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Fighting the web with the web
Retail chains know smartphone-toting consumers use stores as showrooms. Rather than fight the trend, many seek to turn the web to their advantage.
Topics: Amazon.com, bar code, Best Buy Co. Inc., e-commerce, Ems, iPads, June 2012 Magazine, m-commerce, Mobile, mobile commerce, Moosejaw, Online shopping, PayPal, Pew Research Center, Retail Systems Research LLC, Sears, Sears Holdings Corp., Shopkick, showrooming, smartphone, Target Corp., Toys 'R' Us Inc., Wi-Fi
Showrooming has become the new dirty word for executives at retail chains. It refers to the practice of consumers going into bricks-and-mortar stores to examine, touch and try on products and then—often after checking their smartphones to find the best price—buying the product online.
Target Corp. brought the issue into the open in January when it sent a letter to major suppliers asking for help in combating the showrooming phenomenon. While recognizing that consumers will always seek the best price, the letter from Target president and CEO Gregg Steinhafel and executive vice president of merchandising Kathee Tesija went on to say, "What we aren't willing to do is let online-only retailers use our bricks-and-mortar stores as a showroom for their products and undercut our prices."
The Target executives asked suppliers to provide Target with reduced prices and exclusive goods, so that consumers would not be able to find the same product at a lower price on the web. The Target letter did not mention Amazon.com Inc. by name. But the Target executives were surely aware of the furor Amazon caused a month earlier when it encouraged consumers to use its free Price Check mobile app by offering an additional $5 off the Amazon price after a shopper uses the app to scan a product's bar code, presumably in a store.
That kind of in-store price checking on a smartphone seems sure to increase, as more consumers buy web-enabled mobile phones. In February, 46% of U.S. adults owned smartphones, an increase of 11 percentage points from May 2011, just nine months earlier, according to the Pew Research Center's Internet & American Life Project. And they're using those phones to shop: 40% of smartphone and tablet owners say they use their devices to check prices while in stores and 36% use them to read product reviews, according to a survey released this year by Prosper Mobile Insights, a mobile commerce technology firm.
How can bricks-and-mortar stores compete when consumers can instantly see the lowest prices online? Several are finding ways to turn the Internet to their advantage. They include big retail chains that are equipping store employees with web-enabled devices that let them locate and sell the retailer's full range of products, and some smaller retailers taking advantage of mobile marketing programs to introduce themselves to shoppers who live near their stores but may never have heard of them.
An example of a big retail chain embracing the web is Sears Holdings Corp., which last fall began offering free Wi-Fi in some of its stores, and equipped some employees with iPad and iPod Touch devices. Associates are able to help customers check available inventory, order products online, and access product information and videos, Sears says.
In the time since, Sears says the program has worked well, though it would not share any data about how the innovations have impacted sales. "Rather than waiting for access to a computer, associates are able to look things up on the spot, making their time—and customers' time—much more efficient," says Deidra Merriwether, senior vice president and president, retail services.
While retail chains offering free Wi-Fi in stores may appear counterintuitive, retailers can use it to their advantage, says Nikki Baird, managing partner at research and advisory firm Retail Systems Research LLC. Once a consumer selects a retailer's Wi-Fi network, the network can direct the browser on the consumer's smartphone to automatically load the retailer's mobile commerce site, reinforcing the store's brand, she says. And consumers may see the free Wi-Fi connection as a goodwill gesture at a time when mobile service providers are imposing more restrictions on the amount of data subscribers can download.
Merriwether says giving customers access to the Internet increases their confidence to buy. "By offering free Wi-Fi, customers can also use their smartphones or web-enabled devices to surf the web, shop online at Sears.com or compare prices before they purchase to make sure they are getting the right product at the best price," she says.
Employees with iPads
Another retail chain that's recognized and responded to the change in shopper behavior is New Moosejaw LLC's Moosejaw Mountaineering brand, which sells outdoor gear and apparel. "Bricks-and-mortar retailers up until the smartphone were somewhat insulated from the price transparency we see online," says Eoin Comerford, CEO. "That barrier has broken down."
In response, when Moosejaw opened a store in Natick, Mass., in March 2012, the retailer equipped its staff with iPads. Without retreating to a fixed terminal, an employee can stand in the aisle alongside a customer and use the iPad to check warehouse stock, find the desired item and offer to ship it to the consumer's home, Comerford says.
Moosejaw also can use the device to check competitive pricing if the consumer says the same product is available elsewhere for less and wants Moosejaw to match the price, which Moosejaw will do. As long as the customer can show proof of the product and its price at a competitor, in store or online, Moosejaw will match it. Not only does the customer get the price match, but Moosejaw will add 1,000 points to the customer's Moosejaw Rewards Points account on products of more than $100. "We want to engage with our customers in a deeper way," Comerford says.
Another outdoor gear retailer, Eastern Mountain Sports Inc., also is putting iPads into the hands of its employees in its 68 stores. The iPads help store associates use the information available on the Internet to help customers find the right products, says Scott Barrett, vice president of e-commerce. For example, a consumer may want a fleece jacket in a color that is not available in the store she's in. A store associate can order it for her via the iPad and have it shipped free to the customer's residence, Barrett says.