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May 09 2012

MediaPost - Retailers: Make Friends with Showrooming

 

By Dan Israel and Rami Lama

Over the last 15 years, Americans have become accustomed to surfing the Web on their laptop or desktop before traversing out to the mall. With the advent of smartphones, however, the surfing has moved from the house to the store itself. According to a recent study by Pew, 52 percent of American shoppers use their smartphone to perform research while standing in the aisle of a store, a process called “showrooming.” And more than 19 percent of these “showroomers” convert their offline/in-store purchase to an online retailer.

Like so many of us, retailers have grown nostalgic for the good old days, when customers only had two choices for a cell provider, when a broadcaster could make everyone huddle on the couch to watch NBC’s “Must See TV” on Thursday nights or when retailers controlled the customer experience. In the nostalgic era of Mad Men, retailers felt very much in charge. They decided the flow of information, managed a consumer through their processes and ultimately dictated choices and price because of scarce information.

Today, our world is much less Mad Men, and much more reminiscent of a scene from Fast Times at Ridgemont High. Our friend Steve Smith from MediaPost clued us into this concept, using as an example the dating advice that one of the main characters, Mike Damone, dispenses to his desperate friend, Rat. Among his five tips for dating is a credo that speaks to the future of mobile -- “Act as if where you are, that’s the place to be.”

That's exactly what a mobile device does for a customer -- anything an individual wants to do, and any information desired, can be done or obtained anytime, anywhere, any place, on any device. With possession of a phone that nowadays packs as much technology as the Apollo 11, consumers can harness the power of the Internet to compare prices, look up reviews and learn about products before, during and after a visit to the retail location. Bottom line: the traditional retail business model based on scarce information disappears.

So what does this shift in power mean for the retailer? How does it impact their business? What about the “Amazon effect,” whereby a shopper visits a brick-and-mortar store to check out, try on and price compare before buying on Amazon? Have brick-and-mortar shops become showrooms for online-only retailers?

The answer -- and the real challenge for retailers -- is in bridging the virtual world with the physical one, the digital/e-commerce world with the brick-and-mortar shops. Their ability to connect these experiences and complete the consumer journey, thus successfully combating the “Amazon effect,” is essential in order to stay relevant to the modern, digitally enabled consumer.

Consumers have evolved in how they make their buying decisions. Their journey from awareness, to consideration, to intent and ultimately to buy is no longer a linear path. The dynamic has shifted from the traditional model to a more comprehensive, multichannel journey where not one, but many, elements are involved. Shoppers may engage several different media, people and devices before settling on what to buy and from whom. They will traverse across multiple “digital islands” (Web, app, social) and physical ones (print, billboards, flyers, ads) before ultimately making a purchase decision. Mobile is the vehicle that retailers rely upon to usher consumers across these islands.

Digital and brick-and-mortar retailers can evolve business models to better align themselves with the way consumers shop, and most have done this successfully by creating more channels (e-commerce included), using social media to connect with consumers and building brand presence in non-traditional places like Foursquare and 2D barcodes.

Value-added services such as gifting, rewarding, loyalty programs, on-the-spot deals and the opportunity to purchase at precisely the moment of inspiration are all necessary ingredients for combating the “Amazon effect,” primarily because they help establish lasting relationships with consumers. Target and Nordstrom are great examples of companies embracing (or countering) showrooming. Nordstrom allows customers who shop in their stores to get free shipping for any purchased items. In January, Target sent a note to vendors pleading with them to create special versions of their products so prices could not be easily compared online.

Given the opportunities for retailers who are flexible and willing to invest in digital tools, it stands to reason that a mobile app can serve as the ideal instrument for facilitating the connection of the online and offline consumer experiences. With a well-designed mobile app, experiences that start at home or on the go can continue with ubiquity and continuity as consumers enter the physical store. The mobile app can serve multiple purposes such as in-store check-in, e-commerce and in-store checkout, endless aisle (ability to order products that are not present in the brick-and-mortar store inventory) and virtual aisle (ability to scan and order products via other media such as billboards and flyers).

Showrooming does not have to be the kiss of death for the traditional retail experience. Retailers who wish to stay relevant in a digitally complex ecosystem would be well-served by creating a virtual or digital environment within the physical store and by creating loyalty and reward programs that make consumers feel appreciated and engaged. Doing this turns showrooming into an opportunity and creates real and lasting value for both parties.

www.mediapost.com

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