This article is by Karl Heiselman, CEO, Wolff Olins.
(Photo credit: Wikipedia)
Make no mistake, showrooming is crushing brick and mortar– increasingly pushing in-store sales online, where they’re almost always inevitably cheaper. With the online retail spend growing by 16 percent last year, and retailers like Best Buy and recently Target creating Amazon-price-matching policies, there’s no denying the trend.
While few retailers can actually beat Amazon on price, choice and convenience, there are other ways they can compete. This moment of change presents five big opportunities for brick-and-mortar stores to embrace new technologies and consumer behaviors to stop losing too much to showrooming.
1. Bring the best of online shopping into the store.
The growth of online shopping has a lot to do with two ideas: convenience and access. Look to the internet to see how some of the pain of in-store shopping can be removed:
· The recent partnership of Jamba Juice and PayPal allows customers to place an order, select a pick-up time, and pay in advance via a mobile PayPal app.
· Walmart, which has seen as much as 50% of its shoppers turning to Amazon, versus 25% six years ago, recently began offering pay online and pick-up services. Since the rollout of these services, over half of Walmart.com sales are picked up from stores. The Container Store has implemented a similar program and has found that with the new pick-up system, customers are buying more online than they did with standard in-store purchases.
Where else is there to learn? Think about adapting Amazon Prime’s "premium club" experience, which builds loyalty by providing even more convenience for your best customers.
2. Use your space as a magnet.
Be in the experience business, not the transaction business. An interesting observation – retailers focused on children were way ahead of the curve on this. Case in point: American Girl Stores, Build-a-Bear Workshops, FAO Schwarz. What all of these brands have in common is an experience-based, engaging offline strategy to get customers in stores and keep them coming back.
Adults need to escape and interact too. And innovations in technology and gaming dynamics afford a ton of opportunity for retailers to turn their spaces into better experiences. So think of your physical store as "experience HQ"-- the ultimate expression of your brand’s offer. Imagine an ecosystem where people can touch/feel, play, try on and try out.
· Adidas took "window shopping" to a whole new level this fall when they teamed up with the agency TBWA/Helsinki to turn their storefront in Nuremberg, Germany into a giant touchscreen window. Passers-by could flip through looks and clothes in detail. Customers loved it and they were widely praised for thinking beyond the QR code.
· Burton’s NYC store takes you to the mountain…in SoHo. The store, modeled after a mountain lodge, has a chilled testing room (15 degrees Fahrenheit) where you can don gear in mountain conditions. The store is as much (if not more) about the mountain lifestyle than the product that Burton sells.
3. Don’t be a commodity.
Another way to beat showrooming is to make sure your products and services simply can’t be found anywhere else. Creating additional layers of value and utility that can "lock" customers into your brand means you won’t be Amazoned.
· Look to Target’s “up & up” line of everyday products, which transformed a dull yet necessary retail experience into an energetic and memorable one. Or their limited-edition Missoni-Target collaboration, which united customers with in-store pandemonium, as they vied to be the first to own the special run of product. (The Target website actually crashed from all the traffic, affirming that a trip to the store was worth it).
· The UK retailer John Lewis has more than 30 department stores across the UK, but shoppers get a unique experience with every visit. In store, employees show customers how to fit in car seats, how to fluff pillows, and other things you could never do online. They think of their store as an offering in itself, by packaging up the "intangibles" into real service offerings.
4. Add an editorial layer.
By 2020, the simple reality is that every brand will be a media brand. Retailers are in a special place to seize the overlap between content that informs their customers about their products, content that educates them in its use or in the things they can do, and content that entertains them around what their brand can do.
· Imagine, for example, if Best Buy bought CNET.com and made it super simple for customers to purchase products via Best Buy. Added content, reviews, and community would build in usefulness and loyalty to customers’ experiences of the Best Buy brand.
But brands also need to capitalize on being editors of merchandise. Not just being editorial, per se. One of the blessings of Amazon (its infinite selection of options) is also a curse. To some customers, infinity can be empowering. But to many, it makes online shopping overwhelming, confusing and actually more time-consuming--sometimes paralyzing. Stores are by nature limited--if nothing else by their physical space.
· In a time-crunched world of filter failure, retail brands can (and should) serve as trusted, useful filters--especially for categories that are less high-interest or more difficult to navigate online. As a consumer, you don't want to waste your time researching and reviewing 100+ bathtub cleaners on Amazon. You want to show up to Target and trust that you’ll find what you need out of 5 to 10 options for a fair price.
5. Empower your people.
Lastly, but perhaps most important, make sure your brand and your people are motivated by a clear sense of purpose. Hire people aligned to your brand’s mission and encourage them by giving them the tools and autonomy they need to provide the best experience to your customers.
· REI’s workplace culture is founded upon employees' autonomy, empowerment, and a mutually shared passion for the outdoors. The industry takes note; REI was recently named No. 1 on a list of companies with the happiest employees.
· Costco is a champion example of focusing on employee happiness. On average, Costco employees earn twice that of Walmart employees. As a result, they see a low rate of employees leaving and a better prepared staff. Both stores compete on price, but Costco’s staffs are among the happiest employees in the business. Some Wall Street analysts have called Costco “too generous,” but customers aren’t complaining.
As with any major industry shift – in retail or otherwise – big moments of change are scary, but they can also present opportunities to be inventive for the future. Retailers who leverage learnings from an online world, use their space creatively, stay unique and editorial, and empower their employees to make better experience for their customers will have the edge in this new retail world.
