Does ‘Showrooming’ mean the end of retail?

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“It’s not one channel or the other; it’s making sure that you get a richer experience in both”
Christopher Bailey – Chief Creative Officer Burberry.

Like Phoenix arising from the ashes, retail brands Jessops and HMV have both returned to the high street albeit in a stripped down, leaner form. Both brands were much loved by their customers and had a reputation for being pretty good at what they did. But this was not enough to sustain sales in the face of the onslaught from online shopping. The fact is there were just not enough consumers willing to visit the stores and those that did were often ‘showrooming’, visiting the store to see the product, get advice and then leaving to purchase it online and get a better deal. So are the new owners of Jessops and HMV simply postponing the inevitable or is there still a role for the retail store?

The answer to that question is ‘maybe’. It really depends on how the brand thinks about the retail and online channels and the extent to which they work in harmony. Fashion retailer Burberry, reported an 8 percent rise in sales from its stores for the period ending 31st March. Whilst footfall in Europe was down it made up for this by higher value transactions.
“Burberry continues to execute well, driving improved conversion, further elevating the brand and improving average unit retail selling prices,” said analysts at Nomura.

The key to Burberry’s success is in creating a richer retail experience and a brilliant online experience and ensuring that the two work as one pure brand experience. That experience drives perceptions of the brand, which in turn makes it more desirable irrespective of the channel used. The fact is that consumers sometimes like to shop online and sometimes they prefer to browse, handle the product, get advice and then purchase. Whether that transaction takes place in the store or online really doesn’t matter. In fact retailers like Virgin, Apple and Burberry are bringing online in-store so that customers can make their purchase using a web enabled device in-store and have the product delivered to them at home making the whole experience so much more convenient.



Burberry Store. London.

Burberry Store. London.


But there is a ‘but’. This strategy only works when you create a reason for consumers to visit the store in the first place. You have to get footfall before you can convert it. Recent research from retail training company ‘Beyond the box’ throws some light on this. They found only 44 % of staff really ‘showcased’ the products. Contrast that with the nearly two thirds of respondents that felt that online retailer websites are ‘good at showcasing their products and services’. Why bother going to a store if you can get better information online?

When you get it right though, the rewards are significant. Of the customers surveyed, 96% felt they got a sense of a brand when shopping in-store compared to only 72% who felt similarly when shopping online. Of those 96%, one in five (20%) bought complementary products in-store, compared to only 7% who did so online – suggesting that in-store shopping is still able to engage and connect customers with brands in a way that online shopping doesn’t and more importantly, drive additional revenue.

So how do you achieve these benefits? First and foremost the store has to be a showcase for your products and set them off to maximum advantage through creating a multi-sensory experience. So the huge interactive screens in Burberry bring a whole new dimension to the store experience. The physical experience of visiting an Apple or Nike or Build-a-Bear store is difficult to recreate virtually.

Secondly, it’s all about the people. American retail research organisation, National Business Research Institute, found that 40% – 80% of customer satisfaction is affected by employee attitude so it’s clear that retail staff play a significant role in brand building.

Our experience is that in order to have employees that can represent your brand as well as those in Apple, they have to be trained to create a branded experience. But training in most retail operations doesn’t work.

Here’s why.

One – it’s often based on generic customer service training programmes rather than being grounded in the organisation’s brand promise and desired customer experience.

Two – it’s wholly HR owned and therefore often seen as just a ‘sheep-dip’ training programme and implemented independently of marketing communications, branding, or store design.

Three – the content is often bland and generally formulaic of the ‘have a nice day’ variety.



Four – it delivers learning to suit the training timetable rather than being delivered when people actually need it or have the time to do it. ‘Just in case’ rather than ‘Just in time’.

So what’s the solution?

If you want to create a branded experience, you need to create branded experience training. And in our view this training must operate at three levels.

HEAD

Knowing what to do and why it is important. How the brand is different and how products create value for target customers. Knowing how to deliver the brand promise and a unique experience.

HEART

Being motivated to do it. Understanding the difference that the individual employee can make and feeling valued for doing so. Being rewarded for delivering a great customer experience not just incentivised for short-term sales.

HANDS

Having the skills and tools to behave in that way. Having a deep, rather than broad, understanding of the products with the skills to bring them alive for customers in a way that a website never could. Think of the people working the Genius Bar in Apple.

Meet Genius. Apple Store

Meet Genius. Apple Store



Getting these three simple, yet powerful elements right can make the difference between success and failure. As the old saying goes ‘Retail is detail’.

So is there a place on the high street for HMV and Jessops? I believe so; if they can create a rich online experience that works hand-in hand with a great store experience that is a showcase for the products; a store experience delivered by people who are passionate, knowledgeable and can go way beyond selling the product to becoming ambassadors for the brand. It means fewer, but higher quality stores and people working seamlessly with the on-line channel. That, I believe, is the retail model of the future.

For an amazing example of what I mean see this video that shows retailing in the future. http://www.youtube.com/watch?v=DzBIYwZsut0&feature=em-subs_digest-vrecs

7 COMMENTS

  1. I agree with what you’re saying. You’re on a higher conceptual level than this comment will be.

    First, if you want me to purchase from you in your store, you’re going to have to have the inventory on hand. Then create the experience around it. You can have the greatest customer experience and highly trained customer-centric staff but if you don’t have the inventory I want you are SOL.

    I used to be the manager and district manager of mass market jewelry stores. Retailers have an advantage over Web sites in that they can be the beneficiaries of impulse buying more so that web sites. (I agree that impulse buying happens on line, I do it myself, I just think a retailer is better positioned to encourage it.)

    Seeing the merchandise in the store allows you to touch it, smell it, sit on it, which is what you can’t do online. Retailers should create experiences that allow that to happen more often.(This is why there are perfume testers at make up counters.)

    Retailers are at a disadvantage if they can’t match the online price. I love that Best Buy allowed me to walk in to their store, show the cashier the price at Amazon.com and have it matched. I walked out of the store and didn’t have to wait five days to receive the mchdse and worry about it being stolen off my front porch.

    Finally, you’re right about integrating the Web site with the bricks and mortar. I want to purchase five pairs of jeans for my college age son. I go to a store and they only have one pair in his size. It should be easy as pie for me to order right there, assisted by the sales staff, who will receive the commission. I will be given the choice of picking up the jeans in that store, having them shipped to my home, or having them shipped to his college residence.

    If you can make my experience that satisfying, you’re going to hear my footfalls in your store more often.

  2. Glenn,

    Thanks for your comments. As an ex-retailer, you will know the importance of having the best product (and enough of it) , the best price and the best people. Get those things right and allow your customers to move seamlessly between channels and you are golden.

    Regards,

    Shaun Smith

  3. Store retailers probably won’t agree with this, but as a consumer I think showrooming will ultimately improve the omni-channel retail experience.

    Stores will need to work harder to offer a value-adding customer experience, integrate with digital channels, and deal with price competition from online.

    Online retailers will eventually have to figure out how to deliver on the physical experience, which could mean expansion into the real world or collaboration with stores.

    In the process, there will be blood in the streets (High Street, too) as retailers adapt.

  4. Bob,

    I agree with you. If retailers and on-line stop seeing the other channel as the enemy they may figure out that, at the end of the day, the consumer determines how, when and where they wish to shop. By harmonising channels into one pure brand experience that gives the customer choice and builds affection for the brand both will benefit.

    Shaun

  5. Shaun,

    Exactly. About five years ago I wrote about this on my blog using the same example of purchasing jeans as I used in my original comment. I bought them at a regional western wear chain and I received an email from their webmaster who wanted to better integrate the channels. However, she was running into resistance from store managers and their department head who did not want to incentive store personnel to encourage customers to order from the Web or from other stores. Store personnel saw the web site as a competitor.

    At the strategic level, “…harmonising channels…” as you put it requires a change in corporate culture with senior leadership clearly mandating and showing the benefit to the organization, the customer and the employee. At the operations level, incentives and performance objectives need to be revised to encourage the desired behavior.

    It must be clearly demonstrated to all employees that harmonising channels is not a threat, it is a necessary resource to survive.

  6. Glenn,

    This is not new. Many years ago Ted Levitt wrote the classic HBR article ‘Marketing Myopia’ and used the example of the railways resisting competition from the nascent airlines because they saw them as a threat. Instead they could have embraced them as a new means for transporting passengers across America in which case the railway companies might still be around today.

    It’s the same thing as retailing. Do retailers see their purpose as ‘making great products available to the widest number of customers’ as Amazon does, or ‘Running stores’?

    Shaun Smith

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