It may not provoke the same fear that the Jaws theme induces, but for marketers and retailers, a new word has cropped up in their vocabularies that has a similarly spine-chilling effect: showrooming.
Showrooming is the process that takes place when a shopper walks into a brick-and-mortar store to research products, only to buy those same products via their mobile device or online from another retailer, turning a physical store into a place simply to display items and entice customers, but not a place where a transaction is completed — and all at the “physical” retailer’s expense.
Shoppers head to the physical store because they can’t perform the same experiential research via their laptop or mobile device. Despite a host of mobile and technological gains we’ve made in the past decade, consumers still want to feel a product’s weight, examine its texture and see how it looks on display next to other related items. It’s the same reason why digital slot machines include nostalgic pull levers, and provide the “clang, clang, clanging” sound effects of winning change even though most of these machines work on electronic casino credits. It’s the perception of reality they’re creating.
Bringing it back to the retail environment, shoppers may still feel compelled to “kick the tires” while walking the store floor and that’s fine, but it’s very troubling to know that after kicking them, they rush off to the digital world to make their purchase. The experiential experience just delivered by A&B Retailer has actually been for an online competitor’s gain.
While hard numbers on showrooming’s prevalence are hard to come by, a recent NPD Group study found that at least as 1 in 5 shoppers at home furnishing departments are showrooming.
The above scenario, however, isn’t confined to isolated retailers or store departments. With nearly half of Americans owning a smartphone (46%) and tablet adoption rates having nearly doubled, showrooming amounts to a huge financial thorn in any retailer’s side. The shopper practice is cutting into profits and hurting retail business. Case in point: another study by market research firm ClickIQ found that nearly a third of consumers (29%) who use a smartphone to research a product in-store end up buying online. Here too Amazon is the likely winner, though big box stores like Best Buy, and chain discounters like Wal-Mart and Target figured prominently as well.
Digging deeper, of those in-store web purchases, over half (51%) were shoppers between the ages of 18-39, a critical buying set. Even if that group’s collective purchasing power has been slipping of late, they’re still the most likely group to search for products online, embrace new marketing channels and seek the most competitive prices. In fact, when it comes to bargain-hunting, the ClickIQ survey I mentioned above confirmed that for all age groups, 87% of respondents said that price was the reason why they opted for showrooming in the first place.
So how are physical retailers going to tackle that?
Finding Medicine Amid the Mayhem
Part of the showrooming solution comes back to in-store basics: designing engaging displays that are hard to miss, providing superior in-store customer service, price matching, couponing and zero shipping costs, (to compete with many web sites that offer this perk). All tactics are designed to increase that marketing gold standard: conversion rates, or the number of customers that walk into a store and leave with a purchase.
But it’s important to remember that the same technology which has helped give rise to the showrooming “crisis,” can also be brick and mortar’s savior, especially as it relates to the union between in-store digital signage and the shopper’s companion – the mobile device. Combined, digital signs and smartphones establish a two-way communication that allows marketers to send relevant and timely rewards and product information directly to the shopper while they’re on the floor and primed to buy.
Digital signage’s advantages, as referenced above, also come down to some simple numbers: their adoption rates are soaring and cost-per-screen size has also dropped, making it more likely retailers will choose to add a short-term purchasing expense to their budgets for long term consumer gain. According to IHS iSuppli Market Research, 17.3 million digital signs will be shipped in 2012, up from 15.4 million in 2011 and 13.5 million in 2010. By 2016, units shipped are estimated to reach 25.6 million. Digital signage revenue for LCD, front projection and LED screens is also estimated to reach $13.3 billion worldwide, with the retail segment showing some of the highest installation rates. Meanwhile the latest Wirespring data shows that the cost of a 100-screen network dropped another 5.6% in 2011, costing around $3,500 per digital sign.
Stop and Engage
Digital signage — along with its mobile companions — is engaging and showroom-stopping in two critical ways. A digital sign isn’t limited by finite screen real estate. Rather than only promoting discounts, digital signage can increase the odds of an in-store purchase by showcasing what a particular product can do or how to use it or augment it with other purchases.
Digital signage goes further too, effectively closing the “digital marketing loop” through its ability to communicate with smartphones and tablets via WiFi and Bluetooth technology. Sending timely, relevant and privacy-conscious messages, coupons or rewards to consumers’ mobile devices while in-store, potentially meeting or beating offers that tech-savvy shoppers might be already viewing, can significantly reduce the chance a shopper — even one who has specifically come to showroom — will do so.
Their incentive, largely driven by price, has been reduced or eliminated. Shoppers can then use their mobile-acquired coupons or rewards in-store and not rush to buy online. For retailers, this keeps sales revenue in-store and for marketers and advertisers it reinforces the need (and dollar value) of their in-store presence.
And let’s not overlook another critical factor: data. The above overlapping technologies gather vital shopper metrics that help paint the most accurate customer profile yet, data which can be acted upon in real-time and allowing digital signage messaging to be up-to-the-second precise based on item performance, shopper preferences and dwell times.
The Ultimate Show (Room) Stopper
The bottom line? Mobile has in many ways armed shoppers with the most advanced tool in their shopping arsenals yet. But like the two-way digital communications between mobile devices and digital signage, that two-way benefit works for in-store retailers too. Digital signage, working in concert with the continuing mobile revolution, means that showrooming, or at least its growing popularity, can just as likely be clipped as it can be expanded.
There’s nothing wrong with shoppers wanting to kick the proverbial tires and experience a product. In fact, it’s quite the opposite as that need to touch, feel, smell or sample brings them right into the physical store environment. But for marketers and advertisers, once consumers step through that threshold, it’s incumbent on them to keep them there engaged and eager to spend.
Digital signage and mobile, as companion technologies can make all that possible.