Bricks-and-mortar retailers are installing a raft of online technologies to showcase their complete ranges and prevent consumers buying elsewhere after testing products in-store.

More consumers are making purchases via their smartphone

A new phrase has emerged in retail over the last year or so – ‘showrooming’, which involves customers using physical stores to check out a product but buying elsewhere, either online or with their mobile phone, because it’s cheaper or more convenient.

It’s proving an increasing headache for retailers as they fight to win sales – and one that technology itself is enabling as in-store Wi-Fi is rolled out.

But this is not a new phenomenon. A Dixons advertising campaign in 2009 encouraged shoppers to try out products at John Lewis but to buy online at Dixons, and there has long been rivalry between channels.

However, Chris Donnelly, global industry managing director for retail at Accenture, says the growth of mobile commerce over the last two years has made showrooming easier for consumers and a critical issue for retailers. “Showrooming is most popular among consumers purchasing big-ticket items and branded goods, where a like-for-like price comparison is possible,” he says. The problem also causes tensions between retailers’ own stores and internet businesses.

Embracing change

James Spalding, managing director of e-commerce provider e2x, which works with B&Q, says retailers have been trying to find a solution. “Some have tried selling products exclusively in-store, but this is a lazy idea that is more likely to lead to resentment by customers and goes completely against the multichannel approach they should be adopting,” he says.

Siobhán Géhin, associate partner at consultancy Kurt Salmon, says a recent Kurt Salmon and Prosper Corporation survey of 8,000 consumers revealed that 70% of consumers aged 25 to 54 with smartphones use them to comparison shop, up from 62% a year ago. She says: “Nordstrom, the US department store, was surprised that many younger customers were using its app while shopping in-store instead of approaching salespeople.

“Rather than fighting this, Nordstrom added Wi-Fi to its stores and is testing recharging stations and providing clusters of iPads for shopper use.”

Phillip Adcock, founder of research agency Shopping Behaviour Xplained, says retailers need to understand how the shopper thinks to realise that with the right retail proposition the store can still win the sale. “The human brain always disproportionately favours immediate gain over deferred loss. So retailers can dramatically increase sales by telling shoppers the item is in stock and available to take away now,” he says.

BT Expedite chief executive Josh Pert agrees. He says retailers will still have the upper hand if price comparison is driving showrooming. “You have the opportunity to get to the customer first, present them with better information and fulfil the product on the spot. This is a very powerful advantage if you can respond quickly, making sure your staff have the right information in their hands to engage the customer,” he says.

Shopper engagement

Rolling out in-store Wi-Fi is important, not only for customers but for store staff, who need access to information. Lee Gill, senior vice-president of retail strategy at supply chain software specialist JDA, says retailers need to fully engage with the shopper. “That will only be achieved by empowering the sales associate by giving them access to real-time information possibly through a tablet device,” he says.

Fashion retailer Reiss is 90% through the roll out of iPads in its stores, with 57 now live in the UK, supported by a Wi-Fi network from Vodat International. Like fashion giant Aurora, which has led the way in using in-store tablets, it allows customers to view its full collection and order products not available in store. Additionally, using Wi-Fi in store means the store can easily claim the sale as its own.

Reiss business systems manager Alex Dixon says the project has exceeded expectations – driving an uplift in sales that is likely to deliver a return on investment in less than three months.

“We have seen this as an absolute must to bridge the gap between channels. There should be no boundaries for our customers when they come into one of our stores,” he says.

But as well as opening up the product range, such initiatives allow retailers to access customer history and product information that allows them to provide a personalised shopping experience more likely to result in a sale. “For retailers to profit in this showrooming environment, it’s more important than ever for stores to create a personalised experience for their customers,” according to Craig Sears-Black, managing director of Manhattan Associates.

Single customer view

A single view of each customer also enables retailers to target shoppers with offers that persuade them to buy while in store, says Cindy Etsell, head of retail at SAS UK and Ireland.

 “Understanding who your customers are, what they buy and how, their age, gender and other key demographics is crucial and can give retailers a clear strategy on how to deal with challenges such as showrooming,” she says.

However, Gill says sales staff should have freedom to bargain too. “The associate should be prepared to negotiate on price, having access to real-time comparative price information and business rules that define the amount of discount that can be offered, based on the customer’s ‘value’ to the retailer,” he says. “This will encourage customers to buy rather than just try.”

Maplin Electronics agreed a roll out of in-store Wi-Fi earlier this year with The Cloud. The deal will allow it to promote a range of tailored products and promotions via a branded Wi-Fi landing page, personalised according to shoppers’ browsing histories, as well as allow customers to read product reviews or discuss purchases on social media. Retailers including John Lewis are also using kiosks and in-store technology to help staff sell.

Tailored communications

Ian Smith, senior consultant with Kurt Salmon, says retailers should encourage customers to challenge prices and should more accurately track customers too. Asking for login details when the Wi-Fi is used will enable the retailer to track subsequent purchasing and browsing data. “If they do not buy anything, retailers can then contact them with tailored marketing communications based on their previous online or in-store history,” he adds.

Wi-Fi based ‘presence zone’ technologies can also help persuade shoppers to buy in store. They identify a shopper’s presence in the shop, according to James Lovell, a European smarter commerce solutions consultant for IBM. “Coupled with location-based services linked with smartphone devices, they give retailers the ability to identify customers individually as soon as they enter the store and then serve targeted marketing communications messages via their phone or on digital displays in-store,” he says.

Pert at BT Expedite says continuing improvements in location-based services allow incentives to be delivered to the customer while shopping, meaning a retailer’s message can be presented to them before they’ve even started comparing prices online.

But while technology can help, many experts believe that the best approach to combating showrooming is a simpler one that requires retailers go back to the basics of customer service. “Retailers need to make sure their employees are trained as sales people, not just clerks,” says Sears-Black.

As with many problems in the present retail environment, the solution needs to be multipronged and retailers need to be creative. But with the right approach, even difficult multichannel problems can be solved.   

iPads at Reiss

Reiss

Reiss

The roll out at Reiss was designed to enable customers to connect to the retailer’s website in store, enabling them to see Reiss’ full collection of products, and allowing the store to order stock not held in the shop. Staff also have access to Reiss’ retail intranet ‘Clothes Live’ allowing them to access planners and check availability.

Stores only have one iPad per site but Reiss business systems manager Alex Dixon says the retailer is considering introducing further devices and is looking at their use in changing rooms. “The changing rooms would be one area we might look at, so customers trying items on can see what other items are available to complete the look. Future plans include allowing customers onto our Wi-Fi network in a controlled manner and potentially streaming videos via the iPads,” he says.

The roll out at Reiss was designed to enable customers to connect to the retailer’s website in store, enabling them to see Reiss’ full collection of products, and allowing the store to order stock not held in the shop. Staff also have access to Reiss’ retail intranet ‘Clothes Live’ allowing them to access planners and check availability.

Stores only have one iPad per site but Reiss business systems manager Alex Dixon says the retailer is considering introducing further devices and is looking at their use in changing rooms. “The changing rooms would be one area we might look at, so customers trying items on can see what other items are available to complete the look. Future plans include allowing customers onto our Wi-Fi network in a controlled manner and potentially streaming videos via the iPads,” he says.