How To Solve the Retail Problem of Showrooming
Strategies & Tactics to Combat Retail Showrooming
Showrooming is yet another retail industry disruption stemming from trends in mobility and altering consumer shopping habits. Consumers are using their smart phones within brick and mortar retail stores to enter product SKUs or scan merchandise bar codes and compare pricing with e-tailers. The retailers are effectively becoming unpaid showrooms for consumers to touch, wear, smell and evaluate products physically and then order them elsewhere virtually.
For example, it’s becoming increasingly common for consumers to evaluate craftsmanship, physical appearance, video sharpness, audio quality, weight and other electronics qualities at consumer goods retailers and then order the products from Amazon.com. The issue is the same whether garments, durables or any other item on the retail floor.
Without a strategy to combat showrooming retailers will most certainly see revenue declines in near equal proportion to the increase in showrooming. More than half of all phones are now smartphones and a report from Experian Simmons estimates that over 20% of smartphone users scan barcodes and make purchases directly from their phones. BIGinsight’s 2013 consumer survey found that 30% of customers had showroomed during the prior holiday shopping season. It’s only a matter of time until retailers reach a tipping point where more than half of consumers shop and showroom with their smartphones.
But not all retailers are equally affected. Those with distinct brand recognition, private labels and distribution control will be somewhat more insulated; at least temporarily. Similarly, discounters and off-price retailers whose main appeal is low price will be afforded some additional time as many of their customers are not yet pervasive users of technology.
But without question all retailers are at risk and require a strategy to mitigate this threat, and potentially to leverage it for increased customer acquisitions and revenues.
The Showrooming Showdown
Since the turn of the century, the rapid rise of mobility and social media have fragmented customer communication, engagement and commerce over dozens of channels. The combination of social media and mobility provide consumers with unprecedented information to aid their buying decisions. Access to this information is also increasing their expectations. It’s a complex challenge for retailers and while there is no silver bullet or canned solution, what is certain is that continuing to do what worked in the 20th century will not succeed in the 21st.
To combat declining revenues from showrooming, brick and mortar retailers must leverage their physical presence in order to deliver value that cannot be attained solely online. This requires facilitating a multiple step customer journey which includes enabling customers to use their preferred technology in the store, enhancing the shopper’s sensory experiences with physical stimuli, aiding shoppers’ desire for surprise or excitement (such as in discovering merchandise they weren’t shopping for), catering to their desire for an outstanding customer experience and demonstrating a high touch interaction that cannot be matched online.
It’s a tall order for sure, but satisfying consumer expectations requires nothing short of an in-store experience which is more personalized, convenient, informative, collaborative and even entertaining as the best online shopping experience. In many ways, Amazon.com has set the bar and customers expect an Amazon-like experience. Retailers can either attempt to outperform Amazon.com, or change the buying experience and purchase criterion. I recommend the later, and consideration of specific strategies supported by several tactics.
Begin with Customer Objectives
To succeed in any strategy you must start with the stakeholder objectives, and in this case, it’s imperative to know what customers want in order to craft strategies that meet expectations and deliver expected results.
There’s a lot of research to pinpoint what customers want, but that may not be entirely necessary as we’re all customers ourselves and know what we want. We want courteous and helpful personal service from knowledgeable staff, a consistent experience regardless of store or channel, and a good value for the products and services acquired.
The Harris Interactive, Customer Experience Impact Report reveals that when customers were asked how stores can encourage them to spend more, 66% said improved customer service, 61% said accessible information and 23% said a tailored experience. Another study which shows a trending problem is the ongoing surveys by IPG Media Lab which reveal that shopper satisfaction at retail stores is declining up to 15% per year.
On the other side of the transaction, the retailer desires to acquire more first time customers, convert first-time customers to repeat customers, increase up-sell and cross-sell to existing customers, engage consumers in loyalty programs, grow customer lifetime value and ultimately grow consumers into referral sources and advocates.
Create Your Customer Strategy
With stakeholder objectives understood, retailers are in position to create strategies that leverage methods and tools along customer journeys for predictable outcomes. Creating a retail strategy to solve the challenge of showrooming shouldn’t be constructed as a standalone effort, but instead as an integral component of overall customer strategy. To provide an example, I’ve created a simple framework along a traditional customer continuum.
Append Your Retail Strategy with Customer Experience
Your retail customer strategy and customer experience (CX) strategy are separate but symbiotic. CX isn't as new as most think, but it is increasingly becoming a go-to strategy in order to acquire more customers, increase customer share, grow customer lifetime value and decrease customer churn. In fact, CX has made its way to the top of the CEO agenda. An IBM Global CEO Study cited "getting closer to customers" as the #1 priority for CEOs in the next 5 years. A Bloomberg Businessweek survey discovered that "delivering a great customer experience" has become the new imperative, with 80% of the companies surveyed rating customer experience as a top strategic objective.
In reality, CX is in large part a response to the shift in purchase control from seller to buyer and the need for retailers to achieve a sustainable competitive advantage. But achieving CX is illusive for most adopters.
CX strategy is supported with retail technologies that delivers just the right (relevant, contextual and personalized) knowledge or content at every customer touch point, whether online or in store, and regardless of channel or device. Customer loyalty is gained or lost at every customer interaction, and CX seeks to create competitive advantage by delivering consistent and rewarding customer experiences at every pre-sale, sale and post-sale customer interaction.
Among other things, CX requires what is often a profound change in organizational thinking from inside-out to outside-in (i.e., developing strategy and processes from the customer perspective) and evolution from a product company to a customer company. CX also entails tactical measures such as the consolidation of customer data that is otherwise constrained in disparate siloes and consistent customer communication regardless of channel, device, location, time of day or staff person.
Failing to adopt strategy and the supporting culture needed to engage customers on their terms and in their channels will fail to respond to showrooming or other changes in the marketplace as well as challenge top business objectives.
You Also Need a Social Strategy
In addition to integrating CX into your retail customer strategy, you’ll also need to integrate a Social Strategy. Consumer journeys are mobile, social and cross-channel, and connecting with these customers requires an all-the-above social strategy.
Consumers are plugged in 24 by 7, more connected and more informed. With on-demand information and peer to peer collaboration the buyer is now in control. They have access to product review sites, blogger and journalist reviews, their friends’ reviews of products on social networks, consumer ratings and aggregated review statistics.
Rather than trying to ignore or compete with these online information sources, retailers are better served to harness them in a proactive manner and in a way that compliments their in-store customer strategies and achieves more of a total shopping experience.
A word of caution though. Creating a social business strategy isn’t easy, and most retailers get it wrong because they lead with tools, and not with strategy. For example, many first timers view social media as just another channel to distribute their marketing messages. But distributing marketing offers to consumers social accounts or mobile devices is more akin to spam than any sincere interest to engage those customers, and more likely to draw ire from customers than revenues.
Social CRM has become the go-to customer-focused social strategy to successfully engage customers with relevant and personalized communications at scale. There’s a lot to social CRM but the simple goal is to evolve customer communications from a one way vendor to consumer monologue to a two way dialogue, where customers can contribute to the conversations and really engage with their preferred brands. Forward thinking retailers recognize social CRM is not an option, it’s a mandate if you expect to communicate with customers and achieve your business goals.
To enable your social CRM strategy, and achieve consumer engagement in a consistent and automated fashion, you’ll likely require an integrated portfolio of tools which may include social listening and social engagement tools, mobile apps, sales assisted tablets, customer self-service options, social networks and maybe even online communities— and all supported by trained retail sales associates.
Implementing tactics to combat showrooming without an overarching customer strategy is clearly like putting the cart in front of the horse. But once your retail strategy—integrated with CX and social CRM—is well defined and culturally supported, here are several practical and tactical recommendations I’ve put to good use and hope you can to.
Begin with In-Store Wireless
First, retailers must deploy and make available wireless communications in their stores in order to empower the customers shopping experience and begin to add value to that experience.
According to research released from JiWire, 80% of mobile consumers are influenced by the availability of in-store Wi-Fi when deciding where to shop. Unfortunately, The Retail Store: In Transition report from RSR Research shares that 58% of North American retailers do not provide wireless technology for customers or store associates to use in their stores.
Customers have migrated to digital channels in mass and retailers must meet them there if they expect to engage them—whether remotely online or in the store.
Wireless communications provide the infrastructure for traditional systems such as POS and CRM, less traditional mobile POS and on-the-floor one on one clienteling, and a host of mobile and social apps and tools I’ll describe below.
Converge Physical and Digital For Symbiotic Effect
The ease and assurance of online commerce is setting new standards for shopping in stores. And while in-store shopping and e-commerce each offer different advantages, neither can match what they can both collectively deliver when converged. Knowing what to offer means knowing what consumers expect. Here are some examples.
- Consumers place high value in getting personalized, knowledgeable help in stores. To take advantage of this consider allowing consumers to schedule appointments online for in-store consultation.
- Price is of course relevant. To compete with e-tailers, retailers must either offer an in-store value-add or be willing to match online prices when presented. I’ll suggest several value-ads later in the article.
- If a store is out of stock for an item, consumers expect it to be shipped to their home or office, with the same convenience as an e-commerce check out, meaning fast delivery at little or no charge.
- Consumers want to purchase products online and pick them up at the store. They also want the flexibility to return products purchased online to a store.
- Consumers want equal treatment regardless of channel. Discounts, promotions, loyalty perks and other benefits must be consistent.
- Nothing can match a trained sales associate when it comes to contextual and relevant suggestions for product affirmation, up-sell and cross-sell. If given an equal playing field between retail and e-tail, consumers will continue to use stores to review physical attributes, preview merchandise before making a purchase and seek human response to questions such as, “does this look good on me?”
When retailers merge the benefits of online commerce with the immediacy, physical interaction and person to person engagement of the in-store experience, they converge the best of physical and digital into a single experience and create advantages that cannot be matched by e-commerce alone.
57% of showroomers are willing to purchase from brick-and-mortar stores that have a permanent price matching policy in place
- Harris Interactive survey
Create an In-Store (Digital) Immersion Experience
E-commerce sites are often highly valued because of their ability to share social information about products and deliver rich multimedia experiences. However, these benefits can be matched during an in-store experience, and exceeded when also tapping into an item’s physical dimensions by stimulating any of the five senses or supplemented with human interaction.
Consider these examples to embrace consumer behaviors and create an in-store immersion experience.
- Assisted Selling Tools
According to the RIS News, Shopper Experience Study, 47% of customers highlight poor knowledge by store associates as the most disliked experience when in a store. Technology can respond to this challenge and contribute to sales associate training and service delivery. The use of mobile devices such as tablets (most commonly iPads) equipped with apps to deliver product information, multimedia presentations, online social reviews other information while on the floor and interacting with a customer is tremendously powerful in achieving consumer engagement. Sales associates may even bring up an item as advertised at competitor locations to verify price neutrality or service superiority. Going further, when mobile devices have access to the retail CRM system, they can deliver information such as a consumer profile with buyer preferences and wish lists, product availability, purchase history, warranty expirations/renewals, loyalty rewards, guided selling, next best offers and contextual up-sell and cross-sell recommendations.The CX is influenced with every interaction, so it’s important that store associates be empowered with technology that lets them do more than sell merchandise. Staff should be able to use their mobile devices to perform commonly requested pre-sale, sale and post-sale tasks such as estimate shipping costs, issue an RMA, check delivery status, make referrals or redeem loyalty points.
Taking assisted selling tools a step further, mobile devices or Near-Field communications (NFC) technology permits consumers to pay for their items using mobile POS or cashless transactions that don’t require them to endure lines or present credit cards. Mobile technologies can also empower on the floor associates to extend personalized promotional offers that make consumers feel special and appreciated. Retailers are in a unique position to deliver personalized one-on-one attention fused with mobile and consumer technologies, and thereby really make the customer experience rewarding and memorable.
- Product Experts On Demand
Few retailers can offer product experts at every store and even with assisted selling tools it may not be possible to make sales associates experts in everything, but that doesn’t mean you can’t access expertise when needed. E-commerce sites regularly use Live Chat to connect customers with product experts and that same on demand access can be made available from within the store using virtual sales assistants. Using kiosks or roaming tablets, consumers or sales associates can access remote product experts to address product questions and advance the sale opportunity. The TNS annual Mobile Life study, based on responses from 38,000 people in 43 countries, found that 13% of consumers are comfortable in communicating with virtual sales assistants directly, while in the stores, to answer their questions about particular products.
- Facilitate Social Reviews
Research from advertising agency Barkley found that Facebook was the second most-used app among millennials while they shopped, and according to Mark Logan, Senior VP, "When we asked them about it, they told us they use it as a way to consult with friends about a potential purchase". Their research found that 60% of millennials don’t make a purchase decision without seeking advice from others. Barkley’s EVP Jeff Fromm advises that retailers "could make it easier to gain ratings and reviews and see that the value equation is in line instead of trying to prevent it." As an example, Logan cites cosmetic retailer Sephora, which allows consumers to easily scan product barcodes in order to read product ratings and reviews. "It’s a simple tactic that gets people thinking about checking out the review," he says. "It brings the tacit endorsement from all those voices into the store."Barkley research also finds that millennials are not the only active mobile and social consumers in the store, "The older generation is adopting more and more the technology habits of the millennials," advises Fromm. "Millennial influence is much greater than just the impact on members of their generation." To harness these findings, consider tagging items with QR codes or links to product information which includes a menu to access product reviews, social networks, item specifications, product multimedia or videos, or other sources that will erode purchase barriers and advance the customer to the point of sale.
- In-Store Social Network
Merging in-store mobile and social media can further move consumers toward purchases. For example, inviting customers to join the store’s social network upon entry, can then triangulate and share content from their own friends and social spheres about products that have been Liked, Tagged, Commented or purchased. Providing both a solid privacy assurance and incentive such as coupon or personalized offer will encourage shoppers to join the store’s social network.Using geo-proximity, the store’s social network can display social comments from the shoppers own social sphere, or other consumer comments on the shopper’s mobile device or digital signage when the shopper is actually standing in front of or looking at the product. This is particularly powerful as there is no greater trusted source than personal connections. Additionally, if the consumer chooses to share their social profile, the social network can suggest relevant groups or shopping communities which may appeal to the shopper’s interest or personality.
- Mobile Marketing
Mobile phones have brought online commerce to the retailers store floor in a big way. Deloitte Digital reports smartphones influenced more than $250 billion in U.S. store sales or 10% of the total, and will influence over a trillion dollars of store sales in the year ahead. IDC advises that smartphones influenced between $1.7 billion in retail sales during the last U.S. holiday season and that over 110 million U.S. shoppers will use their smartphones to showroom next year.I recommend retailers pursue a three step strategy in order to use the shoowroomer’s mobile phone in a guided attempt to turn those browsers into buyers. First consider local SEO and organic search marketing techniques. A credible study by Google, titled "Mobile In-Store Research", found that in-store mobile activity begins with search, rather than with shopping apps or navigating directly to brand or retail websites. Here's how shoppers mobile activities measured based on their objectives.
Then consider mobile paid marketing and social marketing techniques. For example, stores can push text, SMS, Adwords or email offers, promotions or price match guarantees to their in-store customers’ mobile phones. The highest impact mobile engagement will occur when shoppers choose to participate in your social network or mobile app. From my experience, the big challenge here is giving shoppers enough incentive to opt-in. However, there’s good news in that consumer surveys clearly show shoppers are willing to share their personal profile information and engage with their mobile devices if they receive enough value in return. That value proposition may be satisfied with a sign-up credit, in-store coupon, flash sale or one-time grant of loyalty points.
Finally, there are many standalone third party products to help retailers leverage mobile sales strategies, such as linking product placement with shopper location. Mobile retail products such as Swirl deliver micro-targeted content and offers to shoppers’ smartphone while they browse. These tools use Bluetooth sensors which pick up shopper locations and deliver micro-targeted content by aisle or area. Other comparable solutions use phone-based GPS, WiFi or self-check-in to accomplish the same thing.
Mobile wallet and payment tools are also picking up in adoption according to the most recent JiWire survey. Another mobile tool available to retailers is QR codes, and now that consumer adoption of QR codes exceeds the 50% mark, retailers can get more action with QR codes or “text for info” codes that deliver product information and further engage mobile shoppers in the store. To merge mobile interaction into the broader social strategy, you can even create mobile apps which deliver in-store offers, quick enroll consumers into the loyalty program or provide an on-ramp to your online communities, social reviews and other contextually relevant and supportive online content.
- Kiosks and Digital Signage
Positioning digital screens adjacent to merchandise can deliver promotional media which better visualizes how the item can be enjoyed, shares how or where the product was made, or illustrates advanced uses of the product. Making the monitors interactive with product-specific or contextual buttons or links for things like product questions or FAQs can then deliver more detailed specifications, product warranty information or even product reviews upon customer demand. And if the consumer elected to join the store’s social network or share their profile while in the store, the displays can combine products being considered with prior product purchases, even rendering a dynamic display of a shirt purchased last month with a coat now being considered. Retailers can also infuse fresh product content by rotating multimedia presentations available from brands and manufacturers, or better yet leverage user generated content from social networks.For example, rich social media product content can be queried, collected, positioned within a branded screen design and shared on the monitor using curation technologies. There’s no better opportunity for retailers to engage shoppers than to curate what other shoppers are sharing about a particular item. Showing product related comments from Facebook, videos from YouTube or pictures from Pinterest delivers unsolicited testimonials and begins to subconsciously transition the buyer into the product’s user communities. With curation tools, a bit of integration and optional moderation, retailers can collect rich media content about a product on social channels and display that user generated content on the monitor near the item, on the sales associate’s tablet or on the shopper’s mobile device if they opt-in. Brand or store specific curation content can be visually displayed on the store’s super large screen.
Social media online content-in-stores delivers highly visual real-time stimuli which shares illustrations of how other consumers creatively use the product, builds enthusiasm for the product and actually contributes to brand building and increased social interactions by the shoppers evaluating products. In fact, many times, shoppers will chime in from the store floor and post to the social communities from their mobile devices, thereby creating a bi-directional dialogue and seeing their own comments display in the monitors, and effectively endorsing the products they are reviewing.
When done right, product promotional content can be elevated from just text and static images to include rich media (audio and video) which achieves entertainment, taps into emotions and injects the shopper into the social dialogue. And unlike traditional pictures and images hanging throughout the store which grow stale quickly, curated social media content is dynamic and constantly updating.
- In-Store E-Commerce
Research shows that customers showroom for reasons other than price. A BIGinsight’s survey found that about 30% of consumers had showroomed during the prior holiday shopping season, and while finding a lower price was the driver for 80% of respondents, the other 20% said they showroomed in order to avoid sales tax. Losing 20% of your customers based on a pass through cost outside your control can make or break store goals or shopping season revenue targets.To this end, many top retailers are effectively tapping into something similar to showrooming by letting customers preview products in the store, and then order them online from the retailer’s e-commerce site. For example, brands such as Apple, Burberry and Virgin routinely help customers review items in the store, and then make their purchase using a web enabled device without ever leaving the store.
Harmonizing an immersive store experience with an accompanying online option promotes an overall brand experience that caters to diverse customer preferences across multiple channels. In the end, whether the purchase transaction occurred in the store or online shouldn’t matter.
- Customer Relationship Management (CRM)
CRM is first and foremost a customer strategy, not a software application. But echoing my prior theme of creating strategy first, and then enabling that retail strategy with people, process and technology, CRM software is an imperative to making sense of customer data, leveraging that data at the point of sale, automating customer facing processes for consistent and predictable outcomes, and gaining analytics which steer and revise customer strategies for constantly improving performance.The intersection of CRM and mobility also creates new opportunities such as on the floor offers, promotions, discounts, or coupons targeted to devices or consumers based on their social personas or profiles. This type of personalized interaction goes a long way in advancing customer relationships and achieving sales goals.
CRM software must be able to share the 360 degree customer view wherever it can be applied for customer benefit, be it sales, marketing, service or otherwise. This holistic customer view includes CRM transactional data and social profile data at the minimum. Customer history is helpful for up-sell, cross-sell and renewals, but it’s the social profile that really enables retailers to understand consumer preferences, habits and behaviors, and really speaks to the customer’s wants and desires.
There are several social CRM methods and tools to append CRM software contact records with social profile data and proactively reach out to consumers to elicit their participation. Showing customers you’re paying attention to their preferences and responsibly using data collected about them goes a long way to growing customer relationships and minimizing threats such as showrooming.
Retail Best Practices That Stand the Test of Time
Embracing consumer technologies doesn't mean leaving behind traditional retail best practices. Retail strategies such as product exclusivity diminish showrooming but are becoming less available and present their own challenges. Somewhat similar to exclusivity, offering unique items is another deterrent to showrooming. Innovative merchandising techniques such as bundling or product configurations can create unique items that just aren’t available elsewhere.
Another form of product exclusivity is creating custom products based on customer design or requests. Forrester research reveals that 35% of shoppers are interested in tailoring their products appearance, features and content to their own specifications, and mass customization is being enabled by new technologies.
Another option is to work with manufacturers for private labels. Target recently reached out to its manufacturers asking for their help in combating the showrooming problem, and recommending that they create exclusive products for the Minnesota-based retail chain (or find ways to match low prices from online retailers.)
Price parity, or the ability to control price irrespective of channel can also defer showrooming. For example, Apple products are the same price whether purchased from the company’s retail stores, independent retail stores, mass merchandisers or e-commerce sites.
And retailers must never lose sight that traditional retail practices become all the more important when competing with online channels. For example, unhelpful retail staff and stock-outs negate primary advantages of the in-store experience and will clearly push consumers to e-commerce sites.
It's also important to accentuate strengths. Brick and mortar retailers have several advantages of their own that they need to promote in order to advance the customer experience. The store has to be a modern, engaging and high sensory showcase for your products. The high energy teen atmosphere of an Abercrombie store, the near endless and aided exploration experience of an Apple store or the motivational effect when visiting a Nike store can’t be replicated online.
Whether satisfying a rich sensory experience, invoking the element of surprise, performing live demonstrations or workshops, facilitating customers to evaluate merchandise before buying it or creating a personal or emotional engagement with the consumer, brick and mortar retailers have some unique capabilities that must be exploited to further thwart the negative repercussions of showrooming and promote unique store capabilities and outcomes such as impulse purchases, and facilitated up-sell and cross-sell.
And one more benefit, brick and mortar retailers paying attention to their customers don’t incur the sky high abandoned shopping cart phenomenon.
The in-store experience must evolve beyond just a place to conduct a monetary transaction and become a socially attractive destination. It must leverage what cannot be provided online—a comfortable retail store setting, the ability to recognize customers as people and make them feel valued. Stores must deliver customer service with empathetic and physical interaction, the ability to review products in an immersive manner, the capacity to receive inspiration and guidance from store associates, and most of all to deliver a high touch customer experience that leverages the senses and promotes people’s emotions and desire for human to human engagement.
Times of transformation create opportunities. Pursuant to strategy and depending upon store objectives, creative minds can craft innovative ideas and consider many more opportunities to attract and engage consumers.