If you touch retail in any manner in your profession, you’ve no doubt heard about “showrooming” – the practice of using a smartphone from a store aisle to check prices and potentially buy from another retailer or an online only retailer.
This practice isn’t going away, in fact I believe it will increase, causing a potential billion dollar problem for our nation’s retailers. Amazon is the most notable beneficiary of the dollars that leak out of both the retailer’s physical store and website.
This week, an article in the Wall Street Journal posed the thought that the only answer to this problem is price. The common belief is that retailers have to do whatever it takes to get their price points down to match Amazon. I SAY THIS IS CRAZY. If price is the only rathole left for retailers to go down, I, for one, am going to call it a day and go work on a golf course driving the beverage cart. (my dream retirement job, in case you don’t know me that well).
Why do I feel this way? Because my years in the business of marketing strategy have taught me a few things about the almighty shopper, even those with the smartphone in their hands in the aisle.
First point. Price is important.There are a lot of shoppers who will flit from retailer to retailer for price. So let’s just give up now, right? WRONG.
There’s one solution on the table that makes sense in the digital world, and that is to use “near-field” communications to offer an in-aisle shopper a price-match to retain the sale in the store. “Offering people personalized prices through their mobile device may be the most effective way to beat showrooming,” said Anne Zybowski, director of retail insights for KantarRetail, a global consulting firm. But that practice has huge margin implications, for the likes of Walmart, Target and BestBuy, especially as showrooming behavior escalates.
BestBuy is on to a good old fashioned retail idea – incentivize the sales person to close the sale on the floor. Really.
If you are a student of human behavior, and I am, it’s clear that marketing should always intersect with anthropology. You’ll want to remember that for ages and ages, and still today, the number one influencer of purchase behavior is information from other people. Also known as word-of-mouth. Human influence. Yes, it can come from a smartphone in the aisle, in the form of ratings and reviews. The shoppers are absorbing content that influences their behavior from other humans. The smartphone is just the device to bring the content to them in a most convenient way! But really, it’s best from human to human.
REMEMBER THIS – Over 70% of conversations that influence behavior take place face-to-face. Read this blog post from Keller Fay to see the details. Only 10% of it happens online.
AND THIS – 71% of retail executives say that shoppers want a meaningful experience with the sales associate as brand ambassador with strong product knowledge and the ability to up-sell and cross-sell for greater customer satisfaction and loyalty. This comes from a Deloitte Retail Survey in 2011.
Just consider those recent research results. I’ve been reading similar research for decades. So why is price the only solution to showrooming? It’s not.
Maybe if the retail show room actually was a showroom with people to “show shoppers” something, to perhaps participate in some face-to-face human influence, retailers might have a more powerful weapon against Amazon and other online only retailers. And they might just provide the kind of shopping experience shoppers crave. Fancy that.
Despite whatever is said about not being able to “afford” this human solution, I propose that it might just be worthy of a little more face-to-face discussion. I’d bring the chart below from Nielsen as Exhibit A.