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Will 'showrooming' kill businesses?

post #1 of 136
Thread Starter 
I saw this posted on another board and it started some good discussion. I'm curious to know SF'ers thoughts on it.

http://www.cnn.com/2012/06/17/opinion/greene-showrooming/index.html?hpt=hp_t2
Quote:
(CNN) -- In a bookstore, I saw a woman taking photograph after photograph of newly released titles that were arranged on a shelf. She was using her phone to take the pictures.

I didn't understand. Why would anyone want to take pictures of books?

Then, at a restaurant, waiting for a table, I heard two men, also waiting, talking. One said he had just ended a frustrating day at the store he owned.

"Do they think I'm a showroom?" he said.

He mentioned people who had come into his shop that day, had looked at the merchandise, had taken notes -- and then had left.

"Do they think I don't know what they're doing?" he said.

It is a relatively new phenomenon. Among retail merchants -- owners of stores both small and large -- it has a name:

"Showrooming."

No one showrooms by choice.

And it represents a potential sea change in American life. Its implications are vast.

As described in an article by reporter Amy Zimmerman in the Wall Street Journal, showrooming is "when shoppers come into a store to see a product in person, only to buy it from a rival online, frequently at a lower price."

Say a merchant owns a retail store -- a brick-and-mortar store, on a city street. He or she hires staff, pays rent, writes checks for electricity and telephone service, pays for janitorial work, pays real estate and sales taxes, invests heavily in merchandise.

And hopes against hope that customers will come in, look around and buy something. This is how the retail sales business has always worked.

But in recent years, as online companies without a single physical store have risen to prominence, something new has occurred.

People will come into stores, look around, stop at items they particularly like -- and instead of carrying them to the cash register, will take photos of them, or type a description into their smartphones.

Then, in many cases, they will go home, enter the product into a search engine and find some online-only merchant -- a merchant who has no real-life stores -- who is selling the item for less money.

A tap of the "Enter" key, a few keystrokes to provide credit card information, and the item -- the item the person has examined and liked in the brick-and-mortar store -- is on its way to the buyer's home.

It's all so effortless.

The online merchant wins. The purchaser wins.

Who loses?

You know the answer. The loser is the owner of that real-life store: the person who has stocked the merchandise, hired the staff, paid to keep the store cool in summer and warm in winter, written the rent checks and the tax checks.

It is no wonder merchants are feeling frustration and anger that their stores are being considered as little more than showrooms by some shoppers -- showrooms displaying merchandise that, if the people wandering the aisles go home and buy from an online vendor, will provide not a cent in revenue to the owner of the real store.

Do the customers ever look into the eyes of the proprietor of the store and wonder if this new way is fair to him?

As Brad Tuttle of Time magazine has written:

"Most consumers don't really care how, or even if, a retailer makes money. All they care about is which one has the best products at the cheapest prices. The ideal situation is one in which they can inspect merchandise in person, and then buy it at the cheapest price without having to schlep it to and from the car, and without having to pay extra for delivery."

What's the difference, you may ask? Why does this matter?

It will matter when and if critical mass is reached, and online-only merchants, who don't have to underwrite the expense of having traditional stores on city streets, reach dominance. Then, one by one, the stores that have unwillingly become showrooms for the online merchants will fold up. And the American downtown-and-mall landscape will begin to look barren.

A doomsday scenario? Perhaps. But "just browsing" has taken on a different meaning in the context of shoppers who go home and use their computers' browsers to find online retailers who will undercut the conventional stores.

Last weekend I was in central Ohio for the annual charity race we hold to raise cancer-research money in memory of my late friend Jack Roth. I asked his daughter, Maren, who owns a women's boutique called Rowe, whether she was familiar with the showrooming phenomenon.

She said she has seen it with her own eyes, in her own store. "If they tell you how much they like an item, and take a picture of it and then leave the store and you never hear from them again, it's a pretty good indication that they may be going home and looking for a better price online," she said.

"And if they call the store later and ask you to tell them the specific style name and number of the item -- then you really know. They're putting the merchandise they saw in your store into a search engine."

It's not just smaller merchants like Roth. Target, the retail-store giant, wrote a letter to its vendors this year that said, "What we aren't willing to do is let online-only retailers use our brick-and-mortar stores as a showroom for their products and undercut our prices without making investments, as we do, to proudly display your brands."

What all this will eventually do to old-style stores is anyone's guess. Perhaps they will be judged to have outlived their usefulness.

In the meantime, merchants will continue to open their doors each morning in the hopes that the people who come in will really intend to buy something.

There is a longstanding axiom that business owners are supposed to believe in: "The customer is always right."

But in this emerging era in which people come into stores taking photos and making lists, with no intention to give the store owner their business, worried merchants can't be blamed if they look around their shops and ask themselves:

Who, and what, is a customer?
post #2 of 136
If the price is competitive, people will buy from a B&M. It doesn't have to be the lowest price if you have good customer service. I really don't understand why so many stores in several industries (such as fashunz, firearms, etc) refuse to make competent websites. You don't have to have a webshop with real time inventory etc., but a website with logical navigation and decent pictures isn't asking for much. They wear their bad websites with some sort of perverse badge of honor ("doing business the old fashioned way" or "forming relationships with their customers"), yet they wonder why their business suffers.

Somehow Opening Ceremony still exists. I have no idea how.
post #3 of 136
This is why if you go to any trade show today, small retailers first questions are "do you sell to online discounters"

Plenty of businesses are doing a few million in sales by not selling to mass or online discounters to protect the independent retailer.
post #4 of 136
Interesting read. I now that I do this myself as probably most people in this forum do. Over the last few years I've totally changed by shopping habits due to technology and the freedom of choice/price that exists online. A couple of weeks ago I went back in to Stuart and Wright just to buy a couple of items and support the local retailer with my dollars, because they really are good, friendly merchants, and an anchor in the neighborhood. Shopping at physical retail is becoming rarer and rarer though, as I know what brands I like and have a general sense of the fit. Online retailers like Mr. Porter are making it easier than ever to shop with them as well, with huge selections of brands, same day delivery, easy returns and great service. Brick and Mortars are going to have to taken into account the creative destruction of technology and use it to their advantage by blowing up their models and creating some type of online/offline hybrid that empowers the consumer and their evolving behavior.
post #5 of 136
Maybe we will see more store collabs and local merchandise and production as a means of countering this?

I mean, it seems a little weird that I walk down the road to a retailer in Auckland, New Zealand and I buy the same brands that are selling in shops in the US, Canada, Germany, France, the UK etc etc.

Perhaps more exclusive stock will help stores counter trawling for the discount stores online.
post #6 of 136
Quote:
Originally Posted by hendrix View Post

I mean, it seems a little weird that I walk down the road to a retailer in Auckland, New Zealand and I buy the same brands that are selling in shops in the US, Canada, Germany, France, the UK etc etc.

I'm glad I'm not the only person who has thought this.

I'd feel guilty about showrooming. It seems like a lame thing to do... although I can understand why people do it since lots of stuff you can easily find for 30%+ cheaper on the internet.
post #7 of 136
I do like supporting local retailers, but at the same time cash rules. The less the better.
post #8 of 136
Quote:
Originally Posted by hendrix View Post

Maybe we will see more store collabs and local merchandise and production as a means of countering this?
I mean, it seems a little weird that I walk down the road to a retailer in Auckland, New Zealand and I buy the same brands that are selling in shops in the US, Canada, Germany, France, the UK etc etc.
Perhaps more exclusive stock will help stores counter trawling for the discount stores online.

I feel the same way. The more rare/unique your stock is the less "showrooming" is an issue. Stores that stock brands that cannot be found elsewhere or that are their own brand (such as Epaulet) will be fine. On the other hand, if you stock item(s) that are pretty common and easy to find pretty much everywhere (ex - levis) "showrooming" will be much more of an issue, and you can't really blame the customer in that case.
post #9 of 136
It only gets worse from here though, especially in countries where people don't really have the Judeo-Christian consciences - there's people who just sit in fancy bookstores with DSLRs and photo the books, and then go home. haha. I watched that for years in Korea and I think only now is it becoming frowned upon. I mean, the workers making $4/hr in there aren't exactly pushing sales in a mega-bookstore owned by a conglomerate...

The retail model is broken. Too many old practices and too many hands in the pot in the retail model that are contributing to its death very quickly. Pre-internet days, people were only held back by not having any other choices, and that is no longer an issue. Less efficient businesses will always give way to more efficient businesses, always been that way.
post #10 of 136
create a website and have competitive prices. problem solved. many online retailers who are very successful have walkin stores.
post #11 of 136

This is the future of retail.

 

Unless your store offers unique merchandise or offers a unique, engaging experience you will steadily lose business. 

 

We will end up with far fewer but higher quality retail shops.

 

If you own a secondary mall or retail center... ouch. 

post #12 of 136
At the same time, a brick and mortar store that can engage well online (even without a webstore - sometimes an attractive blog, Styleforum thread, Facebook page, will suffice, depending on the business model) offer exemplary customer service, and build loyalty both online and off, can flourish because of the internet. Many examples of these businesses abound. It's an exciting time to have a business of any sort, but I think that it takes a lot more emotional and intellectual effort to become successful, and the disparities between the good stores and the bad or mediocre stores is getting bigger and bigger.
post #13 of 136
^ agree with that as well.
post #14 of 136
Thread Starter 
How would you guys suggest B&M stores compete in the online market? Prices are generally set based not only on the cost of goods, but other considerations like local rent, utilities, staff salaries, maintenance, etc... all of which varies widely based on where the store is located...but a store that has to set their prices higher to operate in, say, NYC has to compete against other retailers online, whether they're in smaller cities that helps keep costs down or just online-only.
post #15 of 136
Quote:
Originally Posted by LA Guy View Post

At the same time, a brick and mortar store that can engage well online (even without a webstore - sometimes an attractive blog, Styleforum thread, Facebook page, will suffice, depending on the business model) offer exemplary customer service, and build loyalty both online and off, can flourish because of the internet. Many examples of these businesses abound. It's an exciting time to have a business of any sort, but I think that it takes a lot more emotional and intellectual effort to become successful, and the disparities between the good stores and the bad or mediocre stores is getting bigger and bigger.


The Armoury, Epaulet, Selfedge all seem to be good at this.
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