Shop 'til You Drop...Your Smartphone
by David King '08
It’s a scene that plays out every day: A customer enters a store, examines a product and maybe even asks a salesperson a few questions about it.
A sale looks imminent.
Suddenly, the shopper pulls out a smartphone, presses a few buttons and walks out — having just bought the same product from a rival retailer at a lower price.
Called “showrooming,” the practice is just one of many challenges — and opportunities — retailers face in a world where millions of consumers have access to the Internet, anytime and anywhere.
Brick-and-mortar retailers are no strangers to competition. Online sales consume a large share of almost every market segment. “People have claimed brick-and-mortar stores are doomed for a while now,” says Michael Solomon, Ph.D., professor of marketing and director of the Center for Consumer Research at Saint Joseph’s. “But it’s not that black-and-white.”
Mobile shoppers account for only a small portion of those online sales — for now. But it’s an area of rapid growth.
According to an eMarketer report in January, U.S. consumers are expected to spend $37.4 billion using smartphones and tablets this year, a 45 percent increase over 2012. On top of that, networking firm Cisco Systems anticipates that, by the end of 2013, there will be more mobile devices in the world than people.
Still, the devices have a way to go before they become a major source of online sales.
“In general, mobile devices aren’t great for shopping yet,” says John Feehan ’86 (B.S.), CFO of RCN and former CFO of both Virgin Mobile USA and Sprint. “It’s not easy for consumers who don’t know exactly what they want to scroll through pages and view photos on their phones.”
For now, the devices are often used as a research tool, and 46 percent of showroom shoppers still make a purchase in-store, according to a Pew Internet and American Life Project released in January. While comparing prices once meant a day of driving between stores, shoppers can now browse and compare products on the go.
“Online shoppers are more adept at comparison shopping than ever before,” says Brent Smith, Ph.D., associate professor of marketing and director of the Office of Fellowships. “They read reviews, they know a price range. In many cases, they know just as much about the product on the shelf as the sales associate.”
Purely online retailers have a distinct advantage in some areas. They have little to no overhead costs and can sell products at a lower price.
But reports of traditional in-store shopping’s demise may be premature. To win customers and convert sales, these retailers are rethinking the traditional business models — and thriving as a result.
“The item on the shelf is no longer the point of differentiation,” says Solomon. “Stores can’t compete on price alone, so they need to offer something a shopper can’t get at home.”
Some stores, such as Apple, offer floor models customers can try and experts to teach them how to use their products.
“It’s about engaging all the senses,” Solomon says, “whether that’s a store that looks cool and clean or provides product demonstrations and activities. It takes something that’s normally task-oriented and makes it engaging.”
Kim Richmond, principal of Richmond Marketing and Communications and an SJU adjunct instructor of marketing, believes the best retailers will think about sales through customers’ eyes, providing a fun, easy and informative shopping experience.
“Retailers shouldn’t be threatened by mobile sales or showrooming,” Richmond says. “It pushes them to be their best, to engage customers more and in better ways.”
In the end, retailers that focus on customer experiences are generally the ones that win out.
“You can get a laptop cheaper than at an Apple Store or a cup of coffee for less than at Starbucks,” says Richmond. “But these companies understand their customers and what they want from their shopping experiences from beginning to end.”
Brick-and-mortar retailers have not surrendered on price battles, either. Some large companies, such as Target and Best Buy, match lower online prices in the store. Others offer the same deal during the peak holiday shopping season.
But a more proactive approach may be emerging, one that encourages retailers to embrace a combination of mobile and retail shopping.
“Retailers can try to fight mobile if they want, but I don’t think that’s a good idea,” Feehan says. “The smart ones are going to embrace it.”
A hybrid model, in which mobile devices drive the in-store experience, is gaining traction. Apps can offer customers deals as they walk into stores or direct them to products on sale or on virtual shopping lists.
These exclusive deals and offers can create that sought-after engaging experience.
“Consumers want to feel that they’re special and part of a community,” Smith says. “It’s about retailers extending exclusive offers for exclusive relationships with their customers. For a lot of customers, those relationships are more important than discounts.”
Other retailers are luring customers into their stores with the ability to purchase online, then pick up their merchandise in the store. This provides the convenience of buying online without waiting for shipping — and often leads the patron to pick up accessories or other items once they enter the store.
No matter the method, the lines between the home and store shopping experience are clearly blurring. And retailers are taking advantage of the technology to avoid getting left behind.
“Frankly, I don’t know that retailers really care whether shoppers buy from them in-store, on their phones or at home,” Feehan says, “just as long as they’re buying it from them and not the competition.”