The letter below, displayed in a retailer’s shop window, started doing the rounds on social media recently. With it, came a barrage of comments and debates from the industry about whether this could be an early indicator of what’s to come from store-based retailers in the face of increasing competition from the online sector. Whether this could be more of a widespread activity moving forwards is a hot topic, but the reality is such that, under intense pressure to meet high rents and with less footfall, many retailers may have to seriously considering going down this road and start charging shoppers to enter their stores.
Apparently this ‘just looking’ or browsing fee will theoretically combat showrooming – when customers come to the store (the ‘showroom’) to look at the merchandise in person but then shop online to get a better price through a competitor, according to reports.
Well, the good news is that these cover charges will more than likely curb showrooming for those particular stores enforcing such a policy. The bad news is that sales (especially new sales from new customers) will deteriorate as most people – prospective customers and the like – will walk by without a second look. And why should they when they can go across the road, across town, or online in order to find a retailer that doesn’t charge them for browsing?
Granted the charge is deducted from the final sales price if you purchase. But, if you don’t, you leave with a little bit of a lighter wallet than what you walked in with (with nothing to show for it) and more than likely a bit miffed. And the last thing retailers need these days are frustrated customers. If a customer is not satisfied they will go someplace where they are and it won’t cost them a thing (not even a minimal cover fee).
Whilst showrooming is something that definitely warrants monitoring, there are ways to minimise the negative impact and maximise the value of it. Indeed our own research actually shows that showrooming isn’t necessarily a bad thing, and that it presents just as much opportunity in converting long-term and loyal customers as it does a threat. It’s just a matter of how you look at the glass – half empty or half full. For example we found that although a number of UK shoppers admit to using their mobile phone whilst in a retail store, most did so to either access that company’s website (74%) or mobile shopping app (16%). Only 34% reported having accessed a competitor’s website and 16% to a comparison shopping site.
Smart retailers are aware that today’s consumers hold all of the power in the relationship – they can interact with the brand anytime from anywhere with a multitude of devices. And with low to zero switching costs to them, consumers will leave without a second thought to find a company that will meet their expectations. With that in mind, retailers need to look at showrooming as an opportunity to convert their shoppers into long-term, loyal customers by providing a better experience (both instore and mobile) for them.
From my own personal shopper experience, whilst I’m happy to pay a cover charge at the corner bar to experience a good local band, or at a museum to experience fine art, I’m loathe to, and draw the line at shelling out a cover fee just to enter my local grocery or electronics store. I’m sure I’m not alone in thinking this. The better solution all round is for retailers to better understand the needs and expectations of its own multichannel customers by accurately measuring feedback and acting on it.
Maybe some brands can get away with charging a fee just to walk the aisles of their precious stores…however, I’m pretty certain most cannot. Retailers need to tread very carefully when considering introducing a ‘showroom fee’ to ascertain whether a model like this makes sense for them or whether it’s actually a terrible idea.
Eric Head is senior director at ForeSee.