Retailers Turn 'Showrooming' Into Innovation Opportunity

BY SAMANTHA MURPHY18 HOURS AGO

A store in Australia made headlines earlier this year for charging consumers $5 to just walk through the door. The decision was made following the growth of "showrooming," a familiar concept when a person heads into a physical store to check out merchandise before finding the same product at a cheaper price online.

Thanks to free shipping and returns, as well as low or no taxes — hello, Amazon — it makes sense for consumers to do online price comparisons before making a purchase.

According to analytics firm ForeSee Results, about 70% of consumers use a mobile phone in a retail store to research and accompany their shopping experiences. Data from U.K.-based design agency Foolproof also supports the growth of in-store mobile usage. In fact, a recent report revealed 24% of British consumers "showroomed" during the 2012 holiday shopping season — and 40% of that number bought from a competitor after comparing prices.

Not surprisingly, retailers with brick-and-mortar locations are struggling with the concept and are under pressure to entice people to make purchases while inside the store.

"Brands and companies such as Best Buy, Target, Walmart and other large national and global retail brands are taking it very seriously," says Brian Gillespie, principal at service design firm Continuum. "It has pushed them to innovate their cross-channel marketing strategies and in turn, it has spawned a slew of new digital marketing services that are engaging shoppers in new ways and enticing them to stores."

For example, Target earlier this year announced plans to price-match online competitors, such as Amazon. According to Jack Philbin, co-founder and CEO of mobile marketing solutions company Vibes, the mobile wallet space is impacting showrooming. This is helped along by the launch of Apple Passbook and Google Wallet, and other location-based marketing services.

"When you have a 'Pass' in Passbook, it's another valuable way marketers can connect beyond showrooming because as consumers walk past a store, an alert message appears on their phones telling them a location is nearby where they can use their passes," Philbin said. "Google announced this week it is developing a mobile wallet solution that will allow consumers to save objects to Google Wallet, such as loyalty cards, offers, tickets, boarding passes and more, and this will be valuable to consumers and retailers, as well."

So is showrooming a bad thing?

"Overall, it's neither good nor bad, depending on whether you view it as the death of physical retail or a kick to traditional retailers to innovate their cross-channel experience," Gillespie of Continuum says. "Those who are tackling it head-on may actually consider showrooming the future of retail."

The Economist reporter Matthew Bishop recently noted how the success of online companies such as Warby Parker, which made a name for itself with its virtual eyeglass try-on features, is encouraging expansion beyond the web. Warby Parker recently opened its first brick-and-mortar location in New York City.

"Showrooming is forcing companies to figure out ways to take advantage of the opportunities it provides," Gillespie added. "Those who fear it will fail, while those who embrace it and use it to their advantage will succeed."

At the same time, there is also the opposite of showrooming, which Gillepsie refers to as "webrooming" or "e-rooming." Shoppers search for the products they want online, and then head into the store to make a purchase.

"For this to work, it puts a huge onus on the stores to create an excellent in-store experience. Innovative retailers such as Nordstrom and Burberry already get this, and those retailers who succeed will bring out the best the best qualities of physical stores such as customer service to their digital environments."

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