“Showrooming” and the Next-Generation Retailer

On May 19th, The Age newspaper (in Australia) reported on a story that suggests the rise of smart phones and smart phone applications (apps), spells doom for our struggling retail industry.

In the article, "The app crisis alarming Retail", Adele Ferguson, shares insight into Amazon's Price Check application and the response by Big W, to the growing practice of "showrooming".

There is a pattern unfolding people! A pattern that was repeated again, only in the last 15 years.

During the DotCom era in the late 1990s, we saw a similar phenomenon. At the time, it was being widely reported that Internet startups were threatening the very existence of big companies.

Terms like "New Economy", "Paradigm Shift" and "Digital Strategy" became commonplace and even more commonplace was the plight of Corporate Executives struggling to find an answer to this threat.

Many years later, those that remain understood that the Internet represented a way of capturing not just the hearts of customers, but also their minds. Every single piece of marketing asset could be put to use on the Internet in a way that has customer engaging with the company with mutually meaningful outcomes.

Everything else was, and still remains, essentially the same.

Every business must still have adequate plans in place for their six main areas of business -Distribution, Finance, Marketing, Team, Sales & Production.

Is there an App caused crisis?

Conversion Leadership believes there is potentially a crisis; for some not all. That crisis will only affect retailers that are unable to make a better connection... getting from where they are today to where they want to be (if the changes were totally within their control).

In the B2B markets, online activity will remain largely as is. In this space, very little activity is based on impulse purchases. B2B procurement tends to go through long relationship-building sales cycles that make "showrooming" difficult. Plus there are supply chain contracts.

In the retail sector, there is a driver towards high-volume, low-margin and production-line accuracy. Where a season's range must be bought in bulk and often more than a season in advance, retailers are without doubt susceptible to fluctuations in pricing (especially where exchange rates are concerned). And, with a global economy truly in progress, price competition is on the rise from an increasingly international marketplace.

Think about it...

Your customers are always going to want what's important to them. If price is important to them then they will search for the most price-competitive... ones that have special offers and discounts regularly.

When there's something else that's more important than money though, then that's your opportunity to become their preferred choice. This means you have to really know who is your ideal customer.

Leveraging the "Showroom" Effect

"Showrooming" is just a label for the segment of any market, driven by price. This may not be your ideal market.

To become a leader in any market means first knowing who your market really is. After that it's making sure you're able to fulfill a need that's unique to their circumstances.

Are your ideal customers price-sensitive shoppers or risk-averse, conservative bureaucrats? Do they make decisions based on logic and a well though out plan or do they prefer to be shown the answer. Knowing your ideal customer profile will help you decide.

Just as large corporations learnt by competing against Internet startups a decade ago, so can retailers learn today what it means to compete for their customers' attention..

From a growth mindset perspective, the answer is not to prevent "showrooming" from happening. Instead, the answer would be to look for opportunities that leverage off of showrooming to become a point of preference for your customers.

The key is to develop a vision of how they (and future labelled consumer groups) fit into this vast electronic world.

Ask yourself... "What is it that I'm really contributing to our customers?" Your answer will gift you a solution; and if it doesn't, reach out and talk to us at Conversion Leadership.