Retailers Embrace Showrooming

Mobile shopping seen as an opportunity to engage customers

The tide is changing on the once-fearedpractice of showrooming, where customers check out products in the store and whip out their smartphones to search for a better deal. A growing number of retailers are adopting the philosophy of engaging smartphone-wielding mobile shoppers in an effort to win them over and, ultimately, boost sales.

Hubert Joly, CEO of Best Buy, which has lost more sales to Amazon than any other electronics retailer, even went so far as to proclaim in a recent Wall Street Journal article: “We love showrooming.”

What gives?

Consumer electronics retailers are finding that engaging mobile shoppers in their stores is a perfect opportunity to showcase the strengths of brick-and-mortar, the most compelling of which are instantgratification—being able to walk out with a coveted tablet instead of buying online and waiting for it to be shipped—and the ability to experience products firsthand. Another advantage is ease of return if a product is damaged, defective or just turns out to be a poor fit. No need to go through the hassles of shipping a product back.

Engaging showroomers is also a way to promote the store’s own website as a shopping destination offering free shipping or same-day in-store pickup, as well as an opportunity to let a crack sales staff shine by demonstrating products, explaining features, answering questions on the fly, and matching online pricing.

Match that Price
“We like customers being able to compare prices and to be confident they are getting the best price,” said Jeff Pearson, senior vice president of marketing for the regional chain, hhgregg. “With our sales force, we can use this to our advantage.” The chain has a Price Match Guarantee that applies to local stores and a list of major e-tailers, including Amazon.

Michael Perlman, president of Florida-based BrandsMart USA, sees a positive in showrooming. “It can actually help you, and here’s the reason: In the old days, the customer would come in, you’d work with them and they’d say, ‘Well, let me go drive around and check other stores.’ They don’t have to anymore. They can do it from their phones right there. We actually approach customers and let them shop the competition in our store and, then, if we have to make a deal or meet the price, we do it. We have commissioned salespeople and as long as they deal with customers one on one, I’m not really concerned about it.”

With TVs, in particular, “showrooming is almost becoming a non issue,” Perlman said. “As prices have fallen, the Internet companies can’t compete because of the cost of freight. When TVs are $3,000 and delivery is $125, it’s not a problem for them to throw in delivery. Well, now that they’re $700 and $800 and delivery is $125, guess what?”

At Denver-based ListenUp, keeping tabs on Internet pricing is the issue more so than showrooming, said Phil Murray, marketing and e-commerce manager. “Our stores tend to be destinations, so we don’t see too many customers using them as showrooms for online buying. What we are seeing is a change where it has become critical for our salespeople to fully understand and be up-to-date with online pricing for every product we sell.”

Murray tells the story of a customer who was ready to buy a flat-panel TV and wall mount but became irate and killed the deal when he found the same mount on Amazon for half the price he was quoted. “Our TV pricing was in line but the mount was cheaper online and he felt we were ripping him off. So we’re now having an internal discussion about how far we need to go with price matching on mounts.”

Like many retailers, ListenUp uses price matching to win customers. “We’ll sit down with the customer and look at pricing,” Murray said, noting that it’s a way to counter the perception that their prices are too high. “If there’s whacky pricing on a model, you can say, ‘Well, this guy is unauthorized and you’re not going to get a warranty.’ The unilateral pricing policies of Samsung and Sony have really helped in this area. We’ve seen our margins climb back up with those two vendors.”

Woo the Customer
Debbie Schaeffer, third-generation owner of Mrs. G TV & Appliance, which has been operating in the Lawrenceville, N.J. area for more than 50 years, is certain mobile price shopping has had a negativeimpact on her business, although she admits it’s hard to quantify. Still, she sees an opportunity to get back to basics and let her sales staff strut their stuff.

“It feels like we’re all fighting for the same customer,” she said. “We work very hard with our salesman to have talking points so they engage with that customer and make a connection that fostersloyalty where they want to come back and buy from us. You have to be extremely knowledgeable about the product. That’s most important. Our salesmen are really very good at bringing out the important points that make the consumer’s life easier and make them fall in love with the product.”

Fortunately, price isn’t the only factor in the decision to buy or not to buy. “The consumer is telling us today, more so than they have in the past five years, that they’re willing to pay a little more for the service and reputation behind a product,” said Marshal Cohen, chief industry analyst for the NPD Group.

Don’t Fear the Showroomer
As this new attitude toward mobile shoppers catches on in retail circles, recent statistics from CEA suggest that showrooming may not be hurting brick-and-mortar sales of CE products as much as previously thought. At the CEA Industry Forum in October, Steve Koenig, CEA’s director of industry analysis, pointed to a survey of 47,000 TV shoppers between Q2 of 2011 and Q2 of 2012, which showed that of the 40% who walked into a Best Buy store, only 5.9% left the store without buying; 2.3% bought from Amazon and 3.6% bought from another store or e-tailer.

That’s not to say consumers aren’t using their smartphones—they clearly are—but it goes well beyond price shopping, according to CEA statistics. Top uses include:
· Taking photos of products (53%)
· Using a Web browser or app to get product info (46%)
· Calling or texting friends and family for advice (45%)
· Comparing prices (41%)
· Searching for coupons (35%)

Expanding on these findings, a recent NPD Group survey found that 46% of consumers use social media and/or an electronic device to shop, according to Cohen, who is quick to point out that shopping is not the same as buying and that the conversion rate of shopper to purchaser varies with age. “The younger (under 45) crowd comes in at about 63%, whereas the conversion rate for older, 45-plus consumers is only 27%.”

The take-away? “If retailers are afraid of showrooming, it’s a great excuse as to why they have not enhanced their customer experience,” Cohen said. “Showrooming is going to be here for a long time, it’s not going away. Retailers that don’t embrace it and use it to their advantage are not being progressive enough in recognizing how the younger generation is clearly going to be shopping.”

Unlike the typical brick-and-mortar consumer who shops in the store, searches online and ends up buying at the store, today’s younger consumers tend to gather information online first and then go to the store before ultimately making the purchase online, Cohen said.

The brick-and-mortar experience combines social engagement with the sensory process of seeing and touching the merchandise, which can lead to impulse purchases, he said. Online shopping isn’t as impulsive, but the consumer has the convenience of knowing immediately if a product is in stock and has access to detailed information about it, which enables consumers to “presearch” products so they feel confident in making purchases.

”A progressive brick-and-mortar retailer will reach over the aisle and say, we are going to bring some of the conveniences of the Internet into the equation or we’re going to bring in the presearch element,” Cohen said. “The fact that consumers can sometimes learn more about a product online than from the salespeople selling it is a shortcoming. They have to learn how to overcome that, which means they either need to have salespeople better equipped to answer questions or have information readily available, and not only on a tablet or a phone.”

While it’s unclear how much revenue brick-and-mortar retailers lose to consumers who shop in stores but buy from their online competitors, Dave Workman, executive director of the PRO Group, sees industry-wide repercussions.

“The biggest impact is that any time you have a transaction that moves from physical brick-and-mortar to the Internet, from an industry standpoint, you trade down,” he said.

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