The Retail Showrooming Ultimatum – Revolutionize or Die

As a marketer for a physical retail establishment, you are facing an overwhelming challenge in an increasingly digital marketplace. How do you convince consumers to purchase from your store when they can buy the same thing cheaper online, with free shipping, and often without having to pay any sales tax? I am a graduate marketing student in Northwestern's Medill IMC program. I am also a showroomer. As a marketer, I feel bad about that. As a consumer, it feels great to keep more money in my pocket. My paradox of emotions has led me to take a serious look at the phenomenon of showrooming, and to focus my studies on leading retailers' attempts to survive the impending retail apocalypse. 

Showrooming is drastically changing the world of retail, and any retailer not willing to proactively evolve is going to go the way of the flip phone. Wal-Mart initially revolutionized big-box retail stores by bringing incredibly low prices to even the small towns of America through a unique supply chain that served all of its networked stores. Amazon further revolutionized consumer shopping behavior by making e-commerce transactions convenient, fast, cheap, and commonplace. These two shopping behaviors no longer exist in a vacuum; consumers are mixing and matching their behaviors at will. Showrooming has become an integral step in the consumer decision journey and it isn’t just going to go away. It’s time for the next retail revolution - which company will revolutionize the way consumers shop and buy products?

Big-box stores desperate to adapt

Both Target and Best Buy have already resorted to price matching in an effort to stave off Amazon. The Wall Street Journal reports that despite efforts to improve service and selection,  price is still the lowest common denominator. But by engaging in price matching, retailers are focusing the showrooming war on price, which is exactly the war you can’t engage in over the long-term. Engage in price wars and you will effectively commoditize your store’s brand. Any brand knows it’s about differentiation in the marketplace. What do you do better that Amazon? What is the unique value inherent in your brand promise? For brick-and-mortar retailers, it’s not going to be price. If that’s all you’ve got in your showrooming battle tool kit, you’re toast.

Best Buy recently announced that they are bringing Samsung mini-stores to 1400 Best Buy locations to combat showrooming. These “boutiques” within the store will be staffed with specially trained employees to mimic the Apple Store experience. Forbes quoted an industry analyst as stating: “This clearly is the death of showrooming at Best Buy. It never was near the problem it was made out to be.” Pardon me, Mr. Analyst, but how is building a smaller showroom within a larger showroom going to be the death of showrooming? I can still go home and buy most Samsung products on Amazon.

Target, on the other hand, has asked vendors to create products exclusively for its stores. Target understands the value of the “expect more” part of its brand promise.  The company already offers many unique and high-quality goods ranging from clothing lines to furniture that you can’t get anywhere else. More exclusive offerings would play well to the chain’s “posh” appeal, and decrease the ability and desire of consumers to showroom in its stores.

How Do You Start A Revolution?

             Start small but think revolutionary, Retail America. It’s not about quick fixes. And it's certainly not about price. It’s about experimenting and innovating and small wins that will spark the retail revolution and win the long-term war. What can your retail outlet learn from analyzing the big guys? Let's take a look:

1. Target – Target = Experience. People are passionate about being in the store.  I had a friend that gave up Target for Lent. While prices can be beat online, the satisfaction you get from a "Target Run" cannot. To combat showrooming, you (and Target!) must find ways to enhance the experience of your store; and then MONETIZE it. Your store should be a destination. An oasis. People pay for experiences all the time. Besides selling just products, what experience can you sell your customer? What can you offer them through being in the store that they could never get online? 
2. Wal-Mart – Cheap immediacy is Wal-Mart's best asset. Not all retail outlets can or should be about providing the best "experience". If your store falls into this category, maybe you should stop forcing customers to come in to shop at a physical location. Customers could have a better "experience" shopping and ordering online, and then pick up at a local warehouse. The customer gets online prices, immediate pick-up, and you save a ton of operational costs by not running a storefront. Amazon doesn’t have physical stores. They just have warehouses. And yet people buy things directly from Amazon all the time.  (But have to wait for their items to be shipped!) You could stop showrooming madness by ceasing, literally, to be a showroom.
3. Best Buy – Without any private label products to promote, the cheapest prices, or the best service, no one is going to give Best Buy up for Lent. Details in the press are fuzzy about the Samsung mini-stores, and their showroom within a showroom idea just sounds like death-by-showrooming. But they might just be onto something with this "boutique" idea. What if they've actually worked out a pricing strategy with Samsung that allows Best Buy to make its money not by selling Samsung products, but by renting out the store's floor space? Samsung, in turn, effectively eliminates the middle man and directly charges customers prices in-store that match or beat online prices. Everybody's making money, the customer gets to see, feel, and experience the products in the showroom, and then can buy the product in store for the best price available. This, my friends, would be the start of a legitimate retail revolution.  

So what are you going to do better than Amazon? Whether you sell experience, replace showrooms with order pick-up warehouses, create boutiques within your store based on innovative pricing deals with manufacturers, or come up with your own revolutionary idea, get started now. The race for the revolution is on. May the smartest retailers win.

   -Carrie Walker, M.S. Candidate in Integrated Marketing Communications, Medill, Northwestern University. Specializing in branding, with a particular interest in CPG, retail, and shopper marketing. @CarrieWalker04

          

Changing the Social Media Conversation in Your Company

As an integrated marketing graduate student, you get the privilege to experiment with a variety of new marketing tools and no topic is hotter than social media monitoring. Radian6, Social Mention, and Netbase all give you access to a variety of information, including trending topics being discussed and customer sentiment. Another unique tool, NodeXL, visually lays out different segments in a network while allowing you to find the key influencers. As marketers, we understand the benefits of analyzing the conversations taking place in the social sphere, but convincing the rest of the organization of the benefits is a lot more challenging. The best way to answer the question, “how does social drive sales?” is to integrate your social media objectives with those of other departments. Let me now show you how the information generated from social media impacts four departments of an organization.

Customer Service: Ask any marketer that is paying attention to the social media space for an example of which company is doing it best and I have no doubt that the company they mention is utilizing it for its customer service benefits. If a customer is unhappy or has a bad experience with a product, you are not only losing that customer, but most likely potential customers they are tied to. So rather than standing by idle, outside of the conversation, it is important for brands to stop the bleeding before it spreads.  Not only does this have the ability to recapture a lost customer, but actually makes them a stronger brand advocate than before the incident. Everyone loves a personal touch and social media offers that opportunity for a direct connection.

EXAMPLE: Best Buy has over 20 employees dedicated to responding to customer service issues, 3,000 socially trained retail employees, and 26 unpaid super fans that are rewarded in recognition. (www.conversocial.com)

Advertising: Your latest and greatest advertising campaign is just about to saturate the airwaves all over the country. After utilizing focus groups, you are extremely confident the impact will be favorable. The campaign launches and now thanks to the power of social media monitoring, you can immediately gauge the effectiveness and consumer attitude towards this campaign. You now have the ability to adjust or amplify the message to obtain the greatest positive impact.

EXAMPLE: A “Got Milk” campaign meant to last two months was pulled shortly after launching due to an overwhelming negative reaction online claiming the AD to be sexist. (www.adrants.com)

Product Innovation: The most successful products come from customer insights and your research department works tirelessly to observe consumer behaviors in order to generate quality leads. Netnography has been gaining momentum as a new method to evaluate consumer interests and help generate insights that lead to product development.  Who has a better idea of what your customer is talking about on the internet than your existing social media team.

EXAMPLE: In 2010 Gatorade pushed social media to the center of their marketing department, literally, when they developed a social media “mission control” room that monitors a live stream of topics that are relevant to their brand. While it serves multiple purposes, one of their primary goals is to seek out potential product innovation opportunities.  (www.mashable.com)

Sales: Are you looking to answer the ROI question for social media? What better way to do this than to generate leads for your sales department through monitoring for opportunities online. Being able to monitor for key phrases that might lead you to potential customers is a powerful way to drive sales and add substantial credibility to any social media initiative. Once you find the prospect, do not jump in with your sales pitch quite yet. Help them solve their potential dilemma first, then consider the appropriate method by which your company’s needs can be of further assistance.

EXAMPLE: Anchor Bank in Wisconsin focuses on delivering useful information that addresses financial questions and fosters relationships that turn into leads. (www.targetmarketing.com)

While it may not have the exposure of traditional media, social gets you much closer to your customers and gives every company a variety of benefits. While I only chose to highlight these four departments, you will find even more applications for this information source as your social media strategy integrates further into the entire company.  For further information on this topic, I highly recommend reading “The 10 Stages of Social Media Business Integration.”

by Evan Kroft (@ekroft)

Graduate Student at Northwestern University