PAUL J. RICHARDS
Black Friday shoppers check out a Samsung I-Core 7 laptop on sale at the Fair Lakes Best Buy store in Fairfax, Va., in this Nov. 25, 2011, file photo. Retailers are fighting "showrooming," in which shoppers check out items in stores but then buy elsewhere online. Analysts like Best Buy’s store-within-a-store concept, which lets customers interact with products and ask questions of dedicated salespeople.
Retailers facing tenuous consumer sentiment this holiday shopping season are going on the offensive against “showrooming” — shoppers checking out merchandise in the store, then buying elsewhere online to save a few bucks.
“They’re trying to make the brick-and-mortar store more exciting for people to come in,” said Oliver Wintermantel, analyst at International Strategy & Investment, noting that retailers of all types are joining the effort. “It really is across the board,” he said.
In what’s become a year-round initiative, retailers sell related services — such as pet superstores offering grooming and boarding — or hold in-store events, like classes at sporting-goods chains on how to use hunting or camping gear. Wintermantel said retailers also are taking advantage of the same technology that facilitates showrooming in the first place, by sending location-based promotions to shoppers’ mobile devices.
Best Buy is even billing itself as “your ultimate holiday showroom” in its new marketing campaign, touting its price-matching guarantee and in-store pickup of online orders.
“It's probably going to be a little bit better year for Best Buy,” said R.J. Hottovy, a senior Morningstar analyst. “What we’ve seen the last couple of years has been a focus on price matching more than anything else.”
“They’ve been finding creative ways of bringing people into stores like promotional periods for hot products, discounts or trade-in programs,” Hottovy said.
Such tactics are probably not helping margins, “but it could help them retain the sale,” said Gian Fulgoni, chairman of comScore. Fulgoni said about 75 percent of the growth in e-commerce is coming at the expense of brick-and-mortar retailers.
Some retailers are getting the hang of meshing their online and in-store offerings for a single shopping experience, said Forrester Research analyst Sucharita Mulpuru. Customers can buy online and pick up their items in the store, or buy something in the store — sometimes something that’s out of stock on the shelves — and have it shipped to their homes. A new Deloitte survey found that 36 percent of shoppers will buy items online this holiday season that will be picked up in the store.
“Few have executed these efforts well, if at all — but retailers that have executed such programs well report great success,” Mulpuru wrote in a report earlier this year. “Furthermore, most of these sales are incremental. Companies like Macy’s and Nordstrom have taken those messages to heart and invested significantly in multichannel programs,” she said.
The trick for retailers is to get customers shopping on their own site rather than defecting to Amazon, which anticipates as much as a 25 percent jump in sales through the end of December, according to CNBC.
For this, analysts like Best Buy’s store-within-a-store concept, which lets customers interact with products from companies like Microsoft, Samsung and Apple, and ask questions of dedicated salespeople. “I think that’s helped a lot,” said Joseph Feldman, senior analyst at Telsey Advisory Group.
“They’ve stepped up the focus on employee service,” he said. After all, customers can’t ask a brown box how to operate a gadget.
First published November 5 2013, 8:50 AM