up 40%.
What’s happening? The consumers who engaged in retail showrooming in 2012 discovered that comparison price shopping on a mobile device was extremely difficult. Mobile devices are great for texting, tweeting, and instagrams, but are terribly inefficient for comparison price shopping. Full-screen devices, laptops and desk top computers, are much better suited for this exercise.
So the reason for the lack of retail showrooming growth is not simply that is was last year’s fad. Quite the contrary, it’s a function of the consumers who have tried comparison shopping on mobile devices while in-store, have simply switched to a much more efficient medium: Full screen devices at home or work. This demographic, the price conscious tech-savvy consumer, probably made up a large percentage of the 15% decline in retail traffic.
Further evidence of this change in consumer behavior is validated by the recently published reports from Channeladvisors.com that noted that nearly 75% of online purchases were made using full-screen devices. So a lack of growth in retail showrooming is hardly a cause for celebration, but moreover is a rather ominous sign that things are only going to get more difficult for traditional brick-and-mortar retailers in the near term.
As technology, and the apps associated with it, continue to get better and faster, this change in consumer buying patterns can only be expected to increase.
Omni-channel retailing, in-store experience, internet price matching, and loyalty programs will only go so far. (Note the recent Best Buy earnings report). The key to combating virtual showrooming is to change the landscape of the battlefield.
Eliminate the opportunity for showrooming to occur. Showrooming can really only occur when what is available in the store is also available on-line. Therefore, preventing a showrooming opportunity, retail or virtual, starts with an assortment plan that recognizes showrooming risk before inventory is ever purchased.
A fact confirmed by John Lammers, DMM of Auto Zone who recently stated: “There’s absolutely no question. Understanding the on-line competition plays a key role in ensuring that our assortment planning, and merchandising strategy are aligned with our customers’ needs.”
Most of us wouldn’t extent credit to a customer without checking their credit risk first. So why would a forward thinking retailer buy into inventory without first checking out the vendor’s showrooming risk?
The retailers that will survive and prosper in this new environment will be those that are as savvy with technology enabled assortment planning as the consumers are with technology enabled comparison shopping. The real question the industry faces is “Do traditional brick-and-mortar retailers truly understand the dynamics of the showrooming problem, and if so, are they willing to adopt new thinking to tackle the age old challenge of comparison shopping?”
David Coleman is the CEO and Founder of Brandoogle and can be reached via e-mail at [email protected]. Brandoogle works with both retailers and brands to improve margins and combat showrooming using a proprietary suite of software and services.