By Drs. Richard Feinberg, Meghan Norris and Chris Kowal at Purdue University
Showrooming is the term used to describe the curious consumer behavior many retailers have noticed. Showrooming describes the behavior where consumers want to look up possible purchases and read reviews, see possible pricing, and see where they can buy while standing in your store. However, it is still very difficult to do. As long as showrooming is difficult for consumers, you do not have to worry. But one day soon, consumers will be able to showroom with ease, and there will be nothing you can do to stop it.
There are three ways to deal with the future.
Way 1 — Ignore it.
Way 2 — Wait for it to happen, then complain about it and blame others for it.
Way 3 — Embrace it. Deal with it now. Take steps to anticipate it, and make your best guess about how to take advantage of it.
Predicting the future is a tricky affair. Even if one predicts it accurately, knowing what to do is even more tenuous. Because predictions are oftentimes wrong, we take a page from corporate finance and issue a Safe Harbor Statement.
Whatever we say may be wrong.
Do not trust anything we say because we will be long gone by the time the future occurs.
No one understands your business better than you do, but we know what is happening in the retail world.
In looking at the future retail landscape, it is crystal clear that the consumer will have complete access to products and services, prices and information, anytime, anywhere and anyhow THEY want it. One of the truths of today is that change is occurring faster than even the wisest of women/men have predicted. Other than the Jetson’s devotees, who could have predicted that we would have driverless cars? Even as recent as 10 years ago, most people would have said that there is no way we will have driverless cars (even George didn’t trust them…he continued to drive his own car)? Yet, driverless cars are here, and they work. Whatever it is that you do not believe possible today will be…and faster than you think. Who would have thought that computers could handle 80 percent of all customer service calls, and they can (indeed consumers are quite surprised when they learn that they have received information and a solution from a speech-enabled computer). Computers can do medical diagnoses with greater accuracy than doctors. Watson (IBM’s genius computer) can win at Jeopardy, and can do legal work faster than humans (and more effectively). In light of all this, showrooming is very possible.
It should be no surprise that people are going to their mobile device to look up product reviews, see if it is cheaper, and determine if they can buy it elsewhere. The issue is not when showrooming will significantly affect your business, but when. If there is good news, it is that showrooming is only the behavior of less than 5 percent of all consumers and for most businesses less than 1 percent. A lot depends on who your target customer is. If your target customer is 20 to 35 year olds, you have a larger problem than 5 percent. If your customer is 55+, your problem will remain small for now. If the potential loss of 5 percent of your consumers is a big issue, you need to worry about this today…right now. To put this in some perspective, if we had to pick between dealing with showrooming or dealing with consumers who leave the store without making a purchase, I would choose the latter since that problem has a greater impact on your sales right now in most cases.
Right now, showrooming is very hard to do. The “Baby Boomers” may really want to showroom, but our research shows that they find the process difficult. They can’t see the screen on their smartphones and simply find it very difficult to maneuver. But the natural speech recognition technology exists and will soon be everywhere. Consumers will be able to speak to their devices, and once speech is enabled, showrooming will be a fixture across all age and demographic groups. It is the enabling technologies that will define the growth of showrooming. There is an app now that will tell you reviews of the product and prices and places from simply taking a picture of the product. Many businesses have actually increased the likelihood of showrooming by enabling free Wi-Fi in their stores.
There are some basic plays that brick-and-mortar stores should employ to embrace showrooming.
1. Find out if you have a problem. You need to have someone stand in the various places in your business — and at random times — count the number of consumers who are showrooming. Showrooming is vastly overestimated in most product categories. Most of the work that purports to show how big a problem showrooming is has been done using surveys. Surveys overestimate the problem. Our research at Purdue shows clearly that consumers think they should be doing it (85 percent in a recent survey), and therefore, when asked, they don’t want to appear to not be “in.” Media reports of at least 90 percent of consumers admitting to showrooming have increased the pressure on consumers to say they showroom when they really do not do it. So, be careful with your interpretation to purported showrooming. This is not to suggest you don’t have a showrooming challenge. It is to suggest that the problem is probably not so great right now. However, our research indicates that if it were easy, 99 percent of consumers would showroom on a regular basis for even the most mundane of goods and services and then you will have a challenge…a big one.
2. Put yourself in the consumers’ shoes. What happens when the consumer searches for the lowest price? What do they see? Can you match it? You can’t fight what you do not know.
3. Look closely at the latest mobile devices and the apps available for comparison shopping…then look at out how you look on that app or mobile device.
4. Having well-trained and well-paid sales associates is a critical piece to this puzzle. There is no low price that will be able to answer all of the questions and be ready to fix whatever comes up. Online stores seen through a mobile device are at a disadvantage to brick-and-mortar stores in that they do not have the interpersonal interaction opportunities immediately available to customers during the sales process. Great customer service, which is likeable, trustworthy and credible, greatly influences and matches customer’s needs. Until websites can create an interpersonal experience matching this interaction, traditional shopping will thrive. Customer service is dead in the eyes of many, so bring it back to life. The bar really is low.
5. Consumers will showroom. So, it is critical to get your pricing right. You can never underestimate the importance of pricing to today’s price-conscious consumer. Price consciousness, price aggressiveness of competitors, and pending total price transparency mean that the consumer will have access to all pricing, all the time, from anywhere. This does not mean your consumer will always go for the lowest price. It means that your brand and your name need to stand for something important. More importantly, you have to stay in touch with your competitors’ pricing, promotion and product availability. Without that information, you will never be able to adjust quickly when they change pricing or availability changes. If your prices are too high, you will be losing out on sales. If your prices are too low, you will not be maximizing profit margin on the sales. If your competitor does not have product, you are missing a unique opportunity to gain share and profit.
6. The most widely used method to combat showrooming is to price match — guarantee that you will meet or beat any price that a customer can find for the exact item. To lose customers over a few dollars by forcing them to a competitor because they find a lower price is problematic at best. You don’t want them in the store — or on the website — of a competitor. You spend so much time and money to get customers into your store that sending them away for a few dollars is “crazy.” A customer is a terrible thing to waste. Price matching works. However, there are two problems. First, research at Purdue indicates that most consumers do not know stores are often willing to price match, so they may showroom and leave, not knowing that they can buy where they are, at the price they found. Second, sales associates resist price matching and don’t always offer the match when they talk to the customer; in our research, they say they resent it and think it’s not fair to give one customer a lower price and not another just because a customer asked for the match. You might not be using an effective technique for combatting showrooming.
7. The time to start your strategic efforts to combat showrooming is NOW. The relationship you form with a customer NOW defends and inoculates that customer from defection for a few dollars less later.
8. Loyalty clubs fight defection. Travelers will fly many miles out of their way and pay higher prices at hotels to accumulate miles and points that result in rewards.
9. Know who your most loyal customers are and not at the end of the visit, but as they walk in the door. Do your employees recognize the 20-percent most profitable customers when they come in the store? If they cannot recognize them and make them feel special, how can you expect to fence them off from the competition?
10. Have unique products. Work with your manufacturers to provide unique products with value-added features and benefits. This would include special model names and numbers only available to you. They cannot showroom what they can’t find elsewhere.
11. Your Internet channel must have pizzazz. You have to make it as likely as possible that the customer who reaches your website from their mobile device or home computer has a reason to stay there and buy from you. Up-to-date and interesting content. Exciting pictures and videos about your products. A means to contact you. Simple search and navigation. Be there Saturdays, Sundays and after 5 p.m. If not, you may become collateral damage. The consumer will get what they want, when they want it, and if you are not there to give it to them, someone else will.
12. Google+ is beginning to emerge as the single most important place for a business to be. Learn about it, and use it.
13. Know what increases the probability of a sale. We know in fashion retailing that if you get consumers to try on apparel, they are 30 percent more likely to buy it. If they try it on and take it home, they are 75 percent more likely to buy and keep it. If you get customers to take off their shoes in a shoe store, they are four times more likely to buy the shoes. What is your tipping point for a sale?
14. On a broader, more strategic level, you need to have a roadmap to your future. You cannot simply wait for it to happen and then react…you will be way too late. Who is your futures group? What tech blogs do you read on a regular basis to understand and identify new trends (e.g. www.techcrunch.com)?
If showrooming is not a problem now, it will be. The majority of your consumers want to feel appreciated. They want to feel you care. They want something special for their money. Best products are just the price of admission. If they can get those products from other places while standing in your store, they will. Your future in facing the showrooming challenge is to find unique products and do the little extra things that no one else does, so that the consumer has absolutely no reason showroom.
ABOUT THE AUTHORS FROM PURDUE UNIVERSITY:
Richard Feinberg, Ph.D., is a consumer psychologist and a professor in the Department of Consumer Sciences and Retailing at Purdue University. Previously, he was head of Purdue’s Department of Consumer Sciences and Retailing, the director of the Purdue Retail Institute, and the director of Purdue’s Center for Customer-Driven Quality. He teaches courses in consumer behavior, retailing, “e”-retailing, customer relationship management and leadership. Dr. Feinberg is responsible for the development and delivery of executive education programs and has been a consultant for many companies on customer service/satisfaction. He is the author of more than 200 research and trade articles, and hundreds of presentations and seminars. He has consulted with tens of companies and has served as an expert witness and consultant. Dr. Feinberg may be reached at firstname.lastname@example.org.
Meghan Norris, Ph.D., is an assistant professor in the Department of Consumer Science at Purdue University. She holds a Ph.D. in Social and Personality Psychology from Queen’s University in Ontario, Canada. She is an expert in the areas of attitudes, persuasion, and social influence. Current research projects focus strength-related dimensions of attitudes such as attitude structure. Research projects explore how such dimensions can lead to various consequences, including information processing, and how these dimensions might ultimately relate to consequential behaviors related to consumer health and well-being. Dr. Norris also investigates research methodologies, including eye-tracking technology.
Chris Kowal, Ph.D., is an assistant professor in Consumer Science and the director of the Center for Professional Selling at Purdue University. He teaches the selling and sales management capstone course and courses in customer service and nonverbal persuasion. His research focus is in nonverbal communication, specifically the persuasion of emotion, exploring the process of charisma, and emotional competence. Additional focus areas include sales, social perception, and facial expression and body language analysis. Dr. Kowal’s research has been highlighted on international, national and local media outlets, including CNN, ABC News, NBC News, and CBS News. Prior to entering the academic world, he worked as a political and marketing consultant and a top-producing real estate agent in the Detroit market. Dr. Kowal earned his B.A. in communication and political science from Oakland University in Rochester, Mich.; M.A. from the University of Connecticut; and Ph.D. from the University of Connecticut in Communication and Marketing, with a focus on the communication of emotions within persuasion.