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Best Buy is the Newest Amazon Showroom – How can a Retailer Battle “Showrooming”?

Posted by Amit Chail on February 01, 2013
Best Buy is the Newest Amazon Showroom – How can a Retailer Battle “Showrooming”?

Showrooming has been an increasing trend resulting in loss of sales for brick and mortar retailers. It is closely tied to growth in the use of smartphone proliferation and shopping apps for these handy devices.

Chances are you’ve probably not heard of the term “showrooming”.  Showrooming occurs when a shopper visits a brick and mortar store to view, feel, and try the product hands on and then searches for a better price using his/her smartphone while in the store. Guess what happens? The shopper ends up buying the product from another store – typically an online store. Based on a study conducted by Harris Interactive during 2012 holiday shopping season, 43% of US shoppers showroomed.

The losers: The top 2 stores that lost the most customers due to this trend in 2012 were Best Buy and Walmart reflecting 46% of showroomers. Other stores impacted are Target, Home Depot, Lowes and Barnes and Noble.

The winners: Online retailers were the main winners – specifically Amazon.com who gained 51% of these showroomers. eBay and Walmart online each received 5% of this traffic.

One would think that the online stores of the brick and mortars would gain this traffic, but the study found that this was not the case. The chart below shows that Amazon was the biggest winner while the brick and mortars were able to transfer some of these sales to their online stores.

% of showroomers who ended up purchasing a product from these online   retailers Brick and Mortar’s Online store Amazon
Best Buy store 8% 71%
Walmart store 11% 64%
Target store 12% 72%

There is no discrimination by men or women in showrooming. While more men showroom at Best Buy, more women showroom at Walmart and Target.

These showroomers are taking a large portion of their wallet with them to online retailers. On the average, they spent $211.80 on their online purchase after trying the product at a brick and mortar store. This is a significant amount of their wallet share that is being lost to the online retailer.

Retailers respond:

So how have these retailers responded so far? Their initial reaction was to price match Amazon.com during the holidays. Some retailers have also allowed their sales associates more leeway in being able to reduce the price. As per latest announcements from Best Buy, Target, Toys R Us, and other retailers, this trial has extended beyond the holidays season and is leading towards a standard practice. With almost half of consumers showrooming during the holidays, it is difficult to conclude that the price match policy is working. Perhaps, some people are afraid to approach customer service or sales staff (perceived as unfriendly by consumers) to request price match.

Another practice that is becoming trendier is white labelling some products with their retailers’ own brand or retailer exclusive products which make it difficult to price match.

In addition to price match, white label products and exclusive products, what else can you do to battle showrooming?

  1. QR codes:  Target (http://mashable.com/2012/10/03/target-qr-codes-amazon/ ) has started the implementation of placing QR codes of some highly competitive products allowing consumers to purchase the product from their online store. This is helpful when the check-out line is long or if the product is out of stock.
  2. QR Code to wish list: Not everyone who is doing price comparisons will buy the product at that very same instance. In that case, a strategy allowing people to use a QR code which allows consumers to add the product to their WISH list on their online store. This improves the chances of consumers purchasing it from their online store vs. a competitors’ site.
  3. Store specific mobile application: An alternative to item 2 above, this app would scan the bar code of the product and add the product either to a wish list or shopping cart thus keeping the customer. Alternatively, through near-field communications or wireless connectivity, it is possible to let consumers “move” a product they are researching in a store to a wish list or shopping cart on their smart phone. When they decide to buy it later, it’s a single click away.
  4. Free shipping: As Amazon and Best Buy.com have proven time and time again, free shipping promotions increase online sales dramatically.
  5. Enhance the in-store experience:  Engage customers with large-screen, immersive digital experiences utilizing touch-screen and gesture-based interactions. These digital in-store experiences can help consumers compare products, find the right colour or style, visualize product combinations, and even try their favorite outfit on virtually.  These digital tools augment the sales staff’s knowledge in engaging the consumer and lead to a more memorable brand experience.

Your response?

How is showrooming affecting your business? How have you fought showrooming? What works for Best Buy or Target may not be right solution for you. Talk to us to create a custom solution to fight showrooming.

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