Mobile devices have made prices fully transparent to everyone. Since traditional retailers carry higher overhead than online retailers, it’s a real marketing challenge. Do retailers drop their prices and cut their margins, or do they find a way to justify the premium versus online?
Many retailers opt to drop their prices. Electronics chain Best Buy first tried to make it harder to comparison-shop by changing their in-store bar codes. When that didn’t work, they tried to match Amazon prices over the last holidays.
But you can’t out-Amazon Amazon, at least not in the long run. The last time I shopped at Best Buy, I ended up buying at Amazon, but not because of price. I really wanted to buy from Best Buy, particularly after I’d invested the time to travel there and preferred to have the product the same day. But the store experience was so transactional and it was so hard to find a knowledgable sales rep that I gave up. Best Buy could have won me over with a better retail experience, but they dropped the ball. They were trying so hard to be like Amazon on price, they didn’t excel at what could have made them different.
Petco CIO Herman Nell had an interesting point of view on “showrooming”:
“We have the best defense against showrooming that you can think of — puppies. Anyone who comes in with the intention of showrooming looks at that puppy’s eyes and the showrooming is over. A product offering needs to be differentiated. And, if possible, it needs to bring out an emotional connection. That’s what a puppy does. Every puppy is unique, and some can strike a chord with the consumer. And people have emotional connections with different things — from shoes to smartphones.”
It will be interesting to see how different retailers weather the effects of showrooming. The lines between physical retail and online retail will increasingly blur. The winning retailers will be the ones that create a meaningfully unique experience.
Or as the new Best Buy CEO Hubery Joly put it recently: “Once customers are in our stores, they’re ours to lose”.
(Marketoonist Monday: I’m giving away one signed print of this week’s cartoon. Just share an insightful comment to this week’s post by 5:00 PST on Monday. I’ll pick one comment. Thanks!)