It’s time to talk about a new business approach that’s becoming increasingly popular: showrooming in retail.
As we approach the end of this challenging year, it’s time to reflect upon the latest trends in business-to-client organizations. The retail and e-commerce industries had to overcome many hurdles, such as the shipping crisis and the lockdowns. But now they need to address another issue: the novel consumer behaviors.
It goes without saying that businesses need to adapt to these new tendencies and learn how to approach clients in a way that makes sense for them. Hence, this new reality for customers should bring about a new strategy for companies.
The recent trends in consumer behavior
The health crisis caused by COVID-19 has significantly influenced consumer behaviors. McKinsey reported that in 2020 “75% of US consumers have tried a new shopping behavior, and most intend to continue it beyond the crisis”.
Because of the lifestyle changes people had to adopt (especially quarantining and social distancing), their spending habits have shifted towards digital consumption. As a consequence, online shopping is more popular than ever before. Apart from that, online shopping is considered to be more convenient, time-saving, and cost-effective than buying in-store. This is a potential challenge for brands that don’t have a strong online presence, based on intuitive design and usability.
Another effect caused by the pandemic is people’s tendency to consume more sustainably. This often translates to choosing to shop locally rather than from established international companies. Hence, small businesses are presented with a great opportunity to increase their brand awareness and brand loyalty. This is especially important as we see a substantial decline in brand loyalty – McKinsey found that “73% of consumers who had tried a different brand said they would continue to seek out new brands in the future”.
All these factors play a considerable role in the changing attitudes towards brick-and-mortar stores. A more prominent tendency for consumers is to start their journey with online research, followed by going in-store to see or test the products, and then placing an online order. This means that showrooming needs to be considered in the retail industry because in many cases physical stores are no longer selling points.
But what is a showroom?
It is a physical touchpoint that allows potential customers to examine and try merchandise in person before the final purchase takes place online. People are allowed to test the products and get to know them better before committing to any purchase. Some showrooms are designed in a more interactive manner, focusing on creating an immersive experience. These are called concept stores and are aimed at providing the customer with a unique brand experience rather than just product testing.
A great example is IKEA’s initiative in Shanghai and Vienna. The company created two showrooms where customers are expected to engage in activities other than shopping. They can hang out with friends in the cozy theater-like room, or in the rooftop cafe. They can also visit the “Maker’s Hub” where staff members help customers repair old products and build new objects. Customers are encouraged to buy smaller items, while the larger ones can be ordered online through QR scanning.
Replacing the standard retail merchandising with showrooming was already a clear tendency even before the pandemic. But it was certainly accentuated by the recent trends in consumer behavior.
Now let’s dive into more detail and see what advantages and drawbacks this brings.
Reasons for practicing showrooming in retail
No more out-of-stocks
First of all, we’ll discuss insufficient stocks. In a franchise environment, especially in the apparel industry, it’s a common issue for certain product varieties to run out. This creates customer dissatisfaction because the demand cannot be fulfilled. But when your customers’ orders are pulled from only one location, there is a higher chance that their needs will be met.
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No need for large premises
Another benefit of showrooms is reducing large inventory commitments. There is no longer the need for large storage facilities because the physical store isn’t a selling point anymore. This helps reduce costs for rent (especially in expensive urban areas), utilities, and shipping. On top of that, it can also help you minimize the risk of inventory theft.
More focus on customer support
The third advantage to take into consideration concerns the employees. With less time spent handling and arranging products, salespeople can dedicate more time towards customers. As a result, both clients and employees will be more satisfied. Firstly, clients will receive better service and aid. So they will be more likely to return and/or to recommend the business to others. At the same time, this may result in lower employee turnover.
What disadvantages to keep in mind
Additional steps in the buyer’s journey
There are, of course, certain categories of consumers who might not be satisfied with this kind of approach. Seniors, for example, are used to the traditional way of consumption. For them, the shopping experience mostly happens in only one channel: they enter a store to look for what they need, ask salespeople for additional information and decide if they’ll make the purchase or not. Telling them to make the purchase online means introducing more steps in the process. This might complicate things and discourage them from considering your brand further on.
Not all people can place online orders
At the same time, there are people who don’t possess the necessary digital skills to place an online order. Or maybe they don’t own the appropriate devices for this (smartphone, computer, tablet, etc.). Because they need help in this respect, the employees working on the premises could take care of this for them. However, this requires more time than normal client-salesperson interactions and it may prevent other potential customers from getting the support they need.
Physical touchpoints are still very relevant
As technology progresses, websites start to offer more immersive experiences. But people still want to browse through physical stores in order to see, touch, and try out the products. Sensory stimulation is very important to consumers so it’s more likely for them to purchase products that they experienced firsthand.
Moreover, it was proven time and time again that high quality and in-person customer service increases customer satisfaction and sales. So it goes without saying that maintaining direct interaction between clients and salespeople should be a priority for most businesses.
It’s difficult for marketers to determine if the new consumption habits will stick for the long term. As things start to become less uncertain for some countries and restrictions are lifted, people are eager to revive parts of their previous lifestyles. So this might bring back pre-pandemic consumer behaviors.
These are the main takeaways
Companies that want to stay relevant need to understand that nowadays retail is less about selling and more about awareness and education. At the same time, online interaction should only be a part of the customer experience.
Brands should also understand their customers’ habits and build a closer relationship with them. The latter can be achieved through presenting the merchandise in unique and experiential ways. So some businesses might resort to showrooming to supplement their retail practices.
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Ștefania Bulgaru is a Digital Marketer for Megaventory, the online inventory management system that can help medium-sized companies synchronize stock over multiple stores. She believes that good communication can solve almost any problem and she likes to stay up to date with the latest digital marketing technologies.