By JEFF O’HEIR: Dealerscope
October 18, 2012
Showrooming does not hurt retailers as much as some say
Statistics prove that showrooming has not drastically hurt the sale of consumer electronics at brick-and-mortar retailers.
“We have established that showrooming (as a factor) that’s really driving down the channel is a myth,” Steve Koenig, director of industry analysis for the Consumer Electronics Association, said during Retail Changes Holiday Edition: Debunking Showrooming and What to Expect for the Upcoming Holiday Season, a presentation that was part of the CEA Research Summit at the group’s Industry Forum in San Francisco.
CEA defines showrooming like this: A consumer walks into a retailer looking for a product, leaves without buying it, and ends up buying that product at a different e-tailer or brick-and-mortar retailer. It’s true, the analysts pointed out, that more consumers are using their smartphones while they’re shopping at a retailer, but they are not using them in great numbers to actually compare prices and buy the product from a different company.
To come up with their conclusion, analysts surveyed 47,000 people who shopped for a TV between Q2 of 2011 and Q2 of 2012 (the results were essentially the same for any CE product they bought). About 40 percent of them said they physically walked into a Best Buy store. About 5.9% of them said they left the store without buying and ended up purchasing the product elsewhere, with 2.3% buying from Amazon and 3.6% buying at another retailer or e-tailer.
The results were similar for consumers who physically shopped for a TV at a Wal-Mart: 6.2% of the consumers ended up buying the TV elsewhere, with 2.1% buying it from Amazon and 4.1% buying from another retailer or e-tailer. The percentage of consumers who bought from a company other than their original Best Buy or Wal-Mart destinations peaked at about 6.5% in the fourth quarter of 2011 and dropped almost two points in the second quarter of 2012.
The numbers didn’t change much when consumers were asked about overall CE products they shopped for during the same period: 7.8% of Best Buy customers left empty-handed and bought elsewhere, while 5.4% of Wal-Mart customers did the same.
That’s not to say that consumers aren’t showrooming, it’s just that the impact of the practice has not hurt brick-and-mortar retailers as much as some have claimed. “People are also going to shop around,” said Eric Voyer, vice president of sales and marketing at TraqLine-The Stevenson Company, who present the survey along with Koenig.
“Showrooming is happening,” Voyer said, adding that the percentage of consumers who use their smartphones to price shop at a retailer, and ultimately buy the product elsewhere, will increase between one and three percent during this holiday shopping season, as the previous numbers attest.
Several major CE retailers, along with plenty of smaller ones, have said during the last 12 months that showrooming has had a deep and negative impact on their sales. Many industry insiders, though, said the impact is more a result of the bad economy, high unemployment and general pricing competition. Retailers have also said that new unilateral pricing policies,MAP, and online sales restrictions have helped to ease competitive pricing pressures, especially on TVs, during the last seven months.
Despite the numbers, showrooming is a reality and the practice will increase as more consumers adopt price comparison and other shopping apps. And it’s only natural for more consumers to use their smartphones while they’re shopping at a retailer. But all of them aren’t using their phones to price shop.
When surveyed about their m-commerce usage, about 45% of consumers said they use their smartphone to text or call their family members or friends for advice, 46% use a web browser or app to get more product information, 53% take a photo of the product, and 35% search for coupons in their email.
Many industry experts say that retail sales associates should look at a consumer using a smartphone as an opportunity to talk to them about what they’re looking for and how they can help with the purchase. To improve customer satisfaction and to close sales at physical stores, more retailers are matching competing prices, updating and remodeling their stores to create a more exciting customer experience, creating product bundles that help to increase the average ticket price, and offering more flexible return policies.
“It’s all about closing the deal. Retailers will be successful because when people shop in a store, they actually spend more (than online),” Koenig said, adding that retailers can’t skimp on POP displays, hands-on demos, traditional advertising and social marketing, and sales training. “There’s really no limit to the strategies retailers can deploy to battle showrooming and online sales.”
RELATED
An Analyst Walked Into Best Buy, And Discovered Firsthand How Amazon Is Destroying It
12 Volt : KnowledgeFest 2012: The Playbook