BrainTrust Query: Is Charging Customers For Browsing So Ludicrous?
Through a special arrangement, presented here for discussion is a summary of an article from the Retail Doctor’s blog.
Throughout my career, I’ve heard merchants say, “They come into my store and get all the information and then go somewhere else to buy it.” As a retail consultant, those responses used to infuriate me; it was like a loser’s limp. I felt it was an excuse for them not doing better because they miraculously “knew” their customers were at a competitor’s.
I always answered, “How do you know that?” They didn’t.
That’s all changed in the last few years.
Consider this story from a business owner who prides herself on custom fit swimwear for women. “We wait on women hand and foot with a process that takes no less than an hour most times and sometimes up to 2.5 hours to find just the right suit. Then occasionally there is the one customer who comes out with two or three suits and says, ‘Okay, I like these but I need to see if I can find them online for cheaper’ and proceeds to write down all the numbers from the tags.”
Recently, it’s become more immediate.
A sales associate said that when she waits on customers at the fitting rooms, especially young women, at a certain point when everything fits, the dressing room goes silent. That’s because they are scanning with their smartphones to see if they can find a cheaper price online.
How did she know? They told her.
It’s not just clothing. How about any time a customer needs to make serious choices and the retailer has invested a lot of time to learn the products’ intimate details? It could be custom bedding to custom flooring. It could be fine wine to fine china.
Contractors got tired of having people “ask for a bid” only to see their detailed list of materials and time given to some other competitor who low-balls them out of the job. That’s why many require a non-refundable fee to get a bid. Travel agents had to start charging for their services. What if a retailer charged a browsing fee or consulting fee in shops where extensive product knowledge is required? Or how about a non-refundable personal shopper fee with a credit towards future purchase?
The challenge many retailers in an always-on mobile world face is that there is always someone ready to undercut them. And not just down the road but across the country.
Discussion Questions
Discussion Questions: How should stores adapt to address showrooming? Is charging a service fee at certain stores reasonable?
Charging a service fee would be difficult, at best. What if the clothing tags were coded so that the shopper could not check online — if no “model number” were available. This is done in the lighting industry showrooms all the time.
It seems the marketplace has been invaded by cagey consumers who believe that one should never have to play fairly when one holds winning cards in their always-on mobile hands.
Why should retailers adapt to undercutting? It is non-productive and costly. If seeking a lower price on most every purchase is the current king with many consumers, and the process is enabled by today’s technology, then adjustments or new paradigms are worth considering to deal with showrooming.
While “showrooming” is a new term, it’s not a new concept. Customers have always competitively shopped (as have retailers!) but of course digital media and smartphones make it that much easier.
The biggest thing stores should do to adapt is add enough value to customers to make them see a difference in doing business with them OTHER THAN PRICE. Whether it’s having a unique merchandise assortment, better in-store services or better customer relationships across all channels, there are plenty of ways to compete.
The frustration is understandable but charging a service fee will not solve the problem. This is one of the byproducts of the connected world. Seeking ways to stop this behavior is the digital equivalent of the story of the Dutch boy stopping the leak in the dike with his finger. A better approach would be for the swimwear retailer to focus on her best customers and use the technologies to enable a tighter relationship with those customers that value the extra attention and customer services.
Charging a fee for services is reasonable at certain stores — maybe it is a fitting fee, consulting fee or other service provided which would get applied to the purchase price for the customer.
Overall it is service provided in person that an online competitor can’t compete with, and that’s the competitive advantage for bricks and mortar.
Yes, charging customers for browsing is ludicrous, however, full service retailers do need to explore some new ways to discourage the wasted use of their employee’s time for service and consultation. I think there are better ways to accomplish this. For one, training employees to interact more effectively and secondly, by creating an environment where employees know who are the best and most loyal customers of the store.
There will have to be changes to the cost of doing business. Maybe the change is in the cost of being a shopper looking for lower prices. I am looking at this from the merchant’s viewpoint, and well understand their cost of doing business is not to serve as an agent for their online competitor. The brick and mortar has to make changes, and charging a fee to be a showroom for the competitor is viable to me.
If you can’t run with the big dogs, stay on the porch. Retailers who can’t make it because of showrooming have no business being in business. Charging customers to walk in the door? You might as well lock the door.
Good insights shared already. I did notice that one of the examples used was travel agents who started charging fees for their services. We all know how that worked out, with most travel agencies going out of business and those surviving substantially changing their business model.
It seems to me that charging up front for such service is a quick way to drive a majority of customers away and drive yourself out of business.
Although retailers, especially luxury retailers, might like to charge a fee for browsing I just don’t see it happening, nor do I think it’s good for business. This kind of activity and shopper has been around forever and the internet has only made things worse. Flash sale sites, Amazon, and sometimes the retailer’s own direct business fights their brick and mortar stores with discounts, which makes no sense at all.
It reminds me of the “Friends” episode where Monica spent hours drinking champagne and running a sales associate ragged at a high-end bridal shop only to end up buying the identical dress at a discount bridal extravaganza after wrestling with another woman.
The best advice, if you’re going to serve up a great in-store service experience, is make sure the goods are unique to your brand and can’t be purchased down the street or online at a discount. Barring that, adding additional warranties or other value added items or services that can’t be had elsewhere, can be a great differentiator.
Lululemon and Container Store are two textbook examples of successful businesses that sell items that can be purchased at a substantial discount elsewhere. How do they do it? By delivering a great product wrapped in a laser focused customer service experience, limiting their offering, and actively listening and responding to their customers wants and needs.
This is how Best Buy became Amazon’s show room. The question is, can a retailer be compensated for customer service versus lower price and delayed delivery? Much of what retailers think is great product knowledge, is not. People shop for cars online before they ever visit a show room. Home Depot charges to measure a kitchen before they will expend time designing.
Too often, sales associates know less than the customer. The value is in knowing the customer. Branded products are the problem. The mattress industry has solved the problem by assigning unique item numbers by retailer, thereby minimizing comparison price shopping. Retailers are starting to tell manufacturers, unless your product is unique to m,e we will not carry the item.
As long as your relationship with your customer is about this shopping trip, today’s transaction and a commodity product, price transparency is going to be a challenge (unless you happen to have the lowest price).
I do think there are some customer segments that will pay incrementally for shopping support services, however, I wonder if retailers (with their one size fits all approaches) will end up the providers here or if third parties will better address this segment.
For the masses that probably will not pay incrementally, store-based retailers need to leverage in store “services” to drive profitability via market basket, and for a customer over time. This requires a change in how they define and execute on “relationship.”
It’s a real challenge, but I’m with David on this. You think business is tough now? Start charging customers to come in your store and you’ll find that scanning is no longer a problem since you won’t have any customers. The answer is to have products that are not broadly available. Otherwise, match the price on the scan in the same way that stores honor competitor’s coupons.
Service, selection and price. If you can’t stand the heat, get out of the kitchen. Time is money. If the customer wants to comparison shop and go somewhere else, spending time and gas in the process, they have as much right to do so as to try on and walk away without conversion in spite of excellent service in store. Charging for browsing…silliness.
My sense is that the type of shopper that would go to the effort of using a store for a showroom and then look to acquire the item elsewhere will never become a loyal, profitable shopper. My counsel to any retailers being “victimized” by these cyber cherry pickers is to let them play out their shopping schemes while offering their own online incentives. This too, will pass.
For most shoppers, store browsing and all of its trimmings is sacrosanct. Charging for it would be like asking supermarket shoppers to pay for their parking spaces and shopping carts!
Welcome to “Sales 101.”
Price is not the only reason that a consumer is in a retailer’s store. If retailers are seeing an inordinate number of consumers walking out the door after “showrooming”, the merchandising, marketing, and and store operations teams need to gather around the morning coffee rally, and remind associates of the value that they are providing to shoppers — style, fashion, service, location, convenience, time-savings, trustworthy/known retailer there to support the shopper, value at a competitive price, etc.
Every store loses a sale due to “price” on occasion. If a customer says she has to check to see if she can”get it at a better price,” handle the objection by restating it — “We all want to receive the best value, and, if you have time, your plans to compare price might make sense. Did we meet all of your other expectations today? If you find that our service, fashion, time-investment in you, and our reputation as a trustworthy retailer are right for you, will you come back to see us?
Thanks for coming in today.
Stores just need to be competitive not just in price, but in service too. It will be unavoidable to lose customers to “showrooming” — it’s part of the business; but reasonable prices and good customer service will bring in loyal customers.
Charging a service might be a reasonable request but it’s not practical.
It’s not a business model that is going to be sustainable for the long term. Retailers need to change with market forces, customer habits, and other challenges. Showrooming is just another challenge that needs a solution and good retailers will find a way to make the needed adjustments.
The absolute reality is that retailers can charge anything they want for anything they sell — product or service.
The consumer will pay any price they want for anything they want to buy — product or service. The distinction between the two is that the consumer holds all the cards, but the retailer thinks the retailer does. The consumer will make a choice based on their value equation by considering all the factors, not the least of them being price.
Costco charges a minimum of $50 per year to browse their stores. They currently average about 7-8% same store sales increases for each period, year over year. Each period consumers see a value in their browsing fee and buy more. You might say, wait a minute “Scanner” that’s a club fee. I’d say, so what? To me, it’s a privilege fee. I pay $50 bucks for the privilege of walking through their door to treasure hunt what’s new each visit. Call it what you want. It’s the same thing. I perceive that fee as a value and I pay it. Costco pricing is not the cheapest on everything in the store and sometimes I pay more there on certain items. So, price isn’t the only factor.
But, “Scanner” that’s a club fee! I say, so what? It’s a browsing fee. It works for them and they even say if I don’t find value they will give it back.
If a consumer sees value in any fee or price, they will pay it. The challenge is for a retailer of any kind to determine if they can deliver something for the consumer in which they perceive either the price or fee a value. If they don’t, it simply doesn’t matter.
In the scenario outlined in the article I can understand the desire to charge a consulting fee. However, doing so will likely severely limit those that would even be willing to try on the items. I believe that would result in even less completed sales.
Charging the customers a service fee will do nothing other than chase customers away. Why not encourage the shoppers to shop online right there in the store? If they find the same product online at a lower price, match it. If the lower price product is not as good, point it out. Take advantage of the situation. The customer is in YOUR store. Once they leave the store, you lose your competitive advantage.
Browsing fees for apparel stores may make sense from an operations point of view, but it does sound like the worse possible marketing tactic. Will the income received from a browsing fee outweigh the distinct possibility of losing a customer who doesn’t want to be subjected to one? The ability to check prices online is the latest pressure to keep prices in line, and that’s been an age-old challenge for merchants. This really isn’t anything new, although the technology that creates the challenge is. The answer is not a browsing (or estimate) fee but perhaps more imaginative ways to ensure a real, live customer in the store makes the purchase there while in direct contact with the sales representative.
Going back for 40 years and still an ongoing process, is to have different model numbers for different retailers. Why not just make sure each of your items, as much as possible, has your own special model or style number?
You can’t try on 10 pairs of shoes online (well, with Zappos.com free shipping both ways, you actually can). And you can’t get careful, personalized advice from a sales associate when you are browsing the web (well, with interactive chat and 24-7 live customer service reps, you actually can).
So, if you operate a bricks and mortar retail store, you need to figure out how to differentiate your service from the best online alternatives AND your physical competitors. If you can’t survive competing head-to-head, you can always try to obfuscate and dupe your customers by getting different UPCs or serial numbers for the same products as your competitors (hey, it’s worked for mattress stores for years). But in the end, if your only differentiation is that you are better at confusing your customers than your competition, then perhaps you should reconsider your long term viability.
The days of making a living off of customer ignorance of fair prices is rapidly drawing to a close. There will be plenty of carnage as the retailers who can’t offer a differentiated experience fall prey to better prices online and hungrier competitors in the real world.
This scenario is very discouraging from a retailer’s perspective. (I know.) For the above comments, yes it is true that you cannot charge people to browse, but it is too easy of a statement to make, that if you can’t hang with the big discounters, oh well. These are harsh words for the front line businesses who bust their butts trying to offer up goods and services to the ever-increasing disloyal consumer, who couldn’t care less about the efforts being made by some very good small business owners, who just want the opportunity to make a sale and a fair profit.
I know that there are some very intelligent consultants that offer up great advice. Would you like your services to your clients to be deeply discounted due to online Dear Abby folks who think they know better than you, even though they spent no time with your clients?
All I’m saying is that it is not so simple making a transaction in this day and age, and B & M folks are really feeling it from a profit standpoint. I always try to buy local, and sometimes I do go online when certain items are not available. That being said, it does not give any store owner the right to gouge me, and I know when I’m being gouged. Just consider this as all of us are making purchases in the future, and I wish the best to all those Main Street folks who work honestly, and try to make a difference. Hang in there.
Thank you all for commenting on this. If you take a look at the comments on the original posting on my site you’ll see the dilemma first-hand from actual retailers dealing with the issue.
The idea of just “differentiating service level” misses the point. These retailers are servicing their customers. They aren’t ignorant of their products, that’s precisely why shoppers come to them.
“Just suck it up” isn’t going to work for the smaller or larger retailers. The whole idea of “price transparency” that consumers know what an item costs ignores the point that knowledge in the bricks and mortar stores has a price. That opaque service level needs to be factored in somewhere.
OMG, don’t do that … retailers just need to compete! Reminds me of the record industry’s response to all the free downloading in the Napster days — as if arresting everyone would create loyal customers. When all is said and done, they should’ve done what Apple did; close to free. Same goes here, think of something … get out of your box and be innovative!
This concept seems to put up yet another barrier to a shopper visiting the store, as opposed to creating compelling differentiators vs online shopping. While there may be some percentage of shoppers who will use the expert service and assistance at the store and then buy online based on price, there are many cases where customer loyalty and experience drive behavior and should probably be the focal points for capturing sales.
A possible solution is to offer something that the e-tailers can’t — service. How about offering free hemming and alterations? Throw in a free hair accessory? Give them a discount off their next purchase in the store? Time to get creative.
Charging a browsing fee is a non-starter, plain and simple. Talk about killing traffic counts. We’re in an environment where technology has empowered consumers, and retailers need customers more than the other way around.
Showrooming is a challenge for retailers, with no quick, simple answers. But a few things are clear. If you’re going to carry highly identifiable, branded (model-numbered) goods, and price is all that counts, then you better be at the right price, and figure out a way to make money at the resulting margins. Good luck, because the price is only going down.
The challenge for the major national chains is that their pursuit of scale leads unavoidably to commoditization, whether it’s laundry detergent, jeans or TVs.
But I’ve never believed that consumers are only engaged in a strictly rational, utilitarian exercise in procuring commodities. There remains opportunity for stores operating on a more personal scale to engage customers more directly, build value well beyond what’s on any price tag, connect at an emotional as well as a rational level, and truly earn full retails and margins.
It’s not easy, and there’s no question that it’s getting harder, but check out the very best independent retailers wherever you are. As good as they are, they too have walk-outs. But they’re not charging admission. They’re focused on creating greater value for their customers and deepening their relationships with those customers.
An alternative solution is to arm employees with close-the-sale incentives that they can deploy as needed. Perhaps they can offer a free hair accessory from the accessory wall, a pair of socks, 10 percent off, etc. to three customers of their choosing each day and they can pick the incentive that makes the most sense for the customer based on their interactions up to that point.
Another option is to go the Walmart route and simply match the price within certain parameters. That puts individual customers in charge of calling out the price differences that matter to them rather than retailers attempting to lower prices to compete with everyone.
If retailers are going to charge for service then they will need to package it as a concierge or personal shopping offering and build additional services or incentives around it.
I like some of the thinking in the comments so far. The way you confront this is to be on the positive, not the negative perspective in the shoppers’ eyes. Charging a blatant fee won’t work, regardless of what club stores do with their membership fees.
No matter what comparative-shopping product segment we’re talking about here, apparel, electronics, etc., why can’t the manufacturers get a bit more involved, knowing these challenges that the retailers are facing? Say, an apparel manufacturer could offer something unique if the dress is purchased in the store, like a free fashion consultation or an invitation to a manufacturer’s event, etc.?
Maybe stores should require checking-in of smartphones, just as they do backpacks. Silly? Of course, but so are browsing fees, and every other idea put forth here. And the tough talk of “innovate or else, don’t make excuses, etc.” — the futility of which Bob outlined in his article — won’t help either. This is a classic case of free-ridership…it has no solution.
Obviously a hot topic, given the volume of comments that the query has generated this morning. I agree with most commenters that service fees will almost always be unreasonable and do lasting damage to whatever level of loyalty retailers had previously earned. There are multiple ways to combat showrooming; easy to list, but harder to execute. Compelling customer experience, exclusive assortment, a sought after brand and empowered front-line associates being a few of the most obvious ones.
Why not use technology to create the solution? The retailers certainly aren’t going to be successful if they try to charge consumer browsing fees. Consumers simply will not enter the stores. At the same time, the retailers that are attempting to collect showrooming fees from manufacturers will find that the brand owners will simply forgo having their products in these stores.
Why not make it a revenue share program? Why not have the manufacturer offer a special incentive to the consumer who is shopping online to mention the store where they saw the product, and as they gather this information, the manufacturer can provide a “showroom commission” to the retailer that provided the product display. This will allow manufacturers to continue to sell more product, the retailer receives an affiliate fee, and the consumer walks away a happy customer.
While not ideal, it certainly does seem to be a fair and equitable solution.
The stores where merchants could (not “should”) charge such a service/consulting fee are quite limited. The swimwear store example Bob cites is one example. It seems reasonable that a small swimsuit fitting fee could be assessed, if done under certain conditions, e.g., clearly advertising that there is a fee for a custom swimsuit fitting, clearly indicating everything that such a fitting includes, and certainly turning that fee into a credit when the customer makes a purchase.
But other than under such conditions, such fees are unreasonable. In this highly competitive industry and in a post-recession era that helped create a savvier shopper armed with a smartphone, browsing from store to store is a part of shopping experience that’s here to stay. If a retailer were to implement a fee simply for trying on a dress because the customer may use their smartphone to make a smart buying decision, then that retailer would most certainly alienate that customer, plus plenty more once they spread the word via social media and word of mouth.
Rather than trying to squeeze questionable fees out of shoppers, I’d like to see merchants spend more time creating a great shopping experience (including well-educated associates who can educate customers, unique products and store designs, great customer service, well-thought-out loyalty programs, etc.). Retailers who offer a great shopping experience stand a much better chance of sealing the deal vs. retailers who seal their fate with foolish fees.
While showrooming is a problem for all types of retailers, this is a major issue for those with products that depend on expert salespeople that Bob highlighted.
I believe more pressure needs to be put on the manufacturers. We’re seeing some much needed pricing policy changes come to the consumer electronic industry, but don’t be surprised if Congress gets involved. Guaranteeing low prices is a good topic when running for reelection.
Interesting challenge. But little can be done as that is how retail works. But that is also why so many retailers are struggling. I don’t think any brand will get away with charging for product information.
While showrooming may be frustrating, it is simply reality. If a retailer is only competing on price, they should leave the business. Only those that offer value due to relationship, trust, etc., deserve to exist in today’s transparent marketplace.
Although consumers do pay for certain shopping opportunities (flea markets, direct buy), the keys for the average retailer will be to focus on the right customers (don’t wait on Suzy cell shopper as readily the next time you see her) and to make an offer even bargain hunters can’t refuse. Brick and mortar purchases are still more instant than ordering online, they can offer a mix of products that complement the first one, and they can reward frequent shoppers with special discounts and in-person privileges.