Showrooming Markets

Showrooming is a trend more and more retailers recognize. Most online retailers piggyback on consumers trying on merchandise in physical stores, only to search for the best price and then purchase the product online.

Although hard to fight, the trend might be actually beneficial for larger retailers that need to attract customers to their online stores and can afford price matching.

On one hand we have large retailers fighting to keep customers purchasing. Walmart for example, rolled out Savings Catcher in 2014 and now its pushing it across US. The tool allows users to compare prices on Walmart.com to those of its comepetitors. Any difference found is stored as store credit for the customer.

The likes of Amazon are trying to allow showroomers even more space to find the best prices online. Its recently launched Fire Phone has a built in mechanism that allows users to scan products (not just barcodes) and find the best deals online.

Showrooming around the world
Showrooming around the world

In this battle the ones that suffer most are the small retailers or retailers unadapted to omnichannel operations. This companies cannot afford customers trying on merchandise only to buy it some place else, while still keeping the shop open. It’s not just a passing thing either. 33% of customers worldwide report being showroomers, with 21% using their mobile phones to do it ( Source ).

Even more, markets that are earlier adopters of this trend seem to be even more into it. 71% of shoppers in developed Asia, 60% in North America and 54% of European consumers report showrooming practices.

As probably small to medium retailers won’t just roll over and disappear a new type of partner will probably appear in the near future

Showrooming markets as outsourced product display

Traditionally, retailers evolved to outsource everything that didn’t make sense handling within the company. Things as manufacturing or logistics are now commonly outsourced to reliable partners, companies that handle more than one retailers.

It’s not just manufacturing or logistics. If you think about it, most retailers outsource vital areas of their operations. Financial reporting, IT services and sometimes even human resources are outsourced to partners providing reliable service and economies of scale. Globalization has helped push this trend as companies can find cheaper, reliable work offshore.

But so far stores were pretty much left untouched. Retailers still feel the need to control and manage stores as they see fit, even if sometimes it is not the most economically reliable thing to do. As showrooming decreases the need and efficiency for the self-managed store, as online retail becomes increasingly popular and outsourcing gains traction in the future product display in store will also be outsourced.

[Article extracted from “Understanding Omnichannel Retail”. Download the report here.]

Millennials as well as older demographics still favor B&M stores. They also like to see and touch the products they are buying. But they don’t always buy from the shop displaying the product. There is a solution that will probably become commonplace in the future, especially for small and medium retailers.

As retailers need to optimize their pricing in order to compete to only pure plays and online retailers need to establish a physical presence, a new type of company will emerge. The showrooming market.

The showrooming market is a place that aims to provide customers with extended information on the product, as well as the full product experience. The concept is already available online, with markets such as Ebay providing product display space for smaller retailers, as well as online pure plays willing to try an additional sales channel.

The primary function for the showrooming market is product display, rather than sale. Its revenue sources would be retailers paying and competing for shelf space, but generally paying less than they would displaying the products  on their on. Retailers, on the other hand, would benefit from an affordable B&M space, as well as a logistic point in product delivery, outsourced to companies that can do it better, due to economies of scale and process optimization.

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