Showrooming? You have to love jargon. But this word is more than jargon. In fact it is a relatively new entrant into the Oxford English Dictionary. More importantly, showrooming has had a transformative impact in the retail world. Currently, 63% of Canadians have engaged in it (published in the CIRA 2014 Factbook referencing an Accenture survey). Showrooming is the practice of examining merchandise in a traditional physical retail store without purchasing it, and then shopping online for a lower price for the same item (source Wikipedia). This is a practice plaguing big-box retailers because they offer a broad range of products, which makes their physical stores a particularly attractive place to physically compare different products. These can then be purchased more cheaply from an online retailer that has less overhead. Despite the pain to the big box stores, they do have some tools to compete. They have the size to offer competitive pricing, the breadth of products to offer selection, the programs to offer loyalty-based incentives, the money to invest in high quality website experiences, and the purchasing power to have exclusive products in their stores. Even with all these tools they are feeling the pain to their profit margins.
What is a small guy to do to combat showrooming?
This activity can hit a small retail business particularly hard because a small business is often a specialty store offering a higher level of service and more premium prices on more premium products. Premium prices mean that there is usually gross margin available that an Internet-only retailer can use to undercut a small retailer’s high-service/high cost sales process. It also means that the buyer can realize pretty big total savings by showrooming. Think about the difference between buying, for example, a $600 GE electric range at your local Home Depot store versus the $6,000 premium Wolf gas range at a specialty store. The Wolf range has good margin built-in. The sale is entirely different (and expensive). The in store experience the buyer expects is entirely different. And now the buyer can get all the experience with none (or less) of the price premium by learning everything they need, and then going online to buy it. And it isn’t even necessarily an apples-to-apples sales experience. Somewhere in your city someone is selling a used version on Kijiji. Somewhere there is a web retailer with a scratch-and-dent sale. Somewhere there is another retailer with a clearance sale on last season’s model. It is not fair is it? So how is a small shop to compete against showrooming? Short of charging a fee for a customer to pass through your doors, many stores have had to turn to good old customer service, a no-nonsense guarantee, and excellent after sales support. But this is all bricks-and-mortar thinking for an online problem. If it is an online problem, what types of online activities can be done to help a small business combat, or take advantage of, showrooming?
Have a great online experience that engages customers both in the store and online. Get them to transition from an in-store or online visitor to a newsletter subscriber. Keep your newsletter helpful with lots of content they can’t get from a big-box store. Offer exclusive sales through the newsletter. They may not be a buyer this time around, but they just might be back and they might become loyal.
Get a good website
Your website is more than an online brochure about your services. Use it to provide video reviews of new products with a unique flavour that only you can provide. Use your website to promote your local angle, show the potential customer why buying from you supports the local community, and demonstrate why buying from you is a great value.
Make showrooming your friend
Don’t necessarily expect to compete on the exact same prices for the exact same merchandise, but recognize that people are searching for popular items. Having popular items available in even small quantities gives them a chance to be found at your business when someone is doing a local search for other stores that may have the product on sale. If you are competing with big-box stores then this is the opportunity to have an online store that really demonstrates focus in your category by showing related or similar products. Big-box stores are not good at focus. It is hard for companies like Walmart to offer unique experiences in a store that sells both 60” TV’s and baby diapers.
Combating showrooming with a focus on the local market can be very effective. Think of the hassles with shops that don’t ship to Canada or that charge huge fees for shipping. Think of the annoyance when you are on amazon.com to get something only to find that amazon.ca doesn’t offer it. Think of the potential costs and hassles of dealing with customs duties to bring products in. Think of what happens when you want to return a product to the online store (this author has had to pay both import duties on a product bought in the US and then had to pay export duties when he wanted to ship it back to the US to return it). It can be a huge hassle and not all the US retailers have figured out how to make it easy on us Canadians. So when people are showrooming make sure they find you, and can buy from you.
Integrate the in-store and online experiences
Having an integrated experience involves more than just ensuring that key products are available both in-store and online. Knowledge and convenience are key assets of an in-store experience that simply can’t be matched online. As such, many retailers are using tactics like knowledgeable sales staff, in-store pick-up of online orders, exclusive or hard-to-find products, in-store Wi-Fi and smartphone discounts that nudge showroomers to buy in-store. In addition to these online tactics, there are also a host of good offline tactics that can be used to help you combat showrooming. It isn’t easy and none of these are silver bullets, but if you can apply a good mix of them then you are giving yourself the best chance for success.