While large retailers had feared their most loyal customers would decamp to online stores in search of better offers, many shoppers have refrained from engaging in showrooming.
The trend of showrooming has not emerged to be as popular as experts predicted, delaying the demise of closed malls and shopping centers. Showrooming occurs when consumers compare prices from their smartphones while they are shopping at a store and instead purchase items from an online retailer; however, the convenience and strategy of that practice has not pushed the phenomenon to take off.
Showrooming has developed as "more of a scary concept than a hard and impactful reality," because many consumers research the products and prices before they head to the stores, said Douglas Baldasare, CEO of ChargeItSpot, the Philadelphia-based provider of secure cell phone charging stations for retail stores. Once people are already shopping at a store, they tend to commit more and decide that the "retailer's price is within their target," he said.
Though brick-and-mortar stores remain popular with shoppers, the concept of showrooming gaining some traction. While 72.7% of consumers went to a store to make their purchase, 90% said they utilize their smartphones with 53.8% comparing prices, 48.4% searching for product information and 42% reading online reviews, according to a survey of 12,000 consumers of their shopping habit over a three-month period conducted by SessionM, a Boston-based customer relationship management and mobile engagement platform.
When showrooming first started gaining some popularity, consumers were more focused on prices, said Patrick Reynolds, vice president of marketing for SessionM.
"It was a way to go into a retail location, see something you like and then search via a mobile to see if it could be gotten cheaper elsewhere," he said. "With stores now featuring their own apps which are often much richer in details than on-site locations about country of origin, customer reviews and pricing history, coupled with the convenience of online and mobile ordering, there's less impetus to make certain retail 'reconnaissance' visits."
Why Millennials Love Showrooming
While showrooming may not be popular among all generations, Millennials are avid fans of the concept, because they are more accustomed to using their smartphones while shopping.
"Contrary to popular conceptions, showrooming is very popular among consumers today, particularly Millennials where smartphones are such an ingrained part of the social fabric," said Dan Bachrach, a management professor at the University of Alabama. "Although this is not necessarily obvious to the casual observer, literally billions of dollars are lost every year to showrooming, and this is putting brick and mortar retailers out of business every day."
Price Points Are a Factor
Customers are more likely to showroom for more expensive items such as electronics than clothing. They are typically seeking a "significant" difference, so if the consumer can save 10% to 15% on a $10 purchase, this probably will not lead to showrooming, because the "absolute dollar value of the savings isn't offset by having to wait for the product to be delivered, even if it is only a day or two," said Bachrach. The same percentage of savings for a $1,000 purchase will likely be "worth the wait," he said.
"Flat screens are going to be a much more popular category than Nikes because of the convenience factor," Bachrach said.
Research indicates that there needs to be a minimum of an 8% to 10% price difference to cause an in-store shopper to defect, said David Moon, a vice present of strategic consulting for Bazaarvoice, an Austin, Texas-based brand and shopping analytics company. A lack of consumer reviews of a product means "a significant portion of in-store sales of the item were at risk," according to a leading retailer, he said.
Clothing is a harder sell for shoppers because fewer companies offer reasonable shipping for returns and the purchases are more personal, said Zach Ware, managing partner at VTF Capital, a Las Vegas-based VC firm focused on commerce and retail investments.
"Price isn't always the biggest issue," he said. "Shoppers don't always know what to buy. The role of the stores should be to help them."
Why Reverse Showrooming is Catching On
When showrooming first emerged, it sent a "shockwave of fear through the brick-and-mortar retailing world with some analysts going so far as to predict the impending doom of the physical stores," said Moon.
Instead, studies have proven that reverse showrooming or web rooming is far more prevalent. A recent study conducted by Bazaarvoice showed that 64% of all purchases researched online first and 45% to 55% of in-store buyers read online reviews before buying electronics such as flatscreen TVs.
More shoppers engage in reverse showrooming where they research the products online first, but opt to buy the item in a physical store.
"The physical store is not going away anytime soon, because consumers still have a strong preference to see, touch, and feel the product before purchasing or the faster gratification of in-store purchase has not yet been supplanted by truly disruptive delivery models," he said.
Retailers are attempting to reverse the trend of showrooming and brick and mortar companies have fought back by offering to match prices, said Neeraj Arora, a marketing professor at the Wisconsin School of Business at the University of Wisconsin-Madison.
Consumers often shy away from online retailers with poor ratings and reviews and instead will choose a company they are familiar with and trust, he said.
"Consumers also take into consideration which retailer is offering the deal," said Arora. "The retailer ratings on price comparison sites are another vital piece of information that leads shoppers to determine how attractive a price is. If they see poor retailer ratings associated with low prices, they may question the legitimacy of that price."
Retailers now have a larger challenge because consumers have higher expectations.
"Now that the consumer has committed to engaging in store, it better be a conducive environment for them to convert and buy," Baldasare said. "The consumer's physical presence in the store is much more of an investment in time and attention than them simply landing on an ecommerce page and represents a much greater opportunity to convert the interaction to a sale."