Will 'showrooming' kill businesses?

[LA Guy]



LOL. Who "enters information into their smart phone?"
Bar code scanning, people. We have the technology.
Some people have already said it - this has been going on for a while, though this is the first I've heard the term "showrooming." Some businesses will die, others will adapt. There's no question service suffers. I'm all for maximizing value in the supply chain but the bottom line is that showrooms do create value by letting you touch and feel the merch. Some people want that service but don't want to pay for it, and their fate will eventually be that they can't have it at all. This bottom-line phenomenon, fueled by consumerism, fanned by cheap and easy access to information, leads to a lot of **** people say they don't like but actively drive anyways.
Baggage fees, food and beverage charges, and seat selection fees on airlines? Yeah, you asked for those things when you slavishly searched and searched for the cheapest fare.
Bullshit, trash-level home goods from places like Wal-Mart? Yeah, that too.
You'll note there's no such thing as a bookstore. There is such a thing as a coffee shop selling mochas at 95% profit margins with books in it, though.
You want help from a knowledgeable someone who actually knows where the books are, has read them, and can recommend others? Or whether or not that TV is compatible with a certain setup? Or how to use that camera, and which flash is best, and has it in stock?
These are businesses that adapted. You reap what you sow.
And people wonder why everyone who graduates with a BA ends up as a barista.

You seem to be bemoaning the good ol days. They were never here. We just put up with ****** service (see above). Airlines are a special exception, but we can get to that in another discussion.

Consumers won't put up with ****** service anymore. I think that's a good thing. I know good B&Ms that do not offer exclusive goods, but do well nonetheless. For example, a clothier should offer free alterations and expert measurements, and in some cases, perhaps even hand delivery (Nordstrom is famous for coming through in a pince when you are traveling and your luggage is lost). Our local appliance store offers same day delivery, free installation, and a price match guarantee. There are special things that a B&M store can offer that online merchants cannot. Like I said before, the day of being able to be moderately successful in business just buy phoning it in is gone. You have to be on your game and constantly adapting and innovating. It's really only a bad thing for lazy people.

 

[Find Finn]

On big ticket items maybe not, but on smaller items like books etc. it will surely even out especially here in europe and I just find it to be a huge waste of time.


I have an aunt who drives around to save money, she often drives 10k to save 2$, instead of walking out the door and 200m down the road and pay 2$ extra.

 

[LA Guy]



On big ticket items maybe not, but on smaller items like books etc. it will surely even out especially here in europe and I just find it to be a huge waste of time.
I have an aunt who drives around to save money, she often drives 10k to save 2$, instead of walking out the door and 200m down the road and pay 2$ extra.

You may consider it a waste of time, but whether it's worth the extra couple of minutes to save $5 is a judgement call, and many people seem to believe that their 5 minutes is worth $5 of savings.

Your aunt is practicing false economy. That's something else altogether.

 

[Find Finn]



Consumers won't put up with ****** service anymore. I think that's a good thing. I know good B&Ms that do not offer exclusive goods, but do well nonetheless. For example, a clothier should offer free alterations and expert measurements, and in some cases, perhaps even hand delivery (Nordstrom is famous for coming through in a pince when you are traveling and your luggage is lost). Our local appliance store offers same day delivery, free installation, and a price match guarantee. There are special things that a B&M store can offer that online merchants cannot. Like I said before, the day of being able to be moderately successful in business just buy phoning it in is gone. You have to be on your game and constantly adapting and innovating. It's really only a bad thing for lazy people.

That is why I love going to B&M stores.

You may consider it a waste of time, but whether it's worth the extra couple of minutes to save $5 is a judgement call, and many people seem to believe that their 5 minutes is worth $5 of savings.
Your aunt is practicing false economy. That's something else altogether.

5 minutes doesn't do it, if you make a designated trip to go look at an item.


Tell me about it it's marsupialed, but it's sort of the same thing when you think about it.

For example here in Copenhagen, it costs 5,80$ an hour to park down town and petrol is 1,80-2,50$ a liter, so if you have 10km each way, how much will you have saved in the end on a smaller item?

 

[zippyh]



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

Spoiler: Warning: Spoiler!

(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?

Is showrooming anything like copying/pasting an entire article from CNN?

 

[johanm]



Some people have already said it - this has been going on for a while, though this is the first I've heard the term "showrooming." Some businesses will die, others will adapt. There's no question service suffers. I'm all for maximizing value in the supply chain but the bottom line is that showrooms do create value by letting you touch and feel the merch. Some people want that service but don't want to pay for it, and their fate will eventually be that they can't have it at all. This bottom-line phenomenon, fueled by consumerism, fanned by cheap and easy access to information, leads to a lot of **** people say they don't like but actively drive anyways.

Do people really care about touching and feeling merch? I feel like I've done enough in person clothes, electronics, and home shopping that I have a good sense of a product from pictures, dimensions, and (most importantly) user reviews. Worst case scenario, I have to return it.

You want help from a knowledgeable someone who actually knows where the books are, has read them, and can recommend others? Or whether or not that TV is compatible with a certain setup? Or how to use that camera, and which flash is best, and has it in stock?

If I want "help from a knowledgeable someone" I will turn to a message board or other source of user reviews. Why would you want to rely on the opinion of one guy (who might not have much experience with the item besides seeing it for sale on a rack) when you can read the opinions of many people with user experience and no interest in making a sale?

 

[brad-t]

I think the key to success in b&m retail in the 21st century is going to be forming a culture around your shop and a relationship with your consumers. Kiya and SelfEdge has been mentioned a few times in this thread. As much as the exclusive stock is important, kiya has also succeeded in creating a culture around his store. The decor of shops is going to continue to become even more important as creating a 360 degree experience becomes essential. This also means utilizing social media and your own website to keep your product in the consumer's mind.

I think the comparison of book stores is just not really valid. People buying $100 t-shirts are not the same as people looking for deals on books. Clothing is also a much more visual and immediate experience.

 

[freddych]

I think the real issue is not "showrooming" but losing business to online retailers in general. I think there is very few situations where a person who plans on showrooming would buy from a B&M retailer if they could not "showroom." In this way, showrooming is just an excuse for retailers to do poorly. Yes it does happen, but my view is that the customer was never going to buy anyway.

Showrooming is a good way to sell customers impulse buy items or other smaller products. I'd argue that it is better that a customer visits a B&M store to showroom than the customer simply ordering from a website and never setting foot in the store. That traffic is good for business whether or not the customer ends up buying the item they came to the store to look at because of the opportunity to sell and the goodwill that is built from the visit (or bad will in the case they are treated rudely).

In order to compete with online retailers, B&M stores need to add some kind of value add that justifies paying higher prices. One of the benefits to shopping B&M is instant gratification, vs waiting 2 days for amazon prime shipping. They could also match some of the other convenience aspects that come with online ordering. For instance, I love that when I shop online, my receipts are emailed to me and are stored with the retailers so I don't have to hunt for a receipt to do a return. REI does this in the B&M setting. I find myself buying B&M from REI because of their awesome return policy and service, even where I can get the same product online for cheaper.

 

[pickpackpockpuck]



Is showrooming anything like copying/pasting an entire article from CNN?

I would say the better comparison is with a content aggregator such as the Huffington Post

 

[vladimir]

In many cases neither the online retailer nor the customer needs the brick-and-mortar store at all—they do their "show-rooming" at home. Warby-Parker is a good example. They'll send you five pairs of eyeglasses for you to try out for a week. Any retailer with a liberal return policy is effectively doing the same thing. You can order three sizes from LLBean and return the two that don't fit, or return all three if they're not what you expected. I don't find that particularly convenient, but if I lived in the suburbs somewhere it might be a more appealing option.

 

[ballmouse]

Showrooming often involves the customer benefiting by seeing the product in-person. For example, you can try on multiple pairs of shoes in a B&M store, and then purchase it online from another retailer. What the B&M store is upset with is that the customer is using its resources without actually purchasing anything.

Of course, the bigger problem for these B&M stores is probably not showrooming, but online retailers, as many other posters have mentioned.

How is this "showrooming" any different than shopping around, i.e., comparison shopping, in days gone by? Now I have a greater selection of potential retailers, and those B&M locations that don't have an online presence... gotta wonder what they're thinking. I frequently purchase items from Frans Boone in the Netherlands - a B&M store more than 8000 km from my home. Long before the Internet a customer very often had to go without or at best "make do". Now the advantage is to the customer, were it ought to be.

 

[pickpackpockpuck]

Kinda old news, but Amazon is not going to make things any easier for B&M
http://www.nytimes.com/2012/05/08/business/amazon-plans-its-next-conquest-your-closet.html?_r=2

 

[Gus]



Kinda old news, but Amazon is not going to make things any easier for B&M
http://www.nytimes.com/2012/05/08/business/amazon-plans-its-next-conquest-your-closet.html?_r=2

Thanks for posting, I had missed this announcement by Amazon. With the amazing success and profits of Net-A Porter, Amazon, with their infrastructure sees a high margin opportunity.

Interesting....but without their massive discounts will Amazon be "cool" enough to draw the high-end consumer? I'm not sure they can do a Net-A-Porter/Mr Porter.

 

[LA Guy]



For example here in Copenhagen, it costs 5,80$ an hour to park down town and petrol is 1,80-2,50$ a liter, so if you have 10km each way, how much will you have saved in the end on a smaller item?

You will have saved exactly the difference between the B&M and the online price. For a lot of people, this is enough. I make no value judgements. I just observe consume behavior.

This is completely different from your aunt, who is actually losing money. The sentiment maybe the same, but that doesn't mean that the two cases are analogous.

 

[BLAUGRANA]

Thanks for posting, I had missed this announcement by Amazon. With the amazing success and profits of Net-A Porter, Amazon, with their infrastructure sees a high margin opportunity.
Interesting....but without their massive discounts will Amazon be "cool" enough to draw the high-end consumer? I'm not sure they can do a Net-A-Porter/Mr Porter.

I don't see how Amazon wouldn't be "cool enough". Stuff comes from a warehouse either way and if it's the same product at a lower price with the same shipping and return options then who really cares?