Showrooming: Big Deal or No Big Deal?
Based on much of the press coverage that showrooming has received, you might consider it just about the biggest competitive issue facing brick and mortar retailers today. You wouldn’t be right. As a new pricing transparency study by RetailWire discovered, the negative effects of showrooming are largely restricted to a small number of retail channels (see yesterday’s discussion on Best Buy) and to the paranoid imagination of others who see overwhelming competitive threats around every corner.
In a RetailWire webinar last week, Dick Seesel, principal, Retailing In Focus and a former executive at Kohl’s, said showrooming was more of potential problem for most retailers than something they are having to deal with now.
"I think it’s really at the start of a potentially mushrooming growth curve," Mr. Seesel said, "and when you think about other smartphone trends — everything from mobile e-commerce to review sites to e-couponing to GPS-based marketing — we’ve seen all of these things escalate so rapidly it really pays for retailers to get in front of them as quickly as possible with a strategy instead of being reactive to them."
Wes Woolbright, national pricing director, Safeway, told attendees of the webinar that showrooming was not a significant issue in the grocery channel as many factors, in addition to price, currently go into consumers’ purchasing decisions.
"A dynamic that plays into both the mobile and online space is trust. A brick and mortar environment presents a greater opportunity to get some certainty about the purchase that’s being made," Mr. Woolbright said. "Another dynamic is the ‘element of now.’ If I’m in a store I can pick up the item immediately and get instant gratification."
Retailers who participated in the study, underwritten by IBM, listed price sensitivity on the part of consumers (29 percent) as the pricing practice issue having the greatest effect on their businesses. Intensified discounting/promotional activity (22 percent), pricing transparency/showrooming (22 percent), competitive pressure from online discounters (18 percent) and frequency of price changes (nine percent) followed.
What do you think are the most important pricing related issues facing retailers today? What can retailers do to gain some semblance of control in an environment that is becoming increasingly transparent?