Seven Ways Businesses and Communities Can Counter "Showrooming"
By Jeff Milchen and Casey Woods
With smart phones now ubiquitous, customers have become more savvy consumers. Some customers may use their phone to research the best product to purchase from your business while others may be using your store as a showroom and testing facility and then seeking the cheapest price online or from a mass merchant. Here are a few ways to help you close the sale on-site.
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1. Turn apples into oranges. Mass-produced items are easy to compare and are fodder for intense price competition, so try to carry more distinctive products tailored to your customer base and offer personal services that aren't as vulnerable to showrooming. Locally-made products help differentiate your business from your competition, too.
Try bundling products or services, offer tiered “plans,” or provide value-added services with purchases. Consider providing incentives to turn the first purchase into additional ones. When you can explain the difference in your business’ products versus those somewhere else in terms that are real and exciting to a customer, your product or service is less likely to be viewed as a mere commodity.
2. Develop cooperative partnerships with other nearby businesses to "bundle" products and/or services and make them unique and convenient. A real estate firm, for example, may partner with a home decor store, hardware store, insurance agent and moving company to create a "new home package.”
Bridal shops often form relationships with photographers, travel agencies, florists and caterers. A little creativity can help foster mutually beneficial partnerships that add convenience and value for customers and distinguish you from the rest.
3. Engage customers. A 2012 Nielsen poll indicated 69 percent of respondents thought in-store purchases were “most reliable,” and 68 percent of them said that it was the “easiest” and “most convenient” way to shop. Your personal contact can reinforce those beliefs. Also, if you aren't interacting with people, it's much easier for the consumer to showroom your business guilt-free. People are less likely to showroom in businesses where they view the staff as “friends.”
Make sure they experience the value of your staff and know your services.
4. Train your staff to handle potential "showrooming" scenarios. If you have a staff member who receives a phone call or e-mail asking for very specific product or service information, how do you handle it? Do you train your staff on how to close sales and distinguish your products?
Businesses can't stop showrooming (and should not attempt to impede customers from doing it), but pro-active strategy and well-trained staff can diminish leakage and often turn it to your advantage. One key is to make sure you are training salespeople, not mere clerks. Give a potential customer a new insight or knowledge -- espcially those that can't easily be gained researching on the web -- and it’s much harder for them to walk out your door to order online. A well-timed anecdote about online customers facing problems with sizing, returning defective merchandise, etc. also can be effective toward diminishing resistance to a modest price differential.
Matching a no-service business's price is rarely advisable, and nearly every customer will accept paying something for personal service, convenience and immediate gratification. Personal interaction will help you assess how much.
5. Educate your customers and your community about the benefits of doing business locally. In addition telling the story about the people behind your business and the role you play in your community, help educate customers about the importance of local business ownership generally. This includes explaining the value your local entrepreneurs provide to customers, some hidden costs of buying online, and important benefits to your community that accrue from buying locally (more jobs, increased wealth and increased support for charities, for example). When business owners and citizens unite to build long-term public education campaigns through community organizations they've built an impressive track record of increasing sales for local independent businesses.
6. Seek suppliers that demonstrate their long-term interest in your business. Some manufacturers and distributors choose to sell only through full-service outlets or strictly through independents. Others will enforce a manufacturer’s suggested retail price (MSRP) or clearly differentiate the products they distribute to independents from those at mass merchants.
If your suppliers don't care about pricing, discounters undoubtedly will latch onto them. Deal with suppliers that care about the future of physical stores where knowledgeable salespeople can explain the value of their products. Lisa Henline of Southwest Trading Company, a furniture merchant in Spruce Pine, NC, takes this a step further. "I put short bios about the American companies we deal with beside groups of items for sale. I include the number of U.S. and local jobs that vendor supports. It really seems to hit home, especially since we have one of the highest unemployment rates in our state."
7. Embrace technology and turn the tables. Make sure your employees have fast access to product information systems -- and capable knowledge to use them -- to answer customers’ questions. Emerging mobile technologies can arm your employees with access to up-to-the-moment inventory, your costs and other information to help customers and close sales. This article discusses some of the mobile technology being developed for retailers by Motorola.
If you know your price is competitive on an item, pull the item up from a popular online competitor right in front of the customer and explain the greater value, convenience and peace of mind they’ll receive buying from you. Simply removing a customer's fear that they may significantly overpay often is all you need to close the sale on the spot.
Trust your salespeople (or at least managers) to know the best price you’re willing to offer on key items or those for which you will price-match. Price-matching as a blanket policy is untenable for many businesses, but may be a wise tactic to employ strategically, weighing the lifetime value of a customer against the margin on a particular transaction.
While storefront businesses obviously have a stake in discouraging showrooming, it’s also a challenge communities and local governments should work to minimize.
Communities need local jobs, sales tax revenue, philanthropic donations and vibrant commercial districts -- all of which are undermined by showrooming. For citizens, saving a few dollars may be more than offset by lost job opportunities, decreased property valuations, increased mill levies, lost public services and other adverse impacts. This is especially true where sales tax revenues fund essential public services. Many such cities and towns would do well to invest in a professional public education campaign to raise awareness of these issues and other benefits of choosing local independent businesses.
Practice what you preach
You can't be a credible advocate for local shopping while getting the bulk of your supplies from a warehouse chain or online. And you certainly won’t gain an audience for your efforts against showrooming if you exploit other businesses in that way. The Golden Rule extends to businesses, too!
Whatever you choose to do, engage your staff and make a plan. Your staff's customer experiences can help you develop your strategy and involving them will likely invest them in the plan's success. While the challenge of showrooming is formidable, most businesses can implement plans to turn the tables and employ mobile technology to increase sales. See below for more ideas.
Casey Woods is the Executive Director of Emporia Main Street in Kansas. Jeff Milchen co-directs the American Independent Business Alliance. Please contact us if you would like a condensed version of this article or any graphics to run in your newsletter (no cost).
Get AMIBA's publication “Building Buy Local Campaigns that Shift Culture and Spending” for a thorough introduction to that topic. It's free upon request.
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Other Notable Resources on Showrooming
The Showrooming Showdown (Stores Magazine, March 2013)
Truth About Showrooming by Gaurav Pant and Girijesh Agarwal (Nov 2012)
The Growth of Internet Retailing: Implications and Strategies for the Specialty Toy Industry (pdf) by Stacy Mitchell (Aug 2012)
Retail 3.0? Mobile Technology is Both Bane and Boon to Retailers by Heather Clancy (June 2012)
Don't Let 'Showrooming' Sabotage Your Shop by Karen Klein (June 2012)
Our 2011 report on Amazon's "Spy on Competitors" promotion includes many specific examples of counter-showrooming.
* Fulfillment centers lacking storefronts can price products so cheaply in part because they avoid overhead costs walk-in business must pay to serve customers. However, most remote retailers also are exempted from sales tax collection duties brick-and-mortar businesses are obliged to follow in 45 states, a problem AMIBA is working to change.
To learn more about Amazon, see the curated collection of some of the best recent news coverage: All About Amazon.com Corporation.
© 2012 AMIBA. Graphic inspired by Little Independent.