Showrooming in Retail

Warc Trends Snapshot: 04 February 2013

Rescuing Retail >> How brick-and-mortar retailers are innovating in-store to counter the threat of showrooming

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What is the trend?

Brick-and-mortar retailers face increasing challenges as volatile economic conditions and the ubiquity of smartphones drive the burgeoning trend of showrooming, where consumers browse physical stores – then buy products cheaply from online outlets.

Research group IDC has estimated that roughly one in five American adults would engage in showrooming between Thanksgiving and Christmas 2012, affecting retail sales worth between $700m and $1.7bn. A separate US and UK study from Accenture Interactive found 72% of young adult shoppers use mobile devices to compare prices while in-store, and the majority leave without making a purchase.

Brick and mortar retailers are suffering as a result. UK-only data from the Centre for Retail Research indicates that 2012 was one of the worst years for the sector on record, with 54 retailers going into administration.

Some large chain retailers, such as Walmart, Target and Fry’s, in the US, aim to compete by offering instant online price matching.

However, perhaps inspired by the success of Apple stores, retailers that are unable to offer deep discounts due to overheads, location, or the nature of their product, are finding innovative ways to drive in-store engagement and purchase. Š Copyright Warc 2013. All rights reserved

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What can we expect?

The fight against showrooming will see retailers strive to offer consumers tangible benefits, interactive experiences, and improved customer service in order to justify the potential price premium of purchasing in physical stores.

Taking on showrooming is a necessity, rather than a choice – bankruptcy remains a likely outcome for those failing to integrate digital and optimise in-store experiences. The fate of the UK music store chain HMV, which went into administration in 2013, offers an instructive example. One former marketer at the company detected “hubris” in HMV’s slow response to the rise cheaper, more agile online rivals such as Play.com and Amazon.

Customer experience is key and brands will reinforce the link between purchase and retail space by expanding services such as online shopping with in-store pick-up.

Store design will become increasingly important as companies attempt to add value to the shopping experience with fun, memorable and unique retail spaces.

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What it means for brands Smart brands will recognise that competing on price is a no-win situation and instead woo customers and grow loyalty by creating memorable in-store experiences.

We were selling sneakers, we So far, much of the retailer innovation has been in high-interest were selling categories such as fashion. Yet low-interest goods vendors, from apparel, and we supermarkets to stationers, also face an existential threat from were selling online-only rivals – and will also need to get creative to survive. stuff, but the spaces, in Redefining retail spaces can yield cost-cutting benefits as well as themselves, creating buzz with innovative design: Starbucks has led the way with were just its series of modular, eco-friendly, drive-through outlets. stores. So we Just as companies advertise local-based call centres as a point of started asking difference versus outsourced rivals, brick-and-mortar stores need to ourselves: 'How prioritise superb “in-person” customer service. can the stores Retailers should strive to make shopping less stressful for valuable be a little bit audiences such as mothers by creating play spaces for children, and more like our attract older consumers by offering rest areas and home delivery. brand?‘ Many in-store strategies will need to have a digital component. For example, sportswear firm Puma turned tech to their advantage by creating immersive, interactive games and content in their outlets.

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Adam Petrick, Head of Brand Management, Puma

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Brands ahead of the curve The battle against showrooming hinges on giving consumers compelling reasons to visit brick-and-mortar outlets, offering money-can’t-buy experiences, and creating a seamless brand message across both digital and physical environments.

American office products retailer Office Depot has set up a concept store that includes a “PC bar”, laptop rentals, wi-fi, and even free coffee to engage consumers, along with touch screens to allow instant ordering of any product that is not currently on the shelves.

Mobile service provider O2 has created an in-store workspace for small businesses in London that offers bookable meeting areas, printers and wi-fi.

Social media can be used to drive in-store footfall. Fashion chain Uniqlo has launched a Lucky Tweet Counter, where shoppers were asked to tweet about featured items to bring their prices down, raising sales.

Luxury brands are also getting in on the act: fashion house Burberry’s London store has “magic mirrors” that interact with RFID chips embedded in the clothing, while Luxottica provides an in-store glare and windresistance simulator for users to test their eyewear out before buying. © Copyright Warc 2013. All rights reserved

Puma's Joy-Pad: an in-store display of 32 linked iPads creating a collaborative immersive brand experience

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Main sources used: Retail Fights Back Retail Renegades: Blazing the retail trail, Market Leader Innovation in retail experiences, AnalogFolk Best Retail Brands 2012, Interbrand

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