If there’s one word that strikes fear into the heart of modern bricks-and-mortar retailers, it’s ‘showrooming’, says Fadi Shuman*. This is one of the latest retail buzzwords, and is essentially where someone uses a retail store as a showroom. In other words, they come into the shop to browse products and then look online for the cheapest place to buy – more often than not from a competitor like Amazon.
This is a tough for retailers to combat as the playing field is far from level. Online retailers don’t have the same overhead costs as their high street counterparts, enabling them to price their products lower. Yes, high street retailers can fight back by matching online sellers’ prices or improving customer service, but both of these increase their costs and have a direct impact on their bottom line.
Despite being all too aware of this increasingly popular shopping tactic, just 10% of bricks-and-mortar retailers have strategies in place to fight against showrooming, according to a new US research study from Edgell Knowledge Network, in partnership with eBay Local.
The report suggests that 80% of US retailers expect to be impacted by showrooming over the Christmas period, and they estimate they will lose an average of around 5% of sales, and, given the low margins in many retail sectors, this is hardly something to be glossed overThe survey comes out in the wake of the June study by comScore, which found that 35% of Americans showroom when they’re making purchasing decisions.
While these figures are exclusively focused on the US market, retailers across the UK and the rest of Europe (in fact the rest of the world) need to be on their guard. Make no mistake, this is far from being a US-only phenomenon and we’re seeing an increasing number of UK retailers suffering the same fate.
You just need to look at the rise of mobile for e-commerce across the globe to see that showrooming is probably just the tip of the ice-berg for how mobile is going to change the face of retail in the coming years. Indeed, a survey published by NetSuite in October pointed towards an £11 billion rise in mobile commerce over the next 12 months in the UK for the top retailers alone.
So what can retailers do? Part of the answer here is simple, and the EKN study draws this out – while it mentions price-matching, it also points towards improved cross-channel integration as being the most effective strategies to counter showrooming. However, only 25% of respondents reported full integration between their store and online channels, and only 15% share their full inventory online.
So despite the fact that people like me have been banging on about the importance of consistent cross- and multi-channel commerce for some time now, it appears that the retail industry still has a long way to go before it catches up. Showrooming isn’t going to go away, and retailers that get their coping strategies in order now stand to be ahead of the game over the coming years.
*Fadi Shuman, CEO and Founder of Pod1, the specialist ecommerce and digital arm of global content solutions provider Group FMG
Originally posted:
The Integrated Retailer, 19 December 2012
Net Imperative, 14 December 2012
Brand-e, 19 December 2012