Synopsis: showrooming is a new challenge that brick-and-mortar retailers are sizing up as a threat. However, this phenomenon must become an accepted part of retail business models in the era of empowered consumers and ubiquitous information. In this two-part post showrooming is juxtaposed to the power of firms versus consumers in the traditional business model and the modern day’s changing information economy.
Statistics show that close to 70% of consumers showroom in a retail store. Out of the consumers who do showroom, close to 25% will purchase the product from a different source if they save 5%-10%. Due to these facts showrooming is being met with combative strategies by firms.
To be clear, showrooming is the act of consumers visiting brick-and-mortar stores and scanning bar codes with a mobile device in an effort to find more information – and perhaps purchase – the product from a competing online retailer. I believe some anti-showroom strategies are shortsighted and I will support this position using a real-world example.
A Showrooming Example
Pre-purchase consumer activity
A friend of mine invited me along in his quest to buy a BBQ smoker at a brick-and-mortar retailer (he knew I was a BBQ guy). Based on the store’s inventory he focused on one smoker in particular. I am a showroomer, so we scanned the bar code. Surprisingly, there was not a product match found by Google. I then typed in the brand and model number, yet found no matches.
This wasn’t my first rodeo. I knew what was happening. Google is never stumped. Despite an inability to access to more online information sources, he made the purchase.
Post-purchase consumer activity
A few days later he was upset. It seems he did some in-depth research after the fact and found a virtually identical product under a different brand name and model number. The highly similar smoker was less expensive.
He told me he felt cheated. He felt duped. He felt as if the brand restricting his access to information cost him his hard earned money. “I’m never going back to that store,” he told me.
Information blackout: control
Firms using the strategy above, referred to as information blackout, need to consider the ramifications. Preventing access to information by the retailer in my example is an attempt to control what is usually seen as freely accessible information. Brands accomplish this by blocking cell signals in a retail store or by using custom bar codes that will not link to other products; and therefore, will not produce price comparison results.
Clever, but somewhat of a ruse.
This strategy is akin to the brand saying, “We control our product inventory. And we want to control any comparable information online that is available to you. This is our product in our store – you have no right to find more information in real-time.”
This is clearly a misguided strategy, one that may be beneficial at the single transaction-level, yet harmful for a brand at the cumulative-level sought in long-term relationships.
Information transparency: price matching
Another anti-showroom strategy is to price match competitors. This strategy illustrates information transparency – such as a price for a product – is becoming an accepted norm in the modern business landscape.
This strategy is akin to the brand saying, “We don’t care if you view product information and prices from competitors. Go ahead. You won’t find a better deal.” Transparency at its finest.
Older business models devised around a firm controlling available information to a less-powerful consumer audience are being supplanted by new models featuring information transparency. Relying on an older, controlling business model in the age of consumer empowerment and always-on connectivity is a fast method to losing customers.
Click here to read Part Two of this post.
Todd Bacile (@toddbacile) is a showroomer in his free time and a Marketing Professor at Loyola University New Orleans. He holds a PhD in Marketing from Florida State University. Social Media Marketing Magazine ranks him as one of the Top 100 Marketing Professors on Twitter. Questions and comments are welcome.