All Indian metros turn into infernos during summer and are impossible to survive without air conditioners (ACs), and when an office AC breaks down, all hell breaks loose. Our AC happened to break down one hot summer day, so we called in our trusted repair guy, Mr. Parmar to fix it. While he was repairing the AC, he lamented to me that my generation does not bother with much research and buys electronic devices online based on who offers the lowest price.
We are no strangers to criticism as a generation and normally let such comments pass. But that day I asked what is so wrong about hunting for better offers online. It’s smart shopping, buying the same product for lesser price. He pointed out that, almost all ACs sold online have aluminum coils which makes them cheaper as compared to ACs sold in showrooms, most of which have copper coils; this makes them slightly more expensive. Copper coils are easier to maintain and clean; and are more durable than aluminum coils. They can also be repaired very easily and do not need replacement. Therefore, although an aluminum coil AC is cheaper, it ends up costing more than a copper coil AC in the long run. If Mr. Parmar was a salesman at an electrical appliance showroom, he would have successfully sold me a more expensive copper coil AC, taking on Showrooming head on.
An AC Nielsen survey conducted in 2015 in US concluded that 60% consumers browsed online before buying at a physical store. Only 51% followed the process the other way around.
A lot of retailers have figured out solutions to combat Showrooming. So, let us look at some quick and easy ways to combat Showrooming.
- Offer Better Value for Money
Due to lower overheads, online retailers can undercut prices of offline retailers. It’s not possible for every retailer to go the Best Buy way and match Amazon’s prices. However, there are other ways to add value. Experiential rewards can be used as incentives during festive season or tactically to convert a customer who’s found a product Rs.200 cheaper online while at the store. Experiential rewards like movie tickets, lunch, travel vouchers, etc., have a high perceived value and fit perfectly within the retailer’s budget rather than giving discounts. So, a retailer can incentivize a purchase of Rs.1000 with an experiential reward whose perceived value is Rs.1000.
- Omni-channel Presence
Adoption of an omni-channel play enables the offline retailer to not only get new customers, but also convert existing ones into frequent buyers. Brands like Godrej Nature’s Basket have expanded their reach by offering products on their own e-commerce platform – converting offline users into online shoppers, all at very low customer acquisition cost. Having a website or app levels the playing field and customers can avail offers, in-store pickups and free home deliveries. Also, the problem of being out of stock is alleviated, since an online inventory can be much larger. With low costs in launching an e-commerce project, and with various tools available for content and digital marketing to support the offline store – it only makes sense to apply this strategy.
- Membership and Loyalty Programs
If used the right way, a lot can be achieved with a suitable Loyalty program. Finding out what’s useful to your customers and then using relevant rewards and incentives at the right time consists a Loyalty program that works. It can induce existing customers to not only spend more, but also encourage them to keep coming back. For instance, if your customers are an active bunch of millennials, incentivizing them at different levels of purchase, accrued points or frequencies with experiences like couple movie tickets, dining vouchers, adventure activities can keep them coming back.
- Customer Service
As per Forrester Research, 61% of shoppers surveyed said that they still value interacting with store associates and asking them for advice. Physical stores have a major advantage over online players, that is – they can provide customers a real and intangible experience that cannot be replicated by online players. A couple of ways stores could enhance customer experience are:
a. Offer Expertise. Sales staff that is equipped with expert information, can keep a customer coming back, especially in case of consumer electronics, cosmetics, food, hardware, and so on.
b. Offer Complete Solution. Offering the complete solution and post purchase service is something that can help retail stores convert prospective customers even for a higher price tag.
- Location, Location, Location
Markets have come a full circle and a retail store’s location is important all over again. Location-based marketing using geo-fencing, beacons and location-aware technologies help retailers reach their customers at the perfect time and place. 313 Somerset, a mall in Singapore was the first launch beacon-based mobile advertising. Users of Tring313 app could get coupons and sale alerts when they entered a 500-meter radius from the mall. The retailers reported 46% sales conversion due to the app.
Also, location-based marketing doesn’t have to be limited to sending offers. In Brazil, Nivea used a Bluetooth Proximity Beacon embedded in magazine ads, which parents could tear out in the form of a wrist-bands for their children. A smartphone app was used to track how far the children walked away from parents in places like beaches. Parents received an alert when the child walked out of a predefined perimeter. Nivea is now seen as not just the maker of creams to be used in sunny locations, but as a brand which cares.
If you are a retailer, Showrooming doesn’t necessarily have to be viewed as a threat. There are several solutions a smart retailer can adopt (in addition to the ones listed here) which could turn challenges into opportunities. Online retailers are also figuring out ways to combat Webrooming on one hand and on the other, opening brick and mortar stores to sustain. In conclusion, the business that can adapt fast and provide more value will survive whether they are online or offline. Do you have a darker prediction for the retail sector going forward, or do think that things will just be done differently? We’re eager to hear your thoughts.