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GUEST COMMENT Why are Retailers Shifting to the Showroom Model?

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GUEST COMMENT Why are Retailers Shifting to the Showroom Model?

Brian Skewes is a technologist into deconstruction
Brian Skewes is a technologist into deconstruction

Back when the pandemic began in early 2020, the most observant analysts predicted that it would bring huge changes to retail. Now, as we move toward the second half of 2021, it’s fair to say that these changes are upon us.

 

Some of them are an evolution or acceleration of trends that have been apparent for more than a decade. Given the boom in ecommerce in the last year, for instance, it’s become more important than ever to optimize your local search and to make sure that your digital marketing is up to scratch. Some other changes have been less widely expected, though. One is the current trend toward showrooms. As lockdown orders are lifted around the globe, it seems that brands are increasingly turning to showrooms to give customers that real-life, bricks and mortar experience.

 

The showroom model can certainly have advantages for brands, but it also comes with challenges. In this article, we’ll explain what the model is, how you can use it, and how to avoid some common issues.

 

What is a Showroom?

The traditional “showroom model” is familiar to most people. Just think of the average car dealership. Instead of a “store,” car dealerships are generally places where customers can go to get a “feel” for the car they might want to buy and to ask questions of the dealer. This, increasingly, is the way that retail is moving, even for brands which do most of their actual sales online.

 

In order to see why, it’s instructive to scan the headlines. In just the last few months, we’ve seen formerly pure-play ecommerce newcomers such as Bonobos and MM. LaFleur branching out into brick-and-mortar locations. Similarly, Modcloth, which was recently purchased by Wal-Mart-owned Jet.com, opened its first permanent showroom in Austin, TX in January.

 

Given that online sales are booming at the moment, it might seem strange that these brands have chosen to replace a tried-and-tested model (online ecommerce) with an experimental, expensive, “throwback” alternative. In reality, however, these brands have seen that there is only so much they can do online to impress and connect with a new generation of retail customers.

 

In other words, all these brands know what they are doing when it comes to marketing. They all have the online marketing chops to make a video that connects younger audiences to their brand. But they’ve also realized that brick and mortar showrooms can offer the kind of tangible “brand experience” that is difficult to achieve through video.

 

The Benefits of Showrooms

The opportunity to create an impressive, engaging brand experience is the primary benefit of the showroom model. Online retailers, after all, still face a major problem when it comes to connecting with audiences – no matter how impressive their ads, offers, and messaging, there is only so much you can do via a screen. Showrooms offer customers a way of interacting – in real life – with your products, in a way that is simply impossible online.

 

That might sound like a strange idea in 2021. Surely younger audiences are now comfortable buying everything online and don’t really want to take a trip into town to see your products “in the flesh” before they buy them?

 

Well, yes and no. As Andres Mendoza-Pena, a partner in the retail practice of global strategy and management consulting firm A.T. Kearney, told Retail Dive recently, “consumers prefer to engage with brands online for research and transactions … but even when they transact online, two-thirds of the time they have used a store prior to or after the purchase.”

 

In other words, it’s not as if showrooms are going to replace online marketplaces. Rather, showrooms provide customers and brands with a space to interact. They are a place where customers can try out the products they are thinking about buying, and retailers can develop their brand marketing, even if the majority of sales are still going to take place online.

 

The Challenges of Showrooms

Despite these advantages, running a showroom model also comes with challenges. The most fundamental of these is that, in attempting to bring online and physical stores together, retailers may find that they are working with two incompatible supply chains. Today, we have essentially two supply chains – one optimized for delivery to stores and another that is great at delivering products to customers’ houses. Running a showroom model means making use of both simultaneously. This can increase overhead expenses.

 

A second issue is that, despite large fashion retailers and tech companies embracing the showroom model, it might not be suitable for every retailer. The model works well for high-end products that customers will spend some time researching and which they will think long and hard about before purchasing. That’s why the car showroom model works so well – a car is typically the second most expensive item that customers will ever buy, after a house. It’s also why supermarkets do not make use of the showroom model.

 

Because of this, it’s important for retailers to think the showroom model through carefully before deploying it. As changing consumer behavior continues to demand innovation and convenience from the retail industry, retailers need to make a change if they’re going to survive. However, not all changes are equal – ultimately, you should be looking to build agility, rather than tying your brand to an unsuitable business model.

 

The Bottom Line

Despite the flush of recent headlines about online retailers embracing the showroom model, it may be a while yet before showrooms become common. This is, in part, because not all retailers have the foundation or inclination to make the change. Regardless of timeline or testing concepts, though, retailing is evolving, and showrooms seem to be a natural next step. And, at a time when UK retail sales are rising rapidly, it may be that retailers have a little extra money to invest in this exciting new model.

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Brian Skewes is a technologist into deconstruction

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