“Showrooming” Threatens To Be Showstopper For Big Box Retailers

April 12, 2012

How many of you practice the art of “showrooming” — otherwise know as checking out products at stores, before buying the exact same item online for a cheaper price? It’s been going on for years, but it’s gaining popularity as technology allows seamless and instantaneous comparison shopping. You can count me among the millions of people who fall into this category. I don’t do it regularly, but I’ve scouted out everything from televisions to books before purchasing at Amazon.com for less.

And “showrooming” is taking a serious toll on the big box stores who are not well positioned to adapt. They’ve got a ton of overhead costs, including sales staff who take the time to answer questions and educate consumers only to have them go online and buy elsewhere. They’re also required to collect sales tax, unlike internet retailers.

Sure, they’re trying to evolve, but it is a seriously uphill battle. Target, for example, is pushing suppliers to create custom products specifically for their stores. Seems like a good idea, but if the products are just “different” instead of markedly better, consumers will simply comparison shop elsewhere for big-ticket items.

Perhaps the hardest hit company has been Best Buy, which some have called “Amazon’s Showroom.” Reports say they lost $1.2 billion last year by discounting prices. They also just announced the closing of 50 stores and significant layoffs. So what’s the solution? If I had the answer, I would’ve thrown my hat in the ring for the company’s CEO position that opened up on Tuesday.

But here’s what I do know. They can’t compete on price alone. They need a differentiator that is not only relevant to consumers, but cannot be offered online. The internet retailers are crushing them because the stores don’t offer enough extra value. The brick and mortar stores should find a way to make shopping with them more of a premium experience — one that justifies the extra spend. That means more than a polite and knowledgeable sales staff. It means re-orienting their focus around support after the purchase. And it likely means a smaller footprint than we’re used to seeing. What they can afford to do will be up to the bean counters, but here are some thoughts:

  • Instant delivery and installation (free and quicker than their online counterparts can offer)
  • Free, in-store tutorials on how to get the most out of your purchase
  • Stellar, on-site repairs and tech support
  • Exclusive membership for loyal in-store shoppers (providing much more than traditional rewards programs)
  • Extend warranties (even if it’s for a short period) for products purchased in store

Best Buy plans to test a new store concept called its “connected store,” which I’ve heard will mimic some of what Apple stores offer. I’m eager to see what they come up with. And I’m hoping they can transition quickly enough to save themselves.