Contributor piece: Showroom the money!
Showrooming is not a new practice, but it is a growing one. For bricks & mortar retail the solution should not be to find ways of countering it, but to embrace it as part of an integrated customer strategy. By Jon Copestake
Late last year Amazon released a price check app offering discounts to consumers who returned prices from competitor stores. It enabled Amazon to gather information from competitors and undercut them on price. Although it sparked outrage from traditional retailers, the underlying trend is already established and is rapidly growing. It is known as “showrooming”, where consumers test products instore and then use smartphones to buy them online.
From storefronts to mountain tops
The emergence of smartphones and the growth of shopping applications have revolutionised point of sale decisions. People can now search for items on smartphones by barcodes, quick response (QR) codes or even photographs they take. In January Pew reported that 52% of US consumers used their phone when shopping, 25% did so by comparing prices. The trend will only grow as reliance on smartphones and retail software applications increases.
Forrester estimate that mobile retail sales in Western Europe will grow elevenfold, to reach almost €20bn by 2017. By this time mobile retail will account for 6.8% of online sales. This looks a conservative estimate as increased connectivity shifts purchasing decisions away from shops and desks to anywhere that a phone or wifi connection is available.
This presents a challenge to retailers. The high street is evolving into a place where footfall no longer guarantees sales. In the US Best Buy tried replacing standard barcodes with branded codes to clamp down on the practice. But this is counterproductive. If consumers can’t compare prices they may think a retailer is hiding something.
If you can’t beat them join them
Instead retailers need merge physical and online operations into a single strategy. High Street stores are increasingly becoming pick-up centres for the fast growing “click-n-collect” hybrid service. They can also offer customer services for items bought online.
This has not been lost on “pure-play” retail giants like Amazon and eBay. eBay has already experimented with pop-up showrooms in key shopping locations. Amazon has been adapting to the “click n’ collect” concept by setting up “lockers” to allow shoppers to pick up items. Bricks and mortar shops will not be far behind.
As showrooming grows the function of the high street will become focused on brand visibility and quality of service rather than direct sales. Instore services will also use technology to enhance shopping experiences. Asda is already considering hologram technology to engage with customers and Tesco is developing 3D interactive projections. While shops will not become theme parks they will certainly become more interesting places to visit. In fact they will embrace smartphone apps, offering instore maps and augmented reality overlays to keep consumers interested.
In a survey by CapGemeni spanning 16,000 consumers in 16 countries saw over half of respondents think bricks and mortar stores will be little more than showrooms by 2020. For some retailers this transition will be painful and will inevitably result in more high street casualties, but mobile commerce and showrooming are here to stay and the sooner retailers embrace this the more successful they will be.
Jon Copestake, retail analyst at the Economist Intelligence Unit
Make sure you attend the Retail Bulletin’s 2nd Mobile Retailing Summit 26th September 2012. The theme of the day is: Improving sales, loyalty and customer experience in an increasing mobile marketplace.
Speakers already confirmed from Waitrose.com, ASDA, Shop Direct Group, Clarks, Thetrainline.com, Ladbrokes, Javelin Group, Mobileweb Company, FICO
Click here for further details.
