#retail and the rise of showrooming
The new year brought some fairly fundamental challenges for UK retail. The demise of Jessops, Blockbuster, Republic and HMV in a few weeks, combined with the sharpest fall in shopper numbers over the past nine months, has created a distinctly sombre mood within the industry.
More than ever, shoppers today use retail as a research mechanism. It gives them an opportunity to examine, touch and feel products prior to purchase. But they don't necessarily buy those products in-store.
This approach - where retailers carry the risk of leasing expensive premises, stocking goods and providing samples only to find customers then research and ultimately buy online - has become known as 'showrooming'.
There has been lots of discussion in the press and social media about showrooming being a key factor in the collapse of numerous major stockists in recent months. So what can retailers do to stem the flow of traffic away from the high street, and create the best possible customer experience?
It's important to note the differences between brand owners and pure retailers. For the brand holder, it's fine if people buy online; the in-store experience complements their web offer and allows customers to experience products prior to purchase.
So brands such as Apple and Sony, for example, can tolerate the 'retail as a showroom' option because it's another means of advertising and product display for them. And for luxury brands such as Louis Vuitton, if someone buys your goods online slightly cheaper, you will still ultimately make a sale.
For retails that don't own the brands they stock, though, showrooming presents a much greater risk. HMV, Jessops and Comet are three examples of stores that stocked other companies' brands, but did not own any themselves. The products on offer reinforced this risk; it's much less important for shoppers to look at and touch a DVD, tripod or toaster prior to purchase than might be expected in other categories.
If a retailer doesn't own the brands they stock, it's all down to offering a better customer experience. Ultimately price is a challenge for many (try competing with Amazon without publisher subsidies, for example); and inevitably there is some trading on the hope that in-store advice and care will be enough to overcome buyer scepticism and trigger conversion. This isn't always the case though. In the US, Best Buy has taken a bold stance by price-matching 19 major online competitors and local stores, for example - a very different picture to its UK experience. It will be interesting to see if any UK-based retailers follow suit.
Location is another element that retailers can control. Historically, a major retailer would need 250 stores to cover the UK; now 75-100 stores in the best locations will suffice.
Shops need to be in the places that people go to, so retailers are ultimately paying for footfall and need to get as many people through the door as possible.
Shops need to be in the places that people go to, so retailers are ultimately paying for footfall and need to get as many people through the door as possible. It's about having the right amount of products, in the right place - and presenting those products as beautifully as possible to tell shoppers a compelling story.
Product messaging is also key. In-store, retailers can highlight specific features and benefits that they want to manage. In some respects, this is a major benefit above online retailers, because shops can use sensory techniques to full effect. Window displays, store layout, product positioning, posters, models and music can all be used to create an ambience beyond most online retail experiences.
Technology also has a vital part to play in creating immersive experiences. Through QR codes, augmented reality triggers on walls and printed materials, virtual changing rooms, game play zones, social media interactions and so on - or changing the goalposts completely and creating quiet, meditative spaces such as the Selfridges 'No Noise' campaign - retailers can make a bold statement and inspire shoppers in ways that go beyond most web offerings.
And of course, shops can potentially offer the ultimate benefit (for many shoppers) of human interaction. That's an opportunity to reinforce key messages or tell a story in a different way; and it can trigger advice, respect and connection. Delivered consistently and correctly, this relationship-builing is a powerful trigger of brand loyalty and trust.
Often, people will use the store environment to touch and feel products, but not necesarily buy them in the same location. This means shops need to offer a wider range of purchase options - as well as more experiential engagement techniques - to capture buyer attention and convert sales.
Giving shoppers the maximum number of purchase and delivery options is one way that retailers can compete with their online counterparts. Often there's no reason why a store can't offer a wide range of buying options, for example:
- Buy online and have goods delivered at home/work
- Buy online and collect in-store (the 'click and collect' model)
- Buy in-store and have goods delivered at home/work
- Buy in-store and collect in-store.
Again, technology could well be the retailers friend in supporting buying options. The rising popularity of contactless cards, like the Barclaycard PayTag, can make purchases quicker and easier for shoppers. Combined with fast service, strong storytelling and positive customer experiences, retailers can maximise their potential.
As the Argos experience shows, responding to shopper needs has obvious benefits. After introducing a click-and-collect model, the retailer reported 2.7 per cent like-for-like growth in autumn 2012. The 'Check and Reserve' order service also grew from 28 per cent to 31 per cent within a four-month period. Enter, the first multi-channel retailer in Russia, also used click-and-collect successfully to increase store footfall, as our case study shows.