by Stuart Fuller (CentralNic)
In a series of short articles explaining some of the growing trends in intellectual and physical asset risks, Stuart Fuller examines one of the most worrying trends impacting retailers across the globe, Showrooming.
Walk into any major store in any city across the world and you will find shoppers not looking at the items on display but looking intently at their smartphones. Some may be bored partners of shoppers, wasting away the time looking at amusing videos on YouTube or catching up on the sports results but many will be the savviest of shoppers, ‘showroomers’ as the latest buzzword would have you know.
Technology has been a great enabler for most organisations, decreasing overheads in terms of production, marketing and billing whilst opening up new markets, new customers and ultimately, new revenues. However, it does come with a cost. I’m sure a few people reading this will have downloaded or watched an illegal film. Perhaps some of you have even (inadvertently of course) bought a fake product but I would wager that the vast majority of us have taken part in Showrooming. Not that the activity is illegal in any way I should add but it does represent a serious issue for retailers.
Showrooming, or the practice of looking for goods and services in a traditional brick and mortar store then using click and order to get it at a better price. This is not a new phenomenon. Price comparison websites have been part of our online experience for many years. The first real recognised comparison website, Jango.com launched 20 years ago, whilst www.shopping.com was launched at the start of the dotCom boom in the final years of the 20th century. What has changed is the rapid growth of smartphones that now allow us to access such applications faster and from the palm of our hands. It is now estimated that in the US alone there are over 224 million smartphone users, with an estimated 2 billion worldwide.
The Christmas trading figures for 2018 (including the now global sales around Black Friday and Cyber Monday) show continued growth year on year, with online sales once again recording impressive growth. In 2018, nearly 40% of sales in the US came via a mobile device, whilst Forrester Research predicted that 23% of all e-commerce sales in the US in 2018 would be via a smartphone.
For many of those purchases made via their smartphone, their journey will have started in a physical store. In a survey carried out by ComScore within the UK retail market, over 42% of respondents admitted they had taken a picture of an item in-store for purchase at a later date online, whilst in the US Nielsen report that 66% of consumers use their smartphones to check prices of products elsewhere.
It is true that some High Street brands have disappeared in the past few years, blaming the rapid growth of online brands such as Amazon who now offer almost every product from A to Z (which in fairness was always their objective), the failure of the retail sector to adopt mobile-based technology and customer interaction is more of a concern. If you can’t beat them, then you need to join them.
Many shopping centres and malls offer free Wi-Fi today yet few retailers understand how to engage these smartphone users. Instead of discouraging consumers from using their phones in-store to access online offers with other retailers, why not offer discounts and special deals for these users? If smartphone users understand that they can get even better prices or special offers by “checking in” to an online website for an offline brand then they will build not only brand loyalty but revenues. Whilst all consumers want the “best deal” they also want their products immediately. So, if they can have their cake and eat it why wouldn’t a brand use technology to keep their customers?
Unfortunately, showrooming also has other consequences for a brand. Shoppers who use decide to search online for products online may well find bargains, but they also expose themselves to the risk that the products they are buying are not the real deal. This is a growing concern for the luxury brands where customers want the real deal but are not prepared to pay the retail price. Whilst it may be obvious to many online shoppers that supposed luxury branded goods being sold at a fraction of a cost may not be genuine, some shoppers are still duped. The maxim “if it looks too good to be true, it probably is” is the watch phrase when searching for luxury branded goods online. Luxury brands rarely use words like “discount”, “cheap” or “deals” in their online advertising but that doesn’t stop counterfeiters using these keywords to drive traffic to their websites which at best will supply cheap, poorly made and potentially dangerous fake products, at worst will simply take customers money and will never be seen again.
If a brand is able to develop a social engagement strategy then it may be able to hit both objectives of increasing in-store sales from online activities and reduce the amount of revenue lost to counterfeit sales of their items. Brand Protection strategies may help to remove some of the threats posed by websites offering counterfeit items but it also needs some creative and innovative thinking from luxury brand holders to keep those shoppers off the price comparison websites and spending with the brand whether that may be online or in-store. BrandShelter work with ambitious brands who need to create strategies that protect their revenues, reputation and of course customers as technology delivers both risk and reward to their business models.
Technology continues at a pace the like we have never seen before. Brands that embrace the in-store smartphone user and turn them from showroomers into shoppers will be seen as true innovators. Consumers social engagement patterns will soon spread the word about the revolutionary customer experience that a brand will offer and consequently see them stay one step ahead of their competitors in one of the most competitive market places.
