Retailers Fight Showrooming

Arsenal includes basic strategies and social media

A customer walks into your store and heads for the TV displays. He’s on a mission and spends the better part of an hour drilling the TV salesman on the pros and cons of a half-dozen big-screen sets, moving from one TV to the next. Eddie doesn’t hide the fact that he’s ready to buy and narrows his search to a 50-inch LCD.

He thanks the salesman for his time, and as he’s walking away pulls out his iPhone and slips into a corner to see if he can find a better price online. Amazon has the lowest price but the model is also on sale and in stock at nearby competitor. Eddie walks out and heads to the store just down the road to buy the TV.

Price shopping has been around as long as retailing but the practice of “showrooming”—a customer checking out products in the store and using his smartphone to search for a better deal, in some cases scanning barcodes—is a relatively new and growing trend that’s making brick-and-mortar retailers nervous.

Smartphone Shopping on the Rise
The mobile Web, and smartphone apps in particular, have transformed shopping, making it easier than ever to gather product information and price shop on the go. “We’re seeing an increase in price-comparison shopping and those apps are getting easier to use,” said Linda Barrabee, NPD’s research director for connected intelligence. Recent NPD data shows that three-quarters of consumers use the mobile web and shopping websites, while just over half (55 percent) use shopping apps like ShopSavvy and Amazon’s PriceCheck, which let them scan barcodes, take pictures, and say or type in product names to get information and find lower prices at local retailers or online.

It’s the in-store price shopping that retailers find most worrisome. InsightEpxress examined mobile shopping during the last three Christmas seasons and found that the number of smartphone owners who used their phones to search for a better price while in a store quadrupled between 2009 and 2011; 59 percent did so in 2011 compared with 40 percent in 2010 and 15 percent in 2009.

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Comments
  • Ray Windsor

    Adding value is the solution to the showrooming problem. For more see the UltraSphere news letter April 2012.

    Certainly all business people should be encouraging their legislators that all sales (in the smartphone age) be treated equally under sales tax and consumer protection laws in equal fashion regardless of the place where the sale takes place (interesting laws addressing credit card sales too), how and where the consumer receives the goods and/or where those goods are shipped from.

    Regarding Mr. Pearlman’s contention that retailers will move to "Internet only and store only" items, requires the manufacturers to agree and then provide "derivitive" model numbers. In 1980 that worked OK (sort of) for a short while. In the smart phone age where information travels the globe instantly does Mr. Pearlman believe that the "derivitive" models will fool consumers for more than a few minutes? If not, it must then follow that manufacturers will create completely different products for the different channels. If the brick & mortar (store only) model becomes popular, will Mr. Perlman feel comfortable relying on the manufacturer to refrain from filling the order when Adorama puts pressure on the manufacturer? I think Mr. Pearlman’s contention "that is how it will shake out" is a hope, a desperate hope, but not likely to manifest in any predictable or long lasting reality.

    Brick & Mortar guys gotta add value and select & support business partners (suppliers) who understand, respect and deliver ROI on their added value activities.

    The Internet is not evil. It will become more important to consumers. Therefore it will become more important to retailers and manufacturers. How manufacturers act in this smartphone age should dictate how retailers act.

    Ray Windsor
    German Maestro

    PS: sign up for the UltraSphere monthly one page news letter by requesting a subscription from ray@leadershipsystemsconsulting.com

  • Ron Romero

    I was asked last month to attend a "fly In" in Washington DC. I was hosted by the Mainstreet Fairness, they represent both big box & independant retailers. I met personally one on one with Senators & Congressmen. There is confusion, many think that this is a tax increase, and it is not. It is just implementing a way to collect the sales tax that is due to the states and municipalities. People today are required to pay this tax, if not collected by the online merchant, then they are suppose to file with their state a USE TAX. (but how many actually do) There is technology today that can do this. None of these politicians want to see a raise in taxes, but after explaining this, they had a better idea (go figure). There is big interest in this from both Democrats & Republicans. When meeting with the Small Business Association, they felt that the small internet retailer should get a break on the internet because they were small (go figure again) Bottom line is that we should all be communicating to our Congressmen & Senators on this important issue. We were told that this could come to vote, yet this year, even though it is an election year. They would probably attach this bill to another, to expidite it. WE HAVE ALOT OF POWER TO MAKE THIS HAPPEN, CONTACT YOUR REPRESENATIVES NOW. (you can find their information on the internet, just google your State Senators & Congressmen) If we all band together we can make this happen. Thanks for reading this! Ron Romero President, Schaefer’s, Lincoln Ne, & President of Nationwide West Merchanidising Group.

  • jeffoheir

    Ron: Thanks for the comment. For those who aren’t familiar with the organization, its full name is the Alliance for MainStreet Fairness (http://www.standwithmainstreet.com, @StandWithMainSt). It’s a coalition of business owners (including big-box and independent retailers) and citizens who want to bring sales tax laws up-to-date and level the playing field so all businesses can compete fairly. If you’re following the Internet tax issues on Twitter, some good hash tags are #MainStreet. #efairness #salestax