The Value of Showrooming

Ever since “showrooming” entered the retail vernacular we’ve argued that smart retailers could take advantage of the practice as an easier way to identify obvious buyers, engage them and help them to buy exactly what they’re looking for…and more. We certainly realize how much showrooming has disrupted and hurt the brick-and-mortar retail business. But now that everyone’s familiar with the practice, we strongly believe the positives can outweigh the negatives.

Jay Vandenbree, LG’s senior vice president, home entertainment, believes the same. In our annual roundtable discussion with executives from some of the top TV manufacturers, Vandenbree speaks eloquently about why independent dealers are still so important to LG. He then switches gears and talks about the actual opportunities showrooming presents to the CE retailer. We couldn’t say it any better.

“If you had told me you could identify every consumer ready to buy because they’d be staring at a product with their cell phone out, I’d tell you, as a retailer, I could close almost any of them that came in,” he said. “Never before, at the point of retail, have you ever had a sign that said, ‘I’m ready to buy,’ like that.”

Every store manager should be passing along that message to his or her sales associates. The showrooming customer, as Vandenbree points out, is ready to buy. When a consumer uses their smartphone in a store, they’re just looking for the best price. The sales associate who approaches that customer can now offer them something they can’t find online: the best value.

“We know that 85 percent of consumers research online before they do anything. But a customer who comes into a retail store first had to make a conscious decision not to buy from home. So they’re already predisposed to buy from the dealer,” he said. “But they also know that there might be some deals, and if they can show a price, everyone will price-match. And that’s where I think retailers’ value-add comes in. That’s where they have to explain what consumers get by shopping with them.”

  • Companies:
  • LG
Related Content
Comments
  • guest

    so phrase it differently: customer did some research online, but decided that they want to see it in a store. so they come in, ask all questions and get answers from the retail associate. now after all questions were answered, they go check prices online. So, what value does the retailer now provide? customer can get white glove delivery & no hassle returns from etailers, who didn’t pay rent, don’t have to train associates. and do volume so they get better prices then the retailer.

  • Carlos

    Based on own experience, not entirely true the statement about when you go to the retail store you are already predisposed to buy from the retailer. I go to the retailer to actually see the quality of the image, hear the quality of the sound, etc, functions which you can not do from e- tailer. Then I buy based on the price, delivery date, availability of the product. Warranty is the same from e-tailers and retailers. Mr Vandenbree, when was the last time you went to a retailer such as Best Buy to buy any products?

  • SSMD

    We have a Best buy only a mile from my shop, I am hoping they close soon. from what I hear they are having troubles. It wont solve the showromming issue but it will drive more walk in business. We have to face the cold hard facts the "brick and mortar" store is a tough buisness to have in our industry. we can all remember the good old days before the net or went the net was young and not a trusted place for sales. Today you can even buy a handgun online,(FFL transfer needed) but 10 years ago that was unheard of!

  • MinnesotaMktGuy

    I agree. We’ve written many blogs about this subject, how Best Buy is failing and more. Showrooming should be "embraced"…let the consumer know what your store’s brand is about and how your attributes won’t be pigeon holed as a low price commodity: More at: http://www.social4retail.com/our-retail-blog.html

  • TV MAN

    Retail has drastically changed with the introduction of the internet and now smart phones. Plus, with a horrible economy, price is king…not service, to the majority. Most electronics are now made in China and the quality has suffered. During my 20 years with a US CE company, we saw products move from the US to Japan, Korea, Mexico, and China. Quality is an after thought, and price sells, as CE products are throw away. Forget the extended warranty, it will break and be tossed for a newer and cheaper item. Face it…if you have a showroom today, you’ll be out of business tomorrow.

  • Jack Cotter

    I think survival will take a two pronged approach. This column details some ideas for in-store changes. Over on our LinkedIn group, Peter Weedfald suggests 9 e-commerce changes you can make http://ow.ly/ckMnq

  • reinventbestbuy

    "Everyone will price match"? Not true. I offered my local Best Buy $100 more than Amazon’s price for my LG 3D HDTV. The manager was all apologetic and sent me away. Another misconception: shoppers will not pay for service costs built into the sales price. Vandenbree should spend some time on the sales floor, as I have, to see what his close rate actually is without giving away the merchandise. My experience has led me to conclude there is only one answer: the service club store. Everybody gets low prices and members get service too. If as Vandenbree suggests, that service has value, then you’d be able to sell it separately. It wouldn’t cost much. See the pricing example at reinventbestbuy.com. No price differential = no showrooming.

  • toma

    Alas, just more self-serving rhetoric from a brand manager who is fairly clueless, if well intentioned (rare in itself). When talking about sales of what most consumers consider strictly commodity items, and that’s what the vast majority of TVs are, to be sure, a percentage can indeed be closed, but at too low margin with too high effort. Do Vandenbree or O’Heir believe their words? We’re not talking about a McIntosh or Levinson. What’s clearly needed is the combination of a revised margin stack and and tighter control of pricing/availability in the market. An online dominated selling space is just plain bad for everyone – manufacturers, dealers, consumers.

  • guest

    Good suggestion. Will help with the most brazen of consumers who are rude enough to check prices on their smart phone while in full view of a displaying retailer. I would hope that would be a rather small percentage of the buying public. Most, hopefully, check prices in a much more clandestine way or from a computer in their own environment. And yes, anyone could close a consumer who is ready to buy. As long as they offered the same goods and services. So not only price but in many cases no sales tax, free delivery, and liberal return policies.

  • Sev Ritchie

    Great piece! Very good point that this is an "opportunity" at retail.

  • Doc Sr.

    When stores fire their most expensive commissioned sales people to save money they also got rid of the ones that could help a customer get the best possible solution to their needs. At least half of the clients that call me for an "install" of a product purchased on the internet, could have gotten a better piece for about the same money if they had consulted a professional rather than doing their own "research" which most often means the blind leading other blind to a poorer solution.

  • David Munzlinger

    If the internet is driving customer traffic into your store to see products- Great, then it is up to you the retailer to be a product expert, qualify the customer, on the products they came to see, sell them the product them cam to see, match price if necessary, up-sell if the specific situation permits, accessorize as a method to prove your expertise and add value, sell beyond the product-back to the customers house and system and make sure that all compatibility issues are addressed and resolved, have the product in stock. In short be the expert that you claim to be, make sure your customer knows you are the expert and win their business. If you have the product and the customer believes and trusts you why would the customer risk shipping lag time and possible shipping damage. When they can get it from you right now. We need as an industry to get the unfair trade advantage that e-tail has-in that they do not have to collect state sales tax-resolved sooner than later. This will help level the playing field. Regardless of the state sales tax issue. Big box product expertise is minimal at best and most customers come in the door with more product knowledge than the store salesperson. As long as this occurs the value add proposition at retail breaks down immediately and e-tail looks great to the consumer. If you are going to be a salesman than really, really know your products and how to sell. Kmart is Kmart no matter how you dress it up. I am a T-mobile customer, I just got a new phone. One of my desires for my new phone was for it to have Gorilla Glass, I knew walking in the front door that the phone I wanted had Gorila Glass, I hope I spelled Gorila right, I happened to ask the question in the store just to confirm and to my surprise nobody in the store could tell me if the phone had Gorilla Glass or not, they were all on their computers, on their smart phones and they were all buzzing around arguing with each other about it and calling district managers. I left the store with my new phone but the issue of the glass was never resolved. Again, if you are going to sell anything then be an expert. Win the customer. Making a big investment in a store, hiring people, having displays, having inventory, does not give you the "right" to business. You have to win each sale, each customer, and every customer is different. Cookie cutters are for baking cookies not selling. Tell your sales people to stop pitching so much and listen to the customer. What is still so smart about e-tail is that it does not talk (yet).

  • Jay Vandenbree

    Interesting read on all of the comments below. While I would agree that commodity products would likely not fall into my comments above, most of the products that consumers do research on and "shop" are not commodity products. As you all have identified the plusses and minuses of various types retailers, well therein lies the true battle ground. If you choose a club, you choose that value add. If you choose an AV specialty retailer, you choose that. If price is really all that matters, then retail as we know it today can’t survive. I do spend time on retail floors and clearly have opinions on execution challenges. I also don’t believe price is the only thing. I choose retail sometimes, and on line sometimes. I do think it is easy to blame others for poor experience rather than accepting responsibility for our own go to market plans. There are many examples in and out of our industry of retailers that make that choice. I understand it’s not easy, but good retail has value. Not every experience is for everyone. The ones that match or exceed expectations have a value, and Consumers will pay for that.

  • don bendell

    I think it is allussive for Vandenbree to say retailers can "value add" when customers are in the store. Yea, customers come into our store feel confident in buying, most have already done their research or return after. But these companies, ESPECIALLY LG, are hundreds of dollars cheaper online at Amazon. So cheap that all summer we as a store can buy direct from Amazon rather than any of our distributers! So, we have! Our rep is frustrated with LG! Oh and by the way 2 day freight on any TV we order, no freight minimums.
    Back to showrooming, customers are smart, they know how to shop better than ever these days. They know how to get all the information from the store staff. They then know how to go online and find the LG 32" -65" TV below dealer wholesale on Amazon. Bottom line some customers you can win but the majority our going to buy online and use/abuse the showrooming effect. It is TIME for manufactures to decide who they support. If you are LG right now you support Amazon!. If you are Sony you support dealers! Maybe it is time for manufactures to pick their dealerships. We sell only to Amazon or we sell only to dealers.

  • Adam Abraham

    For specific business forecast of the businesses mentioned, and therefore the investment deserves of their corresponding stocks, subscribers area unit inspired to ascertain out our full reports within the worth Line Investment Survey. Dryer Repair Virginia