Blog & Company News

Jul 5, 2012

A Question of Survival: Will Physical Stores Become Mere Showrooms?

Two new terms, showrooming and geofencing, describe the dilemma of brick-and-mortar stores in the age of mobile apps. Today’s savviest shoppers take out their mobile phones when they’re shopping and avidly check prices at e-commerce sites before they’ll buy anything at a physical store. The boldest among them (and we believe Emily Post would call them the rudest), stand in the store and place an order for the less expensive product on the web. In effect, the traditional store becomes a mere showroom. One way those retailers are fighting back is with geo-specific messaging technology that invites customers who are already within a short distance of the store to come in and get a special deal. This practice is called ‘Geofencing’ because the technology effectively fences off a location. This method of combating customer flight is one of several being used to hold on in times that are already tough. The Wall Street Journal reported that those showrooming price-checkers who then buy online number about 15 percent of physical stores’ shoppers on average, citing a Forrester Research study.[1] BusinessInsider later reported on another Forrester Research study that is less dire. Fears that price checking on mobile devices will turn brick-and-mortar stores into nothing but showrooms have been “blown way out of proportion,” the article stated. An accompanying chart shows that online purchases still represent only a fraction of the spending in the retail segment, and Forrester’s projections through 2016 do not show the e-retailers catching up, although they do close the gap somewhat.[2] Still, brick-and-mortar retailers have been feeling threatened for many years by the likes of Amazon. Here are some suggestions for making the in-person shopping experience so nice that customers will keep coming back even if prices are better elsewhere:
  • Create a resort experience. “Retailers need to create ‘destination magnetism’ just as vacation resorts…do,” wrote Roger Ellman, co-founder of Thankly, in a posted comment to a article on geofencing. How to do that? Make shopping a fun or glamorous or chic experience. Rethink the parking, the music, the lighting, the layout of the store.
  • Offer personal attention and make sure that your staff knows how to sell the entire experience, that is, the benefits of getting the product today and not having to deal with shipping costs, shipping time and hassles over returns.
  • Sell it only here, never online. An article in BusinessWeek offers the suggestion that retailers focus on exclusivity of merchandise.[3] “Handpick specialized items” rather than selling “commodity items.” Perhaps your business can work out a deal with suppliers to not show certain products online.
Another idea is to bundle a purchase with a special offer that’s available only through the store: Buy that yoga mat and get a discount at a local yoga studio for your first session. Buy $100 worth of fashion items and get a free consultation for a makeover.
  • Use geofencing apps such as Shopkick. Target uses the Shopkick app to give customers “kicks” when they walk in the door and more “kicks” as they walk around the store, scan products and show that they are interested customers, reported Upstart. The “kicks,” which are like the loyalty points airlines, hotels and others dole out, can be redeemed in the store or for dining discounts, iTunes downloads, FaceBook credits or as contributions to charities.[4]
Through a partnership between Shopkick and Citi, the app is free to small retailers in local markets nationwide. For instance, in San Francisco, Shopkick shoppers can earn “kicks” at the Ferry Building Marketplace, Sunshine Health Foods, Sens Restaurant, Royal Ground Coffee and Union Street Papery to name a few. Other industries—music and publishing come to mind—have had their ways of doing business disrupted by new online models. Retail won’t face so radical a disturbance and will continue in the forms we’ve been used to, but retail does have to smarten up and sharpen up.
[1] Can Texting Save Stores? [2] FORRESTER: Here's Proof That 'Showrooming' Panic Is Blown Way Out Of Proportion [3] Don't Let 'Showrooming' Sabotage Your Shop [4] With Shopkick, Target Takes On Showrooming