Two years ago “showrooming” was something of a boogey-man for brick-and-mortar retailers. In 2012, analysts were writing the early drafts of Best Buy’s obituary, mostly centered on the big box store’s transformation into a demo center for Amazon and eBay customers. At the time, the company’s interim CEO G. “Mike” Mikan identified combating showrooming, as his number one priority, before handing off his duties to Best Buy’s current CEO, Hubert Joly.
Flash forward to 2014. Today Joly “loves showrooming,” and has built two years worth of advertising campaigns around Best Buy as the “ultimate shopping showroom” for consumers. He’s also seen its profits and share prices steadily increase. As it turns out, Best Buy is not exactly a one-off, according to recent data. A 2014 study by IBM indicates that spending due to showrooming declined sharply between 2012 and 2013, from 50 percent to 30 percent.
So what gives?
We know that customers didn’t stop shopping online, nor did they suddenly stop caring about getting good prices. But shopping has changed since 2014, and while showrooming didn’t go away, it’s changed its form.
Consumers are getting savier, and are now increasingly likely to browse for items online for price, and actually make the purchase in the store. The practice is called reverse showrooming, or “webrooming,” and some have been calling it the brick-and-mortar retailers’ secret weapon in 2014.
“The pendulum is swinging back, at least for now, to the offline retailers. Consequently, webrooming should be a real concern for online retailers especially during the holiday season” says P.K. Kannan, Ralph J. Tyser Professor of Marketing Science, at the University of Maryland’s Robert H. Smith School of Business.
Really?
Why would consumers this holiday season suddenly trend back toward the brick-and-mortar store? If they do, how could this change the retail landscape? PYMNTS has the five reasons why e-commerce could actually be the biggest boon to physical retail since the credit card.
As it turns out, Amazon isn’t the only game in town when it comes to undercutting price. In 2014 Walmart is explicitly promoting webrooming by officially offering to match Amazon’s pricing.
“About half of the stores were doing it anyway,” Wal-Mart CEO Greg Foran said on a call with the media following the reporting of its quarterly results, Reuters reported.
Meanwhile, retailers like Target and Best Buy started their Black Friday Promotions 5-7 days early in an attempt to make it that much more difficult for etailers to undercut them on price.
“We’re seeing more and more retailers doing things like price-matching and trying to be more competitive with the Internet,” said Kate Ferrara, principal and New England retail leader at Deloitte.
Moreover, brick-and-mortar stores are getting increasingly savvy about leveraging the omni-channel experiences that allows consumers to move seamlessly between online and instore buying and pick-up.
“I wanted to get boots to wear on Thanksgiving and I didn’t have 10 days for shipping,” one holiday shopper told the Boston Globe. “It’s also good to be mobile and get out into the stores.”
Recent data also shows that as customers are increasingly mobile enabled they are becoming increasingly likely to do real-time price comparisons in-store and then to act on them to try to secure a discount. A study by Men’s Warehouse indicates that of all consumers who carry smartphones, more than one-third (36 percent) have asked for in-store price matching.
Moreover, brick-and-mortar stores are gettting better about using online offers and mobile coupons to drive customers to their locations, where the hope is they will be able to secure more conversions than they would in an online only, sales environment.
“I would rather have customers in the store,” said Terry Lundgren , chief executive of Macy’s Inc. “They will always find something in the store that they didn’t intend to buy, and, hopefully, those impulse items will carry the day.”
Whenever one is shopping there are things to consider other than price, and during the holidays, when time is often of the essence, those concerns are particularly highlighted.
“Holiday-season consumers (tend) to be short of time, plan less, and want immediate possession of the items,” notes Professor Kannan.
The data agrees with Kannan, according to a study by the Columbia Business School and loyalty player, Aimia. Among the reasons shoppers choose to buy in-store after shopping online, was getting the items in a timely way, with 59 percent of respondents noting it as their primary reason.
Moreover, there are certain objects that consumers simply prefer to buy in-store since they are less likely to be comfortable purchasing them sight-unseen.
“Attributes such as quality and fit, besides cost, play a much more important role for non-standard items like dresses or scarves. Also, when prices vary significantly across outlets online, consumers start doubting the quality. These factors make physical inspection of the products even more important. Again, offline stores benefit,” notes Professor Kannan.
When people think about shopping in general, they tend to limit their consideration to the goods that are being purchased. But the push toward webrooming in the last year indicates that when individual shoppers contemplate their holiday purchases, they are thinking about what it will be like to buy the goods almost as much as they are thinking about what they are buying.
According to the Columbia Business School survey, 31 percent of shoppers are “experience seekers,” who go to stores specifically for a retail event and tend to purchase from their mobile devices only if buying in the store is inconvenient.
Additionally the survey found that 48 percent of respondents reported being more likely to buy items in a store if they are a member of the store’s loyalty program, even if the prices are the same or less online.
There is also some evidence that shoppers, particularly those over 40, really prefer to shop in store for Christmas gifts, because it is apparently more psychologically satisfying to spend money in person, after waiting in line.
“The 40-plus crowd loves to shop in the store because they think it makes them feel like they spent time and energy on the gift,” said Marshal Cohen, a chief retail analyst with the NPD Group of New York. “Many shoppers would rather go into the stores, because it’s more fun and there’s more excitement around the holidays.”
There’s one problem with consumers who have done a lot of research and come into stores looking for an experience– they have much higher expectations of the retail staff.
And that’s where the brick and mortar experience can trump the e-tail experience all day long.
According to a recent study, 71 percent of shoppers expect sales associates to know product information, 77 percent expect sales associates to know store information and 78 percent of shoppers expect sales associates to know inventory information.
Unfortunately, retailers, thus far, aren’t living up to the task, with ~70 percent of consumers complaining that retail staff aren’t all that helpful and don’t add value to the shopping experience.
“Sales associates are earning a failing grade on even the simplest of customer service requests,”said April Dunford, COO of Tulip Retail.. “Without this basic foundation, associates can’t begin to offer the next level of customer service, like recommendations.”
Retail associates who diminish the in-store experience could easily help turn the tide back to consumers who would rather buy it online, then brave the stores.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More