A customer walks into your store and checks out a product. He picks it up, reads the packaging, and asks a sales associate some questions.
It looks good. He's interested in buying it. But instead of heading to the cash register, he pulls out a smartphone. Maybe he scans a barcode. Or he browses Amazon.com. It only takes a minute to find the same product at a cheaper price and buy it from an online retailer.
This is a brick-and-mortar retailer's worst nightmare: roving bands of mobile-savvy consumers who turn the store into a showroom for e-commerce. Retailers call it "showrooming".
While some retailers fear it's the beginning of the end of brick-and-mortar, others are finding other ways to compete.
1. Understand the showroomer. There doesn't seem to be much data or demographic profiles on the types of customers who are showrooming. But there are some common characteristics.
- Tech-savvy: They own smartphones, are comfortable with using mobile apps, and feel secure about e-commerce.
- Bargain-hunters: They look for deals, clip coupons and compare advertisements.
- Research-oriented: They research their decisions and carefully make the right choices.
In a way, these customers aren't new. They haven't been buying at your store for decades. Big box and chain retailers have lured them away.
Perhaps the economy has created more price-sensitive shoppers. But mobile technology has made it very easy to research prices and buy the lowest-priced item, wherever it is.
2. Identify the products. Not everything in your store is vulnerable to showrooming. The products that are vulnerable share some things in common.
- Costly: The variation in prices must be enough to make it worth comparing prices. And the stakes in making the right choice are fairly high with expensive purchases.
- Complex: Shoppers need to learn more about the product. Its features spur questions not found in marketing material or independent reviews. These products also may be tested in the store.
- Common: There must be enough similarities between brands to make valid comparisons. Or a particular brand must be common enough that many retailers carry it.
- It isn’t broccoli: "People aren't showrooming broccoli," says Lily Lev-Glick, a shopper insights strategist at Shopper Sense. Shoppers pretty much know everything they need to know about broccoli. The prices at different grocery stores don't vary enough to make it worthwhile to shop around. And shoppers need it sooner than it can be shipped to their homes. This applies to a lot of low-cost, convenience items.
If we aren’t talking about broccoli, what are we talking about? Products such as electronics, tools and household goods. A shopper who compares prices and researches features can save a lot of money with these purchases.
3. Play offense. Chris Lybeer, vice president of mobility at NCR, says defensive strategies aren't going to stop people from buying lower-priced products online. He recommends getting your associates to engage shoppers and embrace mobile shopping with apps that offer the comparisons and research that consumers want.
4. Offer unique products. Large retailers can do this in a defensive way by putting private labels on products or demanding special packaging for their stores. This makes it harder to compare.
Small retailers need to be really unique by offering products that cannot be found on Amazon.
Joe Ales, an optometrist and owner of OPTIK Birmingham near Detroit, examines eyes and sells contact lenses and eyeglasses. His contact lens business has almost dried up because people come to him for exams, take the prescriptions, and order the contacts from a major online retailer.
One of the product lines that does very well for him is vintage eyewear. These are older glasses for people who want a classic, retro look. These are mostly original, unused products that have premium price tags and can't be found at an online retailer.
5. Bundle products. Most retailers don't have an inventory of vintage, luxury goods. But they can package the products they do have. While it may be easy for a shopper to check out an MP3 player in your store and find a cheaper option online, you might be able to keep that business by offering a special price for the MP3 player, premium headphones, a protective case, and warranty.
That package becomes harder to compare to online options and may have enough value that overcomes the desire to save money.
6. Encourage loyalty. Loyalty programs reward shoppers for spending money at your store. "You buy these products from us today, here's a $10 gift card for the next time you come in our store," suggests Vanessa Ting, founder of the retail strategy company Retail Path. She says any kind of reward or discount needs to make financial sense by building revenues and preserving profit margins.
7. Create a retail experience. Just about every retail consultant will tell you about the importance of creating an experience. That’s just what optometrist Ales has done for his shop.
First, it has a comfortable, boutique feel. It doesn't look like other optic shops, he says. It looks like the kind of place that reflects customers' artistic sensibilities. Ales says shoppers tell him, "This is the coolest place I've ever seen."
Second, he says he has a fantastic staff that is artistic, friendly and helpful. It takes recruiting the people with the right personality. "You can train anyone to do the optical stuff and run a register," says Ales. "But you look for personality and intelligence."
These two elements have created a store that clients want to buy glasses from and return to.
8. Stop competing on price. You're not going to win this battle. Big-box retailers have been winning this for years. Now online retailers are beating them at it.
The same strategies that emphasize your uniqueness and help you compete with big-box retailers also make your brick-and-mortar store an unlikely stop for a showroomer.
Carl Natale is a recovering journalist who now blogs about how small business owners can develop and improve their businesses. He shares ideas and tips on CarlNatale.com and as @CarlNatale on Twitter.
Is your small business suject to showroomers? Tell us about it in the comments.
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