Last time, we talked about how showrooming is impacting the retailer, briefly discussed what causes it and covered how a home store’s effective website selling experience helped me save time by avoiding a trip to a store that couldn’t decide whether it could help me.
All the retailers say it’s about price and the research agrees.
Since everyone’s in agreement, let’s dive in.
What makes people showroom?
Piles of research make it hard to argue that showrooming is about price. A recent Harris poll indicated that 96 percent of showrooming was at least “somewhat about price”, while 82% said price was “very” or “extremely important”.
Ask anyone why they showroom and they will almost always say “price”. What reason do they have to lie? It must be about price.
So how should retailers react? Let’s look at a few real-world reactions.
What Best Buy did
Two years ago, showrooming was hammering Best Buy and their financial performance showed it. While it might not have been the sole cause, it’s tough to argue that it wasn’t a factor – particularly since their stores are reported as “most often showroomed”.
They first took an “us vs. the customer” stance. They blocked out shelf barcodes so customers couldn’t scan them. They required that manufacturers provide Best Buy specific product codes (SKUs). These SKUs appear in package and shelf barcodes. Since they’re unique to Best Buy, consumers couldn’t easily price check an item vs. prices at Amazon.com.
These strategies weren’t particularly effective, nor did they improve customer relations.
Since then, they’ve had success using these strategies:
- Price matching vs. Amazon.com
- Improving their website shopping experience
- Offering more in-store promotions and discounts
- Improving their on-floor knowledge about new products.
Half of these strategies rely on price. For now, Best Buy has the resources and buying power to price match Amazon and WalMart, but I think it’ll be tough to depend price matching and discounts over the long term.
Using discounting to make a sale breeds a relationship that’s easily broken. All it takes is someone else’s lower price to “steal” your customer.
I’m not saying price isn’t important, it’s simply a poor long-term relationship builder. The easiest customer to lose is a customer you gained solely by having the lowest price – so that better not be your only edge.
What WalMart did
Rather than fighting the price checking that built them, WalMart leverages having the customer in store – even when there to showroom.
They have an app that produces a list of items that are on sale that day, which is displayed on your phone when you enter the store. The app also lets you scan barcodes and keep track of what you’ve decided to buy.
They embraced their customers’ behavior to their advantage. While people might enter the store to showroom, they’re likely to buy something else they need if they’re made aware of on-sale items while in the store.
So why the “selling by price is bad” conversation for Best Buy and “selling by price is good” for WalMart? Simple. Their business models are much different. Unlike Best Buy, WalMart’s business model is designed around “Lowest price. Always.” and driven by world-class logistics.
The takeaway from WalMart’s showrooming strategy? Taking advantage of customer behavior you can’t change is much easier than fighting it.
What an Aussie retailer did
Earlier this year, a Consumerist story told of an Australian retailer who battled showrooming with a “Just Looking” fee.
Their strategy? Charge everyone who enters the store a five dollar “Just looking” fee and refund it when a purchase is made.
Is this really how you want to make a first impression with a prospect, much less engage a customer? I think not.
Consumers: “It’s about price, but it isn’t.”
So…what’s the big lie?
Remember the 82% of consumers who told Harris Polls that price was “very/extremely important” and the 96% who said it was “somewhat” important?
Despite those big numbers, 70% of the same respondents said that if they had a good shopping experience at an online store, they would be less likely to buy the item elsewhere, even if it was cheaper.
The same goes for local retail.
Showrooming is more complex than just price. A small retailer can address the problem in ways big retail can’t or won’t.
Next time, we’ll drill down on what’s really behind “It’s about price, but it isn’t”.
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