Showrooming is what happens when a consumer walks into a brick-and-mortar store and uses his smartphone to compare pricing, options, and availability online–buying the product from a competitor, often while standing in the aisles of the established retailer.
As described in a Wall Street Journal article, Target’s chief executive and executive vice president of merchandising sent an “urgent letter” to vendors earlier this year: “What we aren’t willing to do is let online-only retailers use our brick-and-mortar stores as a showroom for their products and undercut our prices without making investments, as we do, to proudly display your brands.”
This defensive posture is understandable, given the stakes. But the new reality is this: Digital innovation has forever changed the relationship between customers and the companies that wish to serve them. To successfully address showrooming, retailers need to do more than circle the wagons; that strategy didn’t work any better for buggy whips than it did for the music industry.
In the near term, protectionist tactics may ease the pain a little. But for the long term, it has always been about giving customers what they want, and doing so more effectively than your competition. That’s why successful retailing strategies of the future must recognize and embrace the trends driving showrooming.
Established retailers are miffed. But is it any surprise that customers are looking out for themselves?
It’s Not That Your Customers Don’t Care. They Just Don’t Care About Your Company
Today, many customers act smarter than your average company. These “smart customers” have smartphones that, on average, are loaded with about 40 apps, representing a 28 percent increase from 2011. These apps let them check prices, compare service agreements, read reviews, and check in with their friends, or others, to get a second or third opinion–even as they talk to your employees or shop competitors online while browsing the physical products in your store.
Add to this the fact that your company’s issues are of no concern to most of your customers. They don’t care about your overhead, profits, or shareholders. So it’s no wonder your customers are using the tools at hand to get the best deals on products or services.
While it’s easy for brick-and-mortar retailers to point to online vendors like Amazon and bemoan the lower overhead and economies of scale driving their ability to consistently deliver lower prices, the hard truth is this: In a world of price transparency, most products are viewed as commodities. And in any commodity business, price is the primary driver of purchase choice.
Customers have a choice, which they’re exercising with greater abandon than ever: If they can find what you have at a lower price, in the color they want, or delivered free–gift-wrapped–then they’ll buy it somewhere else.
Even if they’re standing in the middle of the local Best Buy, Target, or mom-and-pop bookstore while doing so.
The Message Customers Send By Showrooming
The thing is, the same disruptive forces giving customers near “superhuman powers” also give established companies the ability to create the product, service, and customer experience-based differentiation that can make showrooming irrelevant.
Whether you run a large, established enterprise like Target, a regional specialty chain, or a local, community-based mom-and-pop, the question is this: How do you leverage your brick-and-mortar presence with technology to give your customers easier access, more choices, better information, and stunning new services based on their unique wants and needs?
What if (for example) Target opened a chain of mini “showrooming” stores, stocking only one each of hundreds of products? Customers could touch, feel, and see them, and be encouraged to order items on their phones or at handy kiosks. Next-day delivery, lowest price guaranteed.
Or a regional mattress and bed retailer could insert themselves in the middle of the social conversation by developing an app that would allow any buyer, anywhere, to scan a barcode or enter a product name to read reviews, get comparative pricing, and assess product fit for their needs–while guaranteeing 100 percent satisfaction, local service, and highly knowledgeable service staff.
Local bookstores (like Book Passage in Marin County, or Powell’s in Portland) are highly attuned to the needs of their best customers, offering author events, classes, highly knowledgeable employees, and specialized apps to not just survive, but thrive–while competitors wither.
And this kind of thinking applies to any business in any industry. By becoming more customer-centric, forward-thinking companies will drive stronger, more profitable relationships while marginalizing their competition.
If You’re Not In Retail, What Will Be Your Industry’s ‘Showrooming Moment’?
Whether you’re B2B or B2C, in healthcare, financial services, or retail, or anywhere between, tomorrow’s going to look a lot different than today. Music, mobile phones, book publishing, and retailing have all had “showrooming moments” as industry stalwarts watched upstarts and interlopers upend decades of entrenched systems and processes in a few short years.
While technology is a big part of this, a deep understanding of your customers is even more important. The power of disruptive forces goes well beyond the obvious, giving any firm the ability to leverage innovation and a keen understanding of their customers to connect in ways that demonstrate their voices are heard, and their (individual and unique) wants and needs will be met.
One thing is for sure: Complaining won’t solve anything. All you need to do is deliver high perceived value and an experience that’s better than the alternatives; the right combination means “decommoditizing” what you’re selling. Find that combination, and you’ll win. If not? Well, no one likes a whiner.
