Our guest blogger this week is Céline Nowak a PPC Account Manager at IAB Ireland members, Tinderpoint.
A statement from Google I came across recently got me thinking about the phenomenon of ‘showrooming’, a trend that is changing the retail landscape. It highlighted the use of mobile phones in shops that is turning bricks-and-mortar outlets into showrooms for products that are purchased online.
“While many businesses fear that showrooming is a major threat, retailers should approach it as an opportunity,” Google stated.
Many consumers like to touch and feel the products they are about to buy, but many more are prepared to forego this in favour of convenience. As a result, big brands are feeling the pinch and US groups such as Wal-Mart, JC Penney and Kmart have announced outlet closures. One of Dublin’s best-known electronics retailers, Peats World of Electronics, closed in 2013, largely due to the inroads made by electronics retailers online.
Consumers are not simply searching for lower prices online. Buying increasingly involves checking online reviews, comparing prices and looking at products before committing to a purchase.
Because of the essential online component, some 44 per cent of consumers are influenced by whether Wi-Fi is available in-store when deciding where to shop, a figure that continues to rise.
So what can retailers do to adapt? French sporting goods brand Decathlon is leading the way, and has opened a new kind of shop where customers get to try out their products before buying them online.
This gives the customer the shopping experience many still crave, particularly when purchasing large items or specialist equipment that may require instruction or advice. By removing the need for tills and stockrooms, Decathlon is able to display its full range rather than the 40 per cent of stock traditionally carried in shops. Customers benefit from prices that are 10 per cent cheaper – although delivery is extra. Staff members are free to focus entirely on the customer, offering advice and enhancing the shopping experience.
This model is gaining ground across a variety of sectors, with beauty retailer Sephora adopting a similar concept. Sephora is well aware its customers continue to seek advice from shop assistants before buying. According to the consumer research group, the Benchmarking Company, 35 per cent of people shopping for beauty products say that sales assistants influence them. Sephora has developed an app that allows shoppers to access their purchasing history, while keeping them up-to-date with promotions and product reviews. This is important to the millennials surveyed, with 66 per cent of this cohort checking reviews before heading to the shops. As a result, Sephora has become the first stop for 85 per cent of women browsing beauty products online.
Not everyone is a fan of showrooming, however. It can be costly to retailers due to damage caused to the shop’s samples by constant handling. It was said to be behind the collapse of British photography chain Jessops and US discount retailer Target’s decision to stop carrying the Amazon Kindle. Some retailers are attempting to battle showrooming by selling product lines exclusive to their shops. Wal-Mart is allowing customers to avoid the delivery charges of online purchases by picking up the items in person, a practice that is catching on. Specialty fashion stores in the US and Australia have introduced a ‘fitting fee’, which is refunded if the customer buys the item. But most retailers are accepting showrooming as a fact of life and deciding if you can’t beat ‘em, join ‘em.
In November 2015, online book seller Amazon put an interesting spin on the trend by opening an actual book shop – or ‘store’ as they say Stateside – in Seattle. The shop uses the same information that’s available to online users – reviews are on display and books are sorted by star rating and genre. It provides the Amazon online shopping experience in a traditional shop setting and it’s not just a showroom: customers can buy books, and at the prices offered online. But with proven online success, why has Amazon taken such a step? Having a highly visible shop promotes loyalty in a way that’s not possible with a virtual warehouse; furthermore, it introduces the Amazon name to new customers, helping to strengthen the brand.
The showrooming success story is therefore not a simple case of catering for online shoppers, it’s also about building a brand that offers customers a great multi-channel experience. A good example of this synergy is demonstrated by Irish bookmaker Paddy Power. The group continues to open betting shops despite impressive growth online. More than three quarters of its profits are now generated by the online operation, but far from shutting down shops, the bookmaker continues to run more than 200 betting shops in Ireland and a further 100 in Britain.
By multiplying conversion channels, businesses are giving customers the information they need when they need it. Showrooming broadens customer choice, enhances the shopping experience and keeps prices competitive. As marketers, we should welcome it and make the most of the opportunities it presents. In this, Google is on the money.