Merchants today have a big problem on their hands: showrooming. People come into their brick-and-mortar stores to see and touch products in real life, but instead of buying them, they look them up and purchase online, often for much cheaper.
A recent study noted that, while shopping in a brick-and-mortar store, 67 percent of people check their smartphones to see if there’s a better price elsewhere, and the majority (62 percent) will readily leave a store and buy a product online to get a lower price.
Many businesses don’t have the margins to offer uber-competitive pricing, so it’s important for them to understand how to respond to the showrooming trend and convince customers to buy in-store.
Understand Gray Area Products
The first step to defeating showrooming is understanding which products are most vulnerable. Not all items are good candidates for showrooming. No one walks into a convenience store, spies a chocolate bar and runs home to buy it on Amazon. Candy is a classic impulse purchase, intentionally placed near the register to capitalize on people’s desire for instant gratification.
On the other hand, televisions are perfect for showrooming. They are big-ticket items with prices that vary wildly from store to store and season to season. For this type of purchase, it’s worth shopping around. TVs are also large and unwieldy, so most people won’t cart them home right away, even if they do buy in-store. Plus, TVs aren’t usually an impulse buy meant to satisfy a transient craving. Consumers generally don’t mind waiting for them because they probably planned to wait.
Of course, a lot of products fall between the Snickers bar and the 60-inch plasma, the most interesting of which are the products that consumers could choose to purchase either in-store or online (clothing is one example). People may have good reasons to buy them in a store, but they have equally good reasons to buy them online. Understanding which products fit into this crucial gray area and figuring out how to convince shoppers to buy in-store is the first step to defeating showrooming.
Identify Shopper Personalities
In addition to understanding the “gray area products,” merchants also need to understand buyer personality type. Some customers are more prone to showrooming than others, and knowing which customers fall into that category can help you deliver targeted marketing and incentives that convince them to buy in-store.
The study mentioned above found that, for a discount of 5 to 10 percent, 23 percent of price-checking shoppers will go elsewhere, and for a discount of 15 to 20 percent, another 39 percent will leave. In other words, though these hard-core bargain hunters represent only 13 percent of shoppers, they will do just about anything to get a deal. Moreover, Mediapost predicts this category of shoppers is destined to grow as new mobile apps make bargain hunting ever easier.
Showroomers are thrifty, willing to search and, if necessary, to wait, in order to find the lowest possible price. Think of showroomers as the “hunter” personality.
To convince these hunters to buy in-store, you may want to offer coupons or limited-time discounts. Do your research and find out where the tipping point lies. Perhaps they’re willing to buy an item for 5% more if they can take it home right away — but if you charge them 10% more, they’re gone. This is information worth knowing and worth building into your pricing structure. Additionally, you can offer hunters the benefit of knowledgeable and helpful salespeople who can help them pick the right product and offer add-ons like warranties or free accessories. This is a great example of providing value that they can’t find online.
On the flip side is the gatherer personality. Gatherers are your impulse buyers. They’re the ones who walk in without a list and walk out with a full shopping bag. Even with big-ticket items that are well outside the gray area, gatherers want the instant gratification of owning something right now.
One great way to capitalize on the shopping habits of gatherers is to use technology that connects across all of your channels. Say, for example, you see a certain gatherer has been peeking at some red high heels online and you sell the same pair in your store, just a few blocks away. That’s your opportunity to get her in the door (stat!). Gatherers also appreciate timely coupons and offers, which can be most effectively pushed out using location-based mobile apps.
Understanding what makes someone a showroomer, and what makes a product vulnerable to showrooming, will help you make smarter decisions about where to allocate your resources when it comes to marketing strategies.
Use Mobile Technology
Mobile technology has been a huge driver of the showrooming trend. After all, most people carry their smartphones with them whenever they shop. That said, mobile technology can also be a great way to convince customers to buy in-store. That’s because mobile offers businesses an unprecedented amount of information about their customers. This information can be used to generate super-targeted offers that respond to customers’ preferences as well as their location — even things like weather, seasons and produce freshness that affect how and when people shop.
While many businesses have held out on mobile payment technologies, fearing that they may be little more than a flash in the pan, mobile wallet apps and streamlined countertop hardware can be a great way for merchants to begin connecting more effectively with their customers. Paying with our smartphones may not be that much more convenient than paying with a credit or debit card, but when offers, coupons, location services and personalization are baked into elegant mobile apps, the result is a better shopping experience for merchants and customers alike.
It’s also important to recognize the role that search will play in the future of shopping. Today, search powers our shopping habits online, but there’s little to connect it to the real world. It’s hard to find a specific item that you’re interested in nearby, so people either waste time looking for it or give up and buy the item online, even if they want it right away. Mobile technology, including location services, will pave the way for merchants to connect people to the items they want locally and right away, thus driving more in-store purchases and building loyalty with happy shoppers.
Now is the time for merchants to start investing in the hardware and software that lets them be competitive with the likes of Amazon. Technology can help businesses understand showrooming and offer the kind of perks that customers can’t find online, as well as better target their marketing to the hunter-gatherers and streamline loyalty programs. Using mobile technology, businesses today can mount a very effective counter-attack against online sellers, bring in new clientele and turning one-time visitors into highly valuable, loyal customers.
Henry Helgeson is the CEO of Merchant Warehouse. He is responsible for driving the future vision of the company and leading day-to-day operational activity. Visit Merchant Warehouses Buyer’s Guide entry on PaymentsJournal here.