What the Showrooming Trend Really Means
A significant role reversal in consumer behavior related to the online/in-store dynamic seems to be occurring.
Previously, consumers typically did their product research online and then used that information to purchase an item in a bricks and mortar store. According to the Pew Research Centerâ€™s Internet & American Life Project, during the 2011 holiday season, just over half (52 percent) of adult cell phone owners used their phone to (a) call a friend while in a store to ask advice about a product (b) look up online product reviews while shopping in a store, or (c) look up a product price while they were in a store. About 33 percent of mobile phone users reported using their phone in a store to look up either product reviews or prices online, but half of those users said they engaged in both of these activities.
â€œShowroomingâ€ is Showing Up in Retail Stores
Now, however, shoppers seem to be much more comfortable making their purchases online, so they are doing just the opposite: Looking at products in stores and then buying them at lower prices via the Internet. A survey conducted in late 2011 by a book market research company, the Codex Group, indicated that 39 percent of people who purchased books from Amazon said they had looked at the book in a bookstore before buying it online. Best Buyâ€™s recently announced fourth-quarter loss â€“ $1.7 billion, resulting in the closing of at least 50 stores â€“ can in part be attributed to â€œshowrooming,â€ the name given to the practice of visiting stores to look at products and then price shopping and ultimately purchasing the products online. Indeed, Best Buy stores seem to be a perfect venue for finding and toying with all the latest technology â€“ but not necessarily buying it there.
Amazon, recognizing that it is reaping great benefits from showrooming, introduced its â€œPrice Checkâ€ mobile app in December of last year in an effort to pull the holiday shopping rug out from under its traditional retail competitors. The app enables users to scan a physical productâ€™s barcode in a store and instantly get the Amazon price. The app also accommodates a product photo or inputting the product name. When Price Check hit the market, Amazon further encouraged usage by offering a discount on products purchased using the app. eBay offers a similar app that scans barcodes called â€œRedLaser.â€
Retailers Fight Back
Some retailers are attempting to deflect the showrooming practice with incentives of their own, according to JWT Intelligence, a market analysis firm. Target is working with some suppliers in an effort to make Target-specific versions of products whose prices cannot easily be compared online, while Nordstrom has begun offering customers who shop in their stores free shipping of purchased items. JWT Intelligence says there is a â€œneed for retailers to create unique experiences and environments that are only partly about shopping. Ultimately, these could make the difference between a loyal customer and one with a wandering Web browser.â€
Upheaval in the retail space has been a fact of life for some time, but showrooming is no small worry for retailers who have already cut margins to fend off intense competition. Laura Davis-Taylor, managing director of ShopWork, a service established by ad agency BBDO for its clients, thinks it is part of a bigger change fueled by technology. â€œPeople now create a different shopping experience every time,â€ she told Adweek in an interview. â€œThey buy what they want, where they want, at the price they want â€“ and itâ€™s not just in stores, itâ€™s across home, life and stores.â€
Davis-Taylor says the smartphone has created a new shopping environment. â€œAs shoppers, we donâ€™t see a difference between virtual and physical now that we have all this technology in our hands,â€ she says. â€œPeople want more, they want to have it made easier for them and they want to love the experience wherever it happens.â€ Davis-Taylor says itâ€™s no longer about transferring the principles of physical retail into the digital and mobile environments, â€œitâ€™s the opposite. Itâ€™s about how are we bringing the mobile and digital into physical.â€
Â Good News for Online Marketers
The good news in all of this for online marketers is pretty obvious. It seems that most consumers have gotten over the basic barrier of shopping and buying online; in fact, they have recognized the value of using online information to comparison shop. With smartphones in hand, they can seamlessly move between physical and online shopping environments, literally placing an order online for a product while they are looking at it in a store.
Showrooming effectively validates the nature of online shopping. Consumers who can find a product they want at a more attractive price online now seem to be satisfied purchasing it online from a competitor, even if they are evaluating the product in a store. Until traditional stores figure out how to turn showroomers into their own customers, online marketers will have a clear-cut advantage.