Showrooming Showboating: If It's In Context, It Wouldn't Sound Good
A showrooming study published on February 22 tries to make the case that Best Buy (NYSE:BBY), Target (NYSE:TGT) and Walmart (NYSE:WMT)are winning their battles against showrooming. But the lack of context makes a better case that showrooming is almost impossible to measure and might not even meaningfully exist.
The study, done by ClickIQ, reported that all three chains saw fewer in-store shoppers eventually purchase online, when comparing 2013 data with 2012 data. What the study didn't explore was whether more shoppers were simply doing their online research first and then choosing to buy from an E-tailer. To be blunt, the retail concern is whether Walmart and the like are losing more or fewer sales to Amazon (NASDAQ:AMZN) and the like, and this study simply didn't try and address that.
Indeed, answering that question is the more likely next step for shoppers if these chains are losing the battle against so-called showrooming. After shoppers come into, let's say, Target repeatedly and then find that E-tailers repeatedly offer the same for less, those shoppers would simply stop bothering to even drive to Target and would go straight online. This study would interpret that outcome as a win for the physical stores—because the percentage of people who go into the store and then buy from the store would go up—when it's actually a clean loss.
Put positively, the customers who are now going in-store have already either completed their online research—at home, at the office or, perhaps, while sitting on a park bench—or tried showrooming before and have always preferred the immediacy of buying physically. So by solely examining the in-store actions of shoppers, the analysis is without proper context.
The concept of showrooming is generally used to refer to in-store shoppers who examine products and then buy them for less online. (The concept of showrooming doesn't have to be limited to E-Commerce, as shoppers who play with products at a major chain store and then purchase them for less at a local discount brick-and-mortar are equally guilty. But it ruins the marketing efforts behind showrooming, so we'll surrender to their more limited definition.)
This report was based on online surveys. The results from 2012 were from 3,780 shoppers (surveyed from March 2 through March 8, 2012), and this year's stats used answers from 5,543 shoppers (surveyed from January 30 through February 7, 2013). But the numbers for this comparison report were actually a lot smaller (406 last year and 1,000 this year), because of the two needed restrictions ("must have shopped in a retail store within the past three months and also own a mobile device" and "further qualified by stating that they used the mobile device while at a brick & mortar store to research a product and have since purchased the researched product.")
This raises another issue with how much weight to give these results. The report wasn't saying these shoppers made these purchases after doing this mobile research. It was merely saying this was what they said in an online survey. Did these shoppers correctly recall these transactions from as long as three months earlier? Were they being truthful? Were they taking the survey seriously and considering all of the options?
The report also seemed to narrow E-tailers to just Amazon, which throws in another key variable, with other E-tailers possibly getting more of those brick-and-mortar dollars.
Here are some specs from the report. Its Target data: "Of those that did their research at Target in 2012, 29 percent purchased at the Target store, 8 percent purchased at Target.com and 21 percent purchased from Amazon. 2013 data shows that Target did the best job retaining customers with a full 43 percent of in-store researchers making their purchase from the Target store, a significant increase over the 29 percent from the previous year. Where Target fell short was dropping from 8 percent who purchased at Target.com in 2012 to less than 1 percent in 2013. Even with that drop, Target gained back from its 21 percent loss to Amazon last year with a defection of only 13 percent this year."And this was the report's take on Walmart: "Walmart also gained from in-store researchers who made the purchase in the store from 26 percent the previous year to 35 percent in 2013. Like Target, Walmart did lose some Walmart.com sales, dropping from 10 percent last year to 4 percent this year. Walmart is also doing a good job of combating defection to Amazon by decreasing its loss from 24 percent last year to 14 percent in 2013."
First off, this report used some bizarre phrasing. I'm not so sure "defection" makes any sense in this context. If someone is trying to buy a television and he goes into Target and looks at the resolution and then finds the identical set for much less money on Amazon or eBay (NASDAQ:EBAY), I doubt the shopper—or anyone else—would see it as a defection. This isn't some CIA agent taking a job with Iran's Ministry of Intelligence. It's a shopper trying to find the best deal. If that shopper explores four or five retailers and chooses one of them, it's hard to see it as the shopper "defecting" from the retailers he didn't choose.
As for those changes with the sites for Walmart and Target, again, the lack of context makes those impossible to analyze meaningfully. Were those dot.com reductions due to the store having better inventory? Also, some of those reductions involve how shoppers perceive the online/offline distinctions. (Hint: They may not perceive them at all.)
What if a shopper is in that Walmart and wants a specific tablet? The store has sold out, but an associate suggests the shopper purchase it online and—given that shopper's work hours—have it delivered to the store for pickup? When filling out an online survey three months later, will that shopper recall the transaction as an online purchase or an in-store purchase? Even if shoppers have their products delivered to their homes, given that the purchase was made while they were in-store, wouldn't they likely think of it as an in-store purchase? I am merely suggesting that these survey recollections may not be particularly precise and that the distinctions of how a purchase was made in the store may not be recalled correctly. (In short, the shopper doesn't care. He got the desired tablet from Walmart. That's all that will sink in.)
The real problem with trying to analyze so-called showrooming is that shoppers don't think that way. And neither should retailers. These artificial—and quite likely counter-productive—marketing online vs. in-store distinctions are anything but helpful to either shoppers or retailers.
The way both should view this is quite direct: A shopper considered your store and ended up purchasing the product elsewhere. The fix involves the old-fashioned retail techniques: Improve customer service, boost inventory, deliver more value (which might mean lowering prices, but not necessarily) and create a more enjoyable and effortless shopping experience.
When shoppers drive to your store, park, walk into the store, go to the aisle where their desired product is and then, instead of buying it right then and there, walk out and wait days for the product to be delivered by some Web site (potentially also paying a delivery charge), you have a problem far more serious than someone using a mobile device in your store.
The numbers in this report may not be persuasive, but this isn't to suggest that better research needs to be done. What is needed is the lack of a distraction—and yes, that's what this showrooming nonsense is—from the core retail functions.