A Tiny Showrooming Tipping Point

Discussion
Aug 31, 2012

Forty-five percent of customers shopping in-store at bricks-and mortar-locations will walk out and complete their purchase online for a discount as low as 2.5 percent, according to a showrooming study from GroupM Next.

The number jumps to 60 percent of shoppers who will leave and purchase a product online for a savings of five percent. When discovering an online discount of 20 percent, only 13 percent stay and complete their purchase in store.

The study, "Showrooming & The Price Of Keeping Buyers In-Store," was conducted to take a close look at the influencing factors of showrooming and to identify the tipping point when the difference between an in-store and online price is large enough to lure shoppers out of stores.

The results were gleaned from a survey of 1,000 shoppers in the U.S. who were presented with multiple hypothetical showrooming scenarios for 10 products at varying price points spanning multiple retail categories.

In another measure, if the price difference in-store vs. online is more than $5.00, most customers will leave, the survey found. Overall, the study found that 44 percent of consumers use a mobile device to influence their purchase decision when shopping in-store.

"Showrooming is a label for a massive consumer behavior shift brought about by the ease of access to information on a mobile device," said GroupM Next CEO Chris Copeland, in a statement. "Brands that sit on either side, be it as the physical store or the online merchant, have multiple opportunities with this consumer change."

Unfortunately, the study underscored the challenges brick & mortar stores face against mobile-accessed discounts. For instance, customers who interacted with an associate were only 12.5 percent more likely to purchase in-store.

The profile of the shopper who can be most ‘swayed’ to stay and complete a purchase in-store appears to be the least active shopper – the older male, 55 percent of whom buy online 1x per month. The most active showroomers were identified as mobile females who are younger in age and make online purchases frequently.

The study did note that "must-have-now" items were less susceptible to showrooming after finding that headphones took the largest discount for shoppers to leave to store without buying.

Is in-store mobile phone access making shoppers even more price-conscious in brick & mortar stores? Does the GroupM Next study appear to overestimate or even underestimate the openness of shoppers to showrooming?

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13 Comments on "A Tiny Showrooming Tipping Point"

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Max Goldberg
BrainTrust

Shoppers are open to showrooming. And shoppers do use mobile devices to compare prices. But what percent of items bought, and what share of total dollars spent are purchased through showrooming? This study seems to indicate that the sky is falling for retailers. Which categories experienced the most and the least showrooming? There’s much more to learn than can be gleaned from this study.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
5 years 2 months ago
This is a very interesting study with some wonderful stats that I plan to reference with my Retail brick and mortar clients. The study points out the importance of combating showrooming and even the opportunity to use it to their advantage. A person that spends time looking up reviews and pricing in store is a more serious buyer. They are leaving the browsing mode and moving quickly into purchase mode. A retailers dream if they can earn the business. In store associates need to training on how to approach these shoppers and help them with their research. When the price is less online, the associates need the room to match (within a few % points as the study showed) and explain the benefit of being able to walk out of the store with their purchase that day. What’s a few points when you have the opportunity to build trust with customers and you are there to help and should always be the go to place when they need an item you offer in-store. Next retailers could set up metrics they could measure and improve on over time. How often does an associate approach a customer researching info online? Does the… Read more »
Bob Phibbs
BrainTrust

What all of this means is death to the premium items in brick and mortar stores that can be easily shopped; the newest high feature baby bag, the best new sweater, the feature-laden gadget, you name it.

It is up to the manufacturers to partner with retailers if they need any type of display, sales team or featured spot to show off their proprietary merch. Otherwise this poll shows that the race to the bottom will clearly be pushed sooner than any retailer would like.

Gene Detroyer
BrainTrust

The message from this study is loud and clear. It is also not new. It is time for brick and mortar retailers to start looking at their real estate as SHOWROOMS. If they did, they would make different decisions and sell more products.

A retailer’s mission is not to sell more product out of the store, it is to SELL MORE PRODUCT, PERIOD. If I considered my store a showroom which also sells product, I would assure that the customer who goes online in the store ends up ordering online from me. Ignoring this opportunity is saying “I don’t want the business.” Ignoring this opportunity is ignoring reality and ignoring the future.

Gene Detroyer
BrainTrust

My follow-up to Bob Phibbs comment…Bob, you have it backwards. It is not the death of premium, high feature laden products. Showrooming would actually support new, better, fancier products for people to touch, feel and study. If you consider your store a showroom, the one thing you want to do is SHOW.

Steve Montgomery
BrainTrust

Missing from the information in that article is what were the 10 products and price points involved. Was it 2.5% of $10 or $1000, $5 off what size purchase, etc.?

Lot of interesting numbers, but I am not sure it reflects the current reality. I agree that show rooming is an issue and one that will not go away. B&M retailers will have to face that new reality. How will depend a great deal on what they are selling. For example, I don’t envision most mass clothing retailers empowering their store associates to discount their items.

Frank Riso
BrainTrust

The study indicates the number of shoppers that would leave a store to make a purchase online in a hypothetical situation, but I think in practice, the percentage will be much lower. Nevertheless, retailers will need to know how to best relate to their customers both in the store and in the store on their mobile phones. It should be the new loyalty device for all promotions and even at some point, for payment.

Phil Wells
Guest
Phil Wells
5 years 2 months ago

I’m always slightly skeptical about consumer studies that deal with hypothetical situations. There are more than a few studies that show significant differences between what a shopper will tell a consumer research group and their actual in-store behaviour.

I would be more interested in an observational study that showed 45% of shoppers consulting their mobile phones for comparative price, walking out of store and being intercepted by the consumer researcher at that point to confirm they had indeed decided to make the suggested 2.5% saving by buying online.

Martin Mehalchin
BrainTrust

There’s clearly a paradigm shift in shopping behavior going on here and the GroupM Next study helps confirm it with data.

I like Gene’s thoughts on this; one way to combat showrooming is to integrate across channels and offer a so-called “endless aisle.” This works if you have the scale and economic model to compete on price with Amazon and its brethren.

Many retailers of course won’t be able to regularly compete on price, so they will have to find other ways to win. Instead of taking showrooming head on, these retailers will have to compete indirectly based on things like unique assortments, value added service or well designed loyalty programs.

Doug Pruden
Guest
Doug Pruden
5 years 2 months ago
The study results appear totally logical. The news seems clear. If it’s a new sweater, headphones, or a toy for a baby, there’s a reasonable chance that the purchase will be made at a brick and mortar location. If you need to try it on, and the price point is relatively low, and you want that immediate gratification, then maybe bricks and mortar has a chance. But as the product complexity and need to study the options becomes greater, and the price is in hundreds or thousands of dollars (think big screen televisions, computers, and sound systems) then the potential in dollars potentially saved increases, and the chance that the purchase will be made online go up dramatically. Nothing against the retailers, but in some product categories their business model is broken no matter how well they run their organization. Is it really logical to expect any different? With those high end electronics the big box retailer is paying rent on a couple of hundred stores, buying and shipping all that inventory to each of those outlets, paying for utilities and security at each of those locations, and staffing and training all that store personnel. How can they possibly compete… Read more »
Craig Sundstrom
Guest

I actually read the report — it was excellent for this purpose since it was short and free — and found that it supported what might be termed “common sense” preconceptions (one exception maybe being that showroomers tended to be lower income); and like many of the other respondents here I had a number of questions (is percentage or dollar amount more important; what about multiple items baskets; etc.) But my biggest concern — again like several others here — is whether the hypothetical “WOULD you?” is really an accurate reflection of what people actually do. I suspect it is not, but how different it is (or even which direction the difference lies) I don’t know.

Kai Clarke
BrainTrust

Yes. Mobile accessibility to the Internet, and better pricing and information will result in a more informed consumer at the POS. As our mobile infrastructure races to 4G+ throughout the USA it will make this information accessible to anyone, everywhere.

Dan Frechtling
BrainTrust
It’s quite dramatic to say 45% of customers would leave a store if the price gap were 2.5%. But the number is more likely to be low single digits. Here’s why: 1. GroupM’s starting point is 19.7%, not 45%, since only 43.7% of consumers use mobile devices to shop in-store. And a recent “State of the US Internet” study by comScore found the proportion of people who have ever showroomed was a more reasonable 35%. If they did so half the time they were in a store (a generous assumption), only 7.9% would leave for a 2.5% savings. 2. Many those consumers comparison shopping in-store constitute incremental traffic that never planned to buy in-store. The same comScore study found 45% of showroomers already planned to buy online before they even entered the store. Applying that discount to the above numbers yields 4.3%-10.8%. I’ll take the low end of that range. 3. There are other reasons cited by “showroomers” in the comScore study who bought online. These suggest they really weren’t showrooming at all. These include out-of-stocks, unable to buy at that time, etc. While exaggerated, showrooming is too powerful to be dismissed. John Boccuzzi lays out good recommendations for associates… Read more »
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