In its 56 years of existence, local camera shop Roberts has had to deal with tricky competitors. Through quality service the store has managed to survive but is currently facing a threat to its business that has retail experts worried – showrooming.
“I think when Amazon came out with that, they offered an additional 5 percent discount on anything you scanned on your phone at a store then bought with them. It’s a very competitive thing and it’s an issue because we don’t want retailers to just become showrooms,” said Bruce Pallman owner of Roberts.
As holiday shopping begins to kick into high gear and as the economy continues to rebound, consumers are becoming more comfortable buying, yet they are still looking for a good deal and are taking part in showrooming, a growing practice.
Showrooming describes shoppers who go into a store to look at a product, then use a smartphone to search for the item at a cheaper price, often buying on the Internet.
“Last year, this was slowly becoming a hot topic among retailers – mostly in terms of what are we going to do about it,” said Richard Feinberg, a Purdue University professor of consumer sciences and retailing. “Then I had the experience of standing in Best Buy and watching somebody talk to a sales associate about a product and at the same time they were on their smartphones looking for a cheaper price. I assume they found it cheaper and they left the store.”
Feinberg said he has no qualms about consumers getting the best deal and value they possibly can. From the consumer’s perspective showrooming is a good idea. From the retailer’s point of view, companies must worry about losing a significant amount of money in sales and profitability because smart devices have made comparison shopping so easy. They also worry about decreased efficiency due to salespeople helping customers who have no intention on purchasing items in the store.
He added that while the consumer sees the immediate benefits of getting the best deal, they may want to rethink showrooming due to its long-term effects.
“Do we want to lose retailers when they go out of business because everybody’s using their smartphones? That’s a community issue, a tax issue, a quality of life issue – a lot of issues tied up into that,” said Feinberg.
Consumers should also wonder if they’re purchasing items from trusted companies that stand behind their product if something goes wrong.
What also makes showrooming threatening is that currently, most showroomers are under 35. So if a retailer’s target market is the under-35 buyer, showrooming is more of a concern. But because most retailers operate at the margin of profitability, if even as few as 1 percent of customers are showrooming, it can make a difference in whether sales increase over the year before.
“But the 30-year-old today is the 50-year-old tomorrow and the 15-year-old today will be the 30-year-old tomorrow. Things are going to change. As people grow up with devices, they’re more likely to use devices,” said Feinberg.
Furthermore, in certain product categories, such as electronics, showrooming is a bigger problem.
As a business owner, Pallman feels indifferent about the practice comparing this phenomenon to the growth of retailer Walmart and Costco saying that this is just the nature of the beast.
To combat showrooming, retailers are fighting back with creative strategies like price matching, which can keep the sale in the store at the price an individual consumer wants to pay.
Purdue research does show that price matching isn’t used a lot because consumers are unaware or they don’t like the possibility of confrontation and because sales associates often don’t like dealing with it.
Retailers are also looking at manufacturers to offer exclusive items that can’t be purchased anywhere else.
Pallman said a good strategy to combating showrooming is tried and true good service.
“You’re going to have the practice, but it’s informing the shopper about what happens after they’ve done it. Ask them ‘what are you going to do if you have a problem,’ ‘how easy is it to return the item,’ ‘who’s going to teach you how to use the product,’ or ‘what’s the true value of walking in here and seeing these items,’” said Pallman.
