How many times have you walked into a store to check out a product and then walked right back out to order it online? Chances are you’ve done it at least once. I’m guilty of doing this all the time. In this day in age it’s a fairly common practice. This is called “showrooming” it’s played a large part in what has happened to Best Buy’s stock price over the last few years. Showrooming is robbing brick and mortar retailers blind.
Conventional wisdom says that in order to combat showrooming you need to match the price that’s being offered online. If you’re Best Buy then you need to price you TVs and cables like Amazon does. Well they can’t really compete with Amazon that way. But they can offer to price match anything you might find online. This way they’re able to capture the value shopper while still listing retail prices. This is something the likes of Best Buy and Target have embraced. But that just doesn’t sound very sustainable. As more and more people move to shopping online they’ll eventually stop needing to come into the stores to look at the object at all.
Companies like Apple on the other hand have embraced brick and mortar retail. They make products that people want to touch and feel. But they quality of the product and the demand they create make it nearly impossible to find the product cheaper online. Apple doe everything from designing to selling. Best Buy isn’t likely to do that. And if they were there’s no guarantee of success.
So how do you beat showrooming? This week the National Retail Federation is meeting in New York for their annual conference. One of the topics is how to combat showrooming. The guys at Petco seem to think they have showrooming figured out. Said simply, they have puppies. People freaking love puppies and will drive specifically to come and look at them. More than half the battle to drive sales is getting a customer in the store in the first place. And anyone that’s ever been in a Petco knows they don’t win business as a value leader.
While puppies sound like a formula that may only work for them, they are onto something. You do need traffic in your stores to get sales. So how do you get that traffic? You need a hook. In the glory days of Best Buy and Circuit City there were the best and many times only places to get certain electronics. There were catalogs that might offer a wider variety, but pricing wasn’t an advantage. Having the best location in town is what mattered. That was all the hook you needed.
Now the value has shifted for traditional retailers. They can’t continue to simply sell a product. Think about Home Depot or Lowes. They used to employ very knowledgeable people that served as the resident experts of their trade. Now most are simply associates that can restock shelves and help you find a wood screw. These guys are much cheaper. If the hardware stores want to have more stable businesses they need to offer services for their customers. Today that comes in the form of website or app that helps you track your products and can even remember what paint you bought from them 5 years ago. Hardware stores host classes to help you learn more about doing projects yourself. These are all tactics designed to get you in their stores.
By packaging services with the products they sell, brick and mortar stores can still compete. The days of the value shopper are mostly over for them. Price matching helps but likely won’t draw customers back into Best Buy as they already prefer the experience of Amazon. But there’s value to be had in bundling services with the products you’re offering. Whether you have something tangible you can’t get online like a puppy or you provide free PC support in your store (hint hint Best Buy), the future of retail is in these services that get people in the doors.
Image: Ian Muttoo