What is Showrooming?

Showrooming is the practice of visiting physical stores to research products before buying them online at a lower price. This lets shoppers test products, particularly expensive ones, before spending money. The rise of smartphones made showrooming more common, benefiting online retailers with competitive prices.

Key points:

• Showrooming involves researching products in stores but purchasing them online for less.
• It gained popularity with e-commerce and mobile devices.
• Some items, like clothing, furniture, and electronics, often require in-person testing.
• Online retailers offer benefits like free shipping, while physical stores now offer price matching and better in-store experiences to compete.

How Showrooming Works

Before the digital era, consumers had to visit traditional retail stores to make purchases. Frugal shoppers seeking the best deals often had to visit multiple stores. However, the advent of mobile devices and online shopping significantly changed consumer behaviour.

Consumers still visit physical stores for various reasons before making purchases. For instance, someone wanting to buy clothing might need to try on a pair of jeans to ensure the correct fit, or a shopper might want to test a sofa at a furniture store before committing to a large purchase.

Visiting a store allows customers to test products before deciding to buy them. It also enables them to comparison shop in realtime. By going online while in the store, shoppers can check which retailer offers the best price.

Online retailers benefit the most from showrooming because they can offer incentives like free shipping for orders over a certain amount or for loyal customers. For example, Amazon Prime members have free shipping as a perk. Specialty retailers such as electronics stores are particularly vulnerable to showrooming as consumers prefer to test out these items before buying. Independent bookstores also suffer because their prices may be higher than those of online retailers.

Brick-and-Mortar Stores Combat Online Retail with In-Store Perks

To counter the increasing influence of online retailers, brick-and-mortar stores employ various marketing strategies. These include offering in-store pickup for online purchases, which helps them avoid shipping charges while also providing exclusive products in physical locations. Other strategies involve enhancing in-store experiences, implementing price matching, allowing customers to test products in-store before buying online, and facilitating in-store returns and exchanges for online purchases. Kerbside pickup, which became common during the COVID-19 pandemic, is another tactic.

Smaller stores and boutiques must tackle showrooming more creatively. They might hold special sales, sell in-store merchandise via their websites, create membership clubs, and promote a shop-local culture to attract and retain customers.

Showrooming vs. Webrooming

While showrooming has gained traction, its counterpart, webrooming, has also emerged as a significant trend. Webrooming involves the reverse process where consumers research products online and then purchase them in physical stores. Both behaviours have distinct advantages and challenges for retailers. Let’s dissect them further.  

Showrooming

Advantages

Showrooming can drive foot traffic to physical stores, providing retailers with an opportunity to engage with potential customers and showcase their offerings. Physical stores serve as brand touchpoints, allowing consumers to experience the brand firsthand, which can enhance brand loyalty and recognition. Sales staff can interact with showrooming customers, offering personalised recommendations and building relationships that may lead to future sales.

Challenges

Retailers may lose sales to online competitors if consumers find better deals online after showrooming in-store. Maintaining physical stores entails operational costs, including rent, utilities, and staff salaries, which can strain profitability if showrooming customers do not convert into sales. Showrooming also intensifies price sensitivity among consumers, compelling retailers to offer competitive pricing to retain customers.

Webrooming

Advantages 

Webrooming often leads to higher conversion rates as consumers who research online are more likely to make purchases in-store, reducing the risk of losing sales to online competitors. Physical stores provide a platform for retailers to build customer loyalty through personalised service, immediate product availability, and hassle-free returns. Shoppers visiting physical stores for webrooming may be tempted to make additional impulse purchases, boosting overall sales.

Challenges

Retailers must ensure adequate inventory levels to meet the demand of webrooming customers, which can be challenging without accurate demand forecasting. Webrooming customers may still engage in showrooming behaviour, comparing prices online before making a final purchase, posing a risk of losing sales. Retailers must maintain consistency between their online and offline offerings to provide a seamless shopping experience and avoid customer dissatisfaction.

Celiac Supplies and Showroomers 

In 2013, gluten-free food store Celiac Supplies made headlines by implementing a $5 fee for customers who were ‘just looking.’ The fee was deducted from the purchase if the customer decided to buy from the store, located at 38 Macaulay Road in Coorparoo, QLD. The owner, Georgina Lazaridis, cited frustration with customers using the store as a ‘showroom’ and then buying from cheaper online retailers. She estimated that around 60 people came to the store every week to ask about the products but never bought anything.

While controversial, this approach sparked a broader discussion about the impact of showrooming on small businesses. Critics argued that the fee could deter potential customers and harm the store’s reputation, while supporters believed it was a necessary step to protect the store’s viability in the face of growing e-commerce competition.

Celiac Supplies has since closed down, with a bookstore now in its place.

Navigating the Showrooming Challenge

For Australian retailers, navigating the showrooming challenge requires a strategic approach that balances the benefits of physical stores with the realities of e-commerce competition. The following are some strategies that can be considered.

Enhance In-Store Experience

Create a unique and engaging in-store experience that cannot be replicated online. This could include interactive displays, product demonstrations, and exceptional customer service.

Price Match

Consider implementing price-matching policies to retain customers who are tempted to purchase online due to lower prices.

Omni-Channel Integration

Develop a seamless omni-channel strategy that integrates online and offline channels, allowing customers to research, purchase, and return products through their preferred method. However, some stores may go so far as to stop people from checking out the online competition within the premises. 

In 2017, Amazon secured a patent for a tech solution called Physical Store Online Shopping Control. Originally filed with the US Patent and Trademark Office back in 2012, the system uses a store’s WiFi network to identify customers surfing the store’s competitors and offer them incentives to instead check out the offerings present using price comparisons.  

In-Store Offers

Offer exclusive promotions, discounts, or loyalty rewards for in-store purchases to incentivise showrooming customers to buy on the spot.

Educate Sales Staff

Train sales staff to identify showrooming customers and provide value-added services, such as personalised recommendations and product expertise, to convert them into buyers.

The above tips can be workable in light of increased electronic device usage by Aussie store patrons. A 2018 Finder study of 2,017 respondents tagged 31 per cent of them – representing 5.9 million Australians – as admitted to having showroomed before. Another 16 per cent feel the practice is an inconvenience to physical stores. When combined by state or territory, NSW and WA were tied at No. 1 in the most percentage of showroomers – at 34 per cent!

“There seems to be a service culture in Australia where if something’s not in stock, a store might tell the shopper ‘sorry, have a nice day’ – as opposed to saying ‘it’s not in stock, [but] how can we help you find a solution?’”, Sean Sands, associate professor at Swinburne Business School, said to SmartCompany AU’s John Nelder back in 2018.

Conclusion

Showrooming is a double-edged sword for retailers in Australia. While it drives foot traffic and brand awareness, it also poses challenges related to sales losses and operational costs. Balancing showrooming with webrooming and implementing strategic measures can help retailers navigate this complex landscape. The Celiac Supplies episode serves as a reminder of the creative approaches retailers may need to consider to remain competitive.

DISCLAIMER: This article is for informational purposes only. BARTERCARD does not endorse or disparage showrooming as a consumer tactic, and has no business relations with any store mentioned.