Showrooming is when a customer browses the shelves of a physical store to learn about or test a product, but will ultimately purchase the product elsewhere, usually online and for a better price. This poses a threat to brick-and-mortar stores, especially those that sell big-ticket items that can easily be found elsewhere, such as facial products, electronics, and car parts.
I recently read an article about a shop in Australia that tried to combat the showrooming trend by instituting a $AUD5.00 (that’s about $5.25 in USD) “just looking” fee. Customers were charged at the door and only refunded when they made a purchase. If you’re a traditional retailer, it can be difficult to compete with online businesses, but alienating your customers is certainly a downward slope.
Let’s talk about how to combat showrooming appropriately and effectively. Below are four tactics to consider when constructing your strategy.
Combating showrooming begins with focusing on the unique advantages of traditional retailers. What is the shopping experience like? The environment should be unique and inviting. Are the employees friendly? A positive interaction with a single employee can change every brand association the customer has. In the words of Matthew Frederick in 101 Things I Learned in Business School, “Good merchandising is theater.” Develop a unique, positive shopping experience. Even if some customers continue to make online purchases, a good in-store experience will draw more customers who will buy from you.
Both Target and Toys ‘R’ Us have responded to showrooming by increasing the number of exclusive products they sell. This monopoly gives them the ability to charge whatever price they deem fit without worrying about undersold. It also draws customers by offering something no one else has. The key here is advertising through the right channels; for example, Target frequently runs its exclusive products in high-end fashion magazines. The magazine already has an air of exclusivity that lends its glamour to Target’s line.
It’s true that not every loyalty program is successful, but they are often overlooked even when the potential is there. A good program offers applicable rewards, such as personalized coupons or special access. There is already a wealth of literature on the topic, but Forbes has published a good overview that can help you begin thinking about what a successful loyalty program would look like for your business.
BestBuy, perhaps the poster child for showrooming targets, faced the issue head-on last holiday season with a campaign that actually showed off the stores as, well, showrooms. But the success was only made possible by the accompanying benefits, such as their Low Price Guarantee. BestBuy customers can request a competitor’s lower price at the time of purchase. Price matching is certainly drastic step, but it can be powerful. The main benefits of online shopping are price and convenience. If your business can at least come close to one of them, the benefits of a traditional store will help balance the game in your favor.
Can’t beat ‘em? Join ‘em. If lowering prices is a major hurdle for your business, venturing into eCommerce may be a more cost-effective way of getting your products to potential customers. Virtually all big retailers have eCommerce websites that offer the same – and oftentimes more – products for a slightly lower price than their in-store products. This lets them compete with online retailers on their level. To prevent your stores from competing with the website, consider a solution like WalMart’s- online sales are credited to the store closest to the buyer. This allows salespeople to suggest digital purchases to in-store shoppers without fear of negatively impacting their store’s performance.
The bottom line: A strong business is a strong business, brick-and-mortar or otherwise. Pursue best practices. Have a clear concept of what makes your business unique. Put your customer first, and they’ll reciprocate.