4 Ways to Combat Showrooming

| January 2, 2013 | 0 Comments

Ever wondered if you were getting the best price on a product when you were out shopping? That’s the premise behind Amazon’s Price-Check mobile app that allows customers to snap a bar code of any product and then send it to Amazon for a price comparison. Although this capability has been around for several years through other tools, Amazon’s seamless integration of price look-up and one touch ordering, gives them a considerable competitive advantage with technically savvy shoppers.

The ability to order in store, ship to home effectively transforms brick & mortar locations into zero-cost Amazon showrooms. Needless to say, brick and mortar retailers are not happy with this arrangement and some have started bringing lawsuits against Amazon. While they may not like it, the transforming effects of mobile technology is here to stay, so instead of trying to fight it, retailers should embrace the change and look for ways to profit from it.

1. Embrace Cross-Channel Commerce (or as I like to call it “Commerce”)

Today’s shoppers want it all. They want the broad selections, rich product information, customer reviews that comDM Showrooming 1e with digital. They also want the personal service, ability to touch the products, and experiential shopping that comes with physical stores. With the emergence of new channels and platforms, retailers should not be focusing on how to become the mobile retail leader or the best at social commerce, but rather set their sights on being the best in retail period.

This means adopting a new way of thinking – one that puts the customer at the center and integrates all channels and platforms into a seamless, cross-channel experience.

2. (Re)Think your mobile strategy

Disruptive technological shifts are a simple fact of life for retailers. It’s doubly challenging for today’s retailers as the impacts of the shifts are difficult to predict while at the same time, their frequency is ever increasing. Mobile is a classic example. We’ve seen it coming for years, but concepts like Showrooming were not exactly what were envisioned. So while some might try to counter Amazon’s mobile apps with legal action, the only way to effectively compete is to fight fire with fire.

That means cross-channel retailers need to develop comprehensive mobile strategies that make the shopping experience more engaging for customers. The question is not so much about do we offer a native app or a mobile web app, but rather what additional value can we add to the customer’s cross-channel shopping experience that will encourage them to shop with us instead of Amazon or anyone else.

3. Redefine the role of your brick & mortar

Ron Johnson, CEO of JC Penney and formerly with Apple Retail is famously quoted as saying ‘Retail isn’t broken. Stores are.’  That doesn’t mean stores are dead, but in the context of the modern cross-channel model, their role must change. Shopping is a deeply social experience and customers often want more than just a bargain or a quick purchase. As we’ve seen in our cross channel practice, physical shopping can be augmented with and highly influenced by mobile and online, but probably won’t be replaced anytime soon.

So your stores’ role is changing. Maybe you transform them into education centers staffed with passionate users of your products who are there not just to sell, but also to excite and inspire similar passions in your customers. Maybe they stock only products that have a high turnover but offer all other products virtually as an endless aisle. This can reduce your operating costs significantly while still offering a full range of products and services. Maybe you bring online personalization into the physical store. Combined with human interaction, such attention to detail can be a powerful counterbalance to the very mechanical Amazon shopping experience. This is what retail innovation is all about, finding new ways to leverage disruptive technology and consumer insights to build a more engaging experience for your customers.

4. Break down internal silos to deliver value to the customer first

In many retail organizations, operations are still siloed within channels and departments. This worked in the days of single chDM Showrooming 2annel retailing, but that is ancient history. Today, conversion is not a single channel concept. Google for instance estimates that online, mobile or other customer touch points influence 71% of all in-store purchases. The ability to successful combine of all your channels into a seamless experience will ultimately decide how well the entire organization performs.

Moreover, Forrester has recently published a report that urges organization to rethink how they deliver value to the customer first in what they call a Target Operational Model (TOM). Today’s customer journeys involve many touch points and the supporting internal processes involve many different departments (in-store, online, mobile, marketing and so on and so forth). Under Forrester’s TOM you first define the key capabilities of the organization, focusing on those services that deliver value to customers, and then organize end-to-end processes that enable that delivery. This enables organizations to rethink how they operate based on a “customer first” strategy.

5. Adopt Uniform Pricing

Yes, I know I said “4 ways” but this is really more of a consequence than a way to combat showrooming. Some retailers are already struggling to rationalize a multi-channel pricing policy. Should the same price be available on the web site as in the retail store? How to price in delivery costs, on line or in store? Major retailers in consumer electronics, home improvement, and auto parts still operate under this model. I always recommend to my clients that they consider going to uniform pricing. Shoppers have had the ability to do on-line price research for years and the added hurdle of selecting a store before being able to shop online is not the best lead-in to a great customer experience.

Now with the threat of Amazon instant price check, even category killers will be subject to aggressive price comparison. Uniform multi-channel pricing is inevitable. Competing with Amazon will be a requirement. The quest for private label and exclusive model bar codes will accelerate, but this will make life for the independents even more difficult. The upshot is that there will be greater pressure on margins all around.

Amazon is clearly an innovator and a game changing, retail juggernaut, but the game is far from over. As Charles Darwin once said, “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” Retailers that transform themselves quickly and see technological disruption as an opportunity have much more to win than to loose. Amazon built their entire business model on technological disruption. And who could have imagined that Apple would change the music business and develop retail stores that generate more revenue per square foot than Tiffany’s? The opportunities are out there. Now is the time to act.

Category: Archives, Mobile, Uncategorized, User Experience

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