What would you do in this situation? A young man—let’s call him Andy—walks into your store and starts looking at your merchandise. Suddenly he pulls out a smartphone and snaps a picture. Then he starts tapping away at the keys on his device.
What’s going on? It seems Andy is looking up your merchandise on the Internet, seeking a better price. When he finds one he’ll order the item online. With that done he’ll walk out of your store.
Revenues to you: Zero.
Andy is a “showroomer”—a shopper who examines merchandise in a brick and mortar store, then uses a smartphone to find a better deal at a rival’s website.
Shortly we’ll answer this article’s opening question about dealing with Andy. Right now it’s important to note that he’s part of a growing group of shoppers who are making life difficult for retailers.
Research shows that many active showroomers are similar to Andy: males between the ages of 18 and 34. Of people in this demographic who own smartphones and who have recently shopped for products in brick and mortar stores, 64 percent say they have done some showrooming. That figure compares with 52 percent for the general public with the same characteristics. The data come from a survey by Forrester Research, Cambridge, Mass., and Aprimo, an Indianapolis marketing firm.
Look for more Andys in your store: In the same Forrester-Aprimo survey of young men owning smartphones, 47 percent of respondents said they planned to increase the usage of their devices for researching prices. “This is alarming in an environment where there is price competitiveness,” says Sucharita Mulpuru, Principal Analyst at Forrester.
What’s driving the growth of showrooming? No secret: Personal technology is getting more powerful every year, breaking down the concrete walls that have long blocked public access to pricing information around the country and the world.
“Price is transparent today,” says James E. Dion, president of Dionco Inc., a Chicago-based retail consulting firm (www.dionco.com). “And showrooming is the end result of price transparency.”
And price—not the availability of a related style unavailable in a store—does seem to be the determining factor in a showroomer’s purchase decision. Some 75 percent of purchases that start in the store and end up online are due to price, according to a survey from fluidretail.com. This price sensitivity seems to be characteristic of the population in general. A good 70 percent of shoppers have become more sensitive to price in the past year, according to a survey from Parago, Lewisville, Texas.
And the vendor who most benefits from all this showrooming? You might guess Amazon.com—and you are correct. The famous web retailer has captured one third of online shopping dollars according to figures gathered by ilsr.com. And Amazon shoppers love showrooming: 39 percent of them say they look at products in-store prior to buying online, according to a survey from fluidretail.com
Dealing with showrooming
The above numbers suggest that showrooming is growing. Every retailer needs to deal with the phenomenon in a constructive way.
Just how? You might be tempted to ban the practice. Some retailers have done just that: They ask showroomers to leave the store, or install technology that blocks wi-fi signals. One retailer even posted a sign announcing a $5 “just looking” fee, refundable at purchase.
Such steps, though, can create bad feelings among your regular customers. Some of them, after all, would like to do a little showrooming of their own—not to cheat you out of a sale but to make sure your prices are reasonable. They also might want to access online details about—and reviews of—items they are considering buying.
“Don’t make the assumption that someone with a smartphone is just looking for a lower price,” says Dion. “Some are finding out what other people are saying about merchandise.”
Tip #1: Fine tune your price reputation
A better solution to the showrooming puzzle starts with the knowledge that pricing, as noted above, is the number one driver for showroomers. Cultivate a reputation for reasonable prices and showroomers will be less aggressive.
“People often showroom because a retailer has done a bad job establishing pricing credibility,” says Josh Pollack, Executive Consultant at The Parker Avery Group, Atlanta (parkeravery.com). “The consumer is not necessarily looking for the lowest price--just a reasonable one.” He suggests getting ahead of the issue by maintaining a firm grip on your own knowledge of prices. What is amazon.com asking? The other brick and mortar stores down the street? Stores in nearby cities?
“Retailers are notoriously bad for not knowing what the competitors’ prices are,” says Pollack. That leads to wide pricing disparities that only fuels the showrooming fire.
Fair pricing, though, is not the final word in battling the showroomer. Indeed, you can go too far in the attempt to go head-to-head with the marketplace. Some retailers, for example, have experimented with promises to match any competitor’s price. That can be too costly. “Price matching is a recipe for disaster,” says Dion. “You have to be competitive but you cannot beat an online retailer that has no brick and mortar store and no associates to pay.”
Exact price parity is not important, but being in the ballpark is, says Pollack. “If I am looking at a $100 purchase and you are asking a $2 premium over an Internet provider, there is all likelihood I will buy from you to avoid the risk of something happening in handling or delivery.” Proximity pricing is most important for generic items; less so for items that are not easily compared.
Tip #2: Engage with showroomers
Now let’s answer the question that opened this article: What do you do when you see Andy pull out a smartphone and start tapping keys?
Proceed with caution: Andy might not even be a showroomer. “You don’t know whether a person with a smartphone is searching a competitor’s website or searching your own, which happens quite a bit,” says Pollack.
The best response to Andy is to initiate a productive engagement, exhibiting the same positive mental attitude and skilled salesmanship you employ with your best customers. Here are three possibilities:
* A general approach that opens a conversation: “Good afternoon. Is there information I can provide you? Let me tell you what we carry and why we carry it.’”
* An approach that emphasizes some service that the customer cannot get from a web merchant: “I noticed that you are looking on the web for information. That’s cool. I do that myself. You may find that [the item] appears to be a couple bucks cheaper elsewhere. It really isn’t because [explain what you offer that the web offer does not].”
* An approach that tells showroomers what they are doing is smart and that you are on their side: “Hey I see you have a smartphone. I use one too. If you want to do a price match let me know. I am right here.”
Such responses can communicate your commitment to price parity. Your endorsement of showrooming testifies to your belief in your store as the best place to shop.
“It’s smart to promote that you welcome showrooming,” says Patrick C. Fitzpatrick, President of Atlanta Retail Consulting, Alpharetta, GA. “Don’t try to hide the practice. Put it out on the table. Let people know how much you want their business.”
Done well, this engagement can make showroomers your friends and customers. In the best of cases showroomers will become your advocates online. According to a recent survey from IBM Global Services, 58 percent of showroomers visit online forums more than once a day; more than half of them write positive reviews. Make yours one of them.
Prepare for profit
Approaching smartphone users with the right attitude can work well. But you must make sure of two things. First, you and your associates must have a firm grasp of pricing in the marketplace so you can converse productively with a skilled showroomer. Says Dion: “You have to have your homework done or you are dead in the water.”
Second, make sure that those associates who approach showroomers possess the requisite people skills. You probably already have a good idea if you are able to engage productively with a stranger. It may be that your store personnel do not. Having the wrong people engage showroomers is a recipe for disaster. You can end up with negative conversations that irritate customers.
“First look at the quality of your staff,” suggests Lisle Davies, partner at The Grayson Company, a New York City based consulting firm (thegraysoncompany.com). “Some store associates are fantastic and others are extremely average.” Only those top performing associates should be asked to engage with the smartphone-using public.
It’s a different story, adds Davies, if a customer approaches a store associate with a question about price. In that case most employees are on firm ground interacting in a way that communicates the value of the store’s services, polices, or bundled merchandise offerings.
Providing your associates with training in this area may be the best thing you can do. “Invest in your people,” says Dion. “If there is a five to 10 percent difference in price between a store and online item, your people can still make the consumer feel there is value in a store transaction.”
Maybe showrooming is becoming a dominant force in retailing, but the practice also highlights the value of a brick and mortar store: Without it, after all, a showroomer would have no place to showroom. “In a few years, maybe 14 percent of all sales will be mobile,” says Dion. “But that means 86 percent will still be brick and mortar.”
Making that brick and mortar presence pay off in an electronic age is the challenge. A successful response requires competitive pricing and a productive engagement with showroomers. “Retailers have to rethink the way they do business these days,” says Fitzpatrick. “Showrooming will only continue to grow. It’s not going away.”