The Store Is It: How Retailers Can Address Showrooming
Amazon recently reversed its longstanding opposition to collecting sales tax on internet sales, catching many by surprise. Yet, backing the Marketplace Fairness Act is actually a shrewd move, resolving the issue at the federal level and opening the way for the company to open distribution centers closer to major population areas like California. The ultimate goal may even be same day delivery, removing one of the last barriers to buying online - delayed gratification.
Articles about Amazon’s move toward same day delivery, such as the recent one in Slate, “I Want It Today,” are sending shivers up the spines of many retailers. This move, combined with growing smartphone ownership and its proven influence on shopping behavior (estimated to be as much as 5% of all sales today, 20% in 2014), has put ‘showrooming’ at the top of the list of things that keep retailers awake at night.
Is ‘Showrooming’ the big bad wolf it seems to be? And if so, what can be done to mitigate it?
Consider the facts, starting with the consumer. Many consumers like shopping online. They can comparison shop for the best price, get reviews, and know all the options before deciding. Yet according the U.S. Commerce Department, ecommerce accounted for just under 5% of all retail sales in the first quarter of 2012. The NRF says even Black Friday sales in 2011 were just 8% of the total. Why not higher? Apple was digital before it had stores, and today Apple sells far more of its products in-store than online. What’s more, research shows that even avid digital shoppers do not confine themselves to one channel. They use different channels to satisfy different needs.
There are many reasons people will continue rely on stores for buying as well as browsing.
1. Stores Are Sensory Experiences
Some items need to be scratched and sniffed, tried on, squeezed, smelled or tasted before buying. This is especially true for things that need to fit, work together or be experienced (How does it sound? How big is it?).
2. Shopping In Stores is Fun
For many consumers, shopping is a hobby, a way to be social and spend time dreaming, talking and staying on top of the latest trends. We know from our research that young women visit an average of three different retailers (all channels) for each purchase they make. Self-reported data for one very large department store shows half of the visits to any channel were online, but only one fourth of total purchases were made online.
3. Stores Save Time and Money
Consumers do not like to wait. Even a day can seem like a long time. Some things are needed RIGHT NOW and even same day delivery won’t cut it. Stores provide immediate satisfaction and are perceived as saving time, as well as shipping costs, even if the total time spent is greater.
4. Stores Offer More, and Safer, Ways to Pay
According to the FDIC, one in four consumers are unbanked or under-banked, meaning they don’t have a way to make purchases online. Walmart.com is among the first websites to allow consumers to pay in cash for online purchases, but this is very new. And some shoppers with credit cards are reluctant to enter their information online. With the recent high profile security breaches, more may be joining their ranks.
5. Stores Provide Inspiration
We don’t always know what we want, or what to put in the search bar. This is especially true for gifts or special occasions - how often have you gone ‘looking’ for an idea about what to buy?
What Consumers Really Want
For stores, fighting back against showrooming may be simpler than it first seems. The answer lies in offering an inspiring and truly, integrated multi-channel shopping and buying experience. Here’s what that means:
Consumers expect the same recognition in-store as they receive online. “Welcome, back!” “You’re special, here’s what you were looking at.“ ”We know you and can tailor our offering to what you want.” Furthermore, they don’t want to be asked repeatedly for the same information. If this sounds unrealistic, it’s a lot of what high-end loyalty programs, such as Nordstrom’s Fashion Rewards, do today. Technology should make this possible for most any store. Location-based solutions like Shopkick and Foursquare allow retailers to acknowledge a customer’s presence and respond appropriately.
One of the biggest complaints we hear from shoppers is that their experiences of the same retail brand online and in-store are so different. An inspirational store paired with a strictly commerce-focused website is a disconnect for them. Similarly, a fabulous blog with lots of great visuals and user generated content paired with a bare-bones store experience is also a disconnect. At a more fundamental level, consumers don’t understand why they can’t find the same merchandise, at the same price, with the same return policies everywhere. Nothing is more infuriating than seeing an item you just purchased in one channel offered for less in another. Likewise, it’s confusing when the mobile experience is different from the online, social or store experience.
Madewell is one example of a retailer that is winning with young shoppers by providing a rich, multifaceted and near-seamless experience.* This 30+ store brand aimed at fashion savvy Millennial women was cited in Fast Company this year for its design leadership. Madewell’s stores are a feast for the senses, filled with styling ideas. Sales associates are literally walking, breathing billboards for inspiring shoppers to create their own great looks using Madewell fashions. The online experience amplifies the store experience with continually refreshed lifestyle content as well as merchandise. Videos, a blog, and a monthly calendar of fun ideas and events help to bring the brand to life. Madewell’s integration of online and offline merchandising and customer policies results in sales conversion rates that rival those of chains with many more store locations.
Is showrooming a reality? Absolutely. But for retailers who embrace channel integration, it doesn’t mean the end of stores. Instead, it is an opportunity to increase overall customer intimacy, satisfaction and sales.
*Full disclosure, Madewell is a Brand Amplitude client.