Retailing in the digital age

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RETAILING IN THE DIGITAL AGE

MANG6265

Alix Duchêne

STUDENT ID: 28147464

Tutor:  Ioannis Krasonikolakis

The multiplicity of electronic devices allows consumers to access much easier and much faster to different websites. Nowadays, competition is therefore more and more important. This is what we see in particular with this new trend called "Showrooming". In this essay, the description of Showrooming will be detailed in order to understand how this trend can be a threat for retailers. Then, the different strategies to fight this scourge will be highlighted. Finally, actions to take to achieve successfully the different strategies in our contemporary world will be explained.

The Showrooming is a recent trend that allows consumers to see and try a product in stores but subsequently finalizing the purchase on online platforms where the same product is offered at a lower cost. This new practice has intensified with a faster and easier access to the Internet, including smartphones and WiFi points that are becoming more and more numerous. Indeed, today the consumer has only a few clicks to perform to compare the price of a product on the market. We must not forget that the world's largest market is on the Internet and that every consumer has access without leaving his home. This practice is used by almost one out of two consumers. Bob Phibbs. (2015). 

The Showrooming can therefore be considered as a customer poaching. In 2012, a study published by IDC was put online; this study was conducted a few days before Thanksgiving and found that 20% of US inhabitants have used Showrooming, which led to an estimated financial loss of 1.7 billion dollars for retailers. Amazon takes advantage of this new trend, because according to Forrester, 30% of online consumers do a search on Amazon before finalizing their purchases. Indeed, Amazon has developed special pages with very large reductions and thus very attractive to the consumer. With this strategy Amazon has helped to grow its sales by 42% in 2012.  Greg Girard. (2012). 

As can be seen on the picture below, this trend is still very present, in fact in 2015, 21% of US inhabitants ordered products online via their mobile phone. The reason why that during those big events, US inhabitants prefer buying online is that they are almost certain to find the product they want in stock whereas in physical stores people are going on a shopping spree and therefore the store is empty very quickly. The consumers would then rather prefer not moving from their home and order a product online. Adobe. (2015)

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Here are some key figures to explain this phenomenon:

You should know that in the United States, over 56% of adults have a mobile phone, among these 56%, 50% of them have already done comparative price web searches while they were inside a physical store. Among these 50%, 33% finalized their purchases online. But that's not all, 96% of consumers are considering using the Showrooming during their shopping.

So why do the consumers use Showrooming ? Several explanations are given. First, physical stores do not try to improve the customer experience, then, the websites often allow consumers to have free shipping and delivery at home. There are also often highly visible and accessible online promotions while in store they are very rare and most of the products are sometimes not in stock in physical stores, which creates disillusionment among the consumers as well as frustration.

80% of retailers believe that their sales will be impacted by the Showrooming trend; so many strategies are needed to reduce this financial deficit. Deloitte. (2015). 

The solutions to keep an advantage are numerous. For brick and mortar businesses, the most appropriate solution would be to guarantee the price, if the customer finds cheaper elsewhere the price difference can then be refunded.

For the most adventurous one, it may also be possible to install tablets in the store so the customer himself compares prices within the point of sale.

For offline and online stores, or as we can name them multi-channel retailers, the strategy would be to develop a joint online and offline experience. Which means to guarantee the same prices found in stores on the store’s website and also to encourage consumers in store to visit the website of the physical store. This trick allows channelling the Showrooming. Marc Lockley. (2012). 

Of course the customer experience is the most important thing to develop in order to enable consumers to truly appreciate its in-store shopping. That's what Apple does with sellers who provide excellent advice and know exactly the products they sell. The physical store becomes essential for the customer because he is often in search of information he cannot find on the Internet. Moreover, loyalty cards are used to maintain a relationship with the customer, and encourage him to come back to shop to earn maximum points on his loyalty card. I do not think that consumers are using the Showrooming thoughtfully, if they finally use it, this is because they have not received answers to their questions in store. They know that by connecting onto the huge database of Internet they will find a satisfactory answer and thus end up with an online purchase. Marshall L. Fisher. (2015). 

Another strategy to fight Showrooming is payment in instalments, because if this technology is well developed on the Internet it is not well developed in physical stores. Customers are fond of this method of payment because this reduces their purchasing impact on their budget. The physical stores should facilitate the payment method of their customers because it creates loyalty. The retailers must find a type of payment in instalments that do not affect them, choosing to be a multiple payment by check, credit card or direct debit with a bank account details. Andrew Cherwenka. (2013). 

The fight against showrooming is based on understanding the needs of the consumer. To learn more about their needs, the retailer should not forget to ask the consumer opinion about important subjects because in the end they are the ones who ultimately will influence certain trends either negatively or positively. There are several key factors to consider in order to evaluate the impact on the customer experience such as customer service, accessible information or a personalized experience.

But why can’t we make this trend an asset for retailers?

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