Retail Therapy Wins Every Time: On-site Retailing Remains A Success Story

Although the death knell continues to sound for the future of on-site retailing, I still believe in the potent power of retail therapy.  

Though there is satisfaction gained from shopping online much like ordering take-out or pizza delivery, it still does not equal the calming thrill (yes, an oxymoron) of walking in a store and being swept away in the sensory fantasy buffet of smelling, touching, tasting, seeing, and/or hearing my prospective purchases.

There are decided advantages to online/mobile shopping.  As many of us well-know in the industry,  a few advantages as following:

• Open For Business 24/7 = Consumer convenience (time-saver) which can lead to increased sales without having to increase the electricity bill.
• Global Location = Wider potential audience to capture and sell products.
• Lower Transaction and Holding Costs = Lower prices for target customers.
• Improved Customer Interactions = Customer ratings; analyze clicks per conversion, and easily track new and repeat customers.

With these types of advantages, understand, no one here is knocking the effectiveness of on-site retailing.  Online sales rose by 14% during this past 2012 holiday season with growth rate expecting to continue increasing.  As strong as the numbers and indicators are for online and mobile shopping, I remain a huge advocate of multi-channel retailing as the only sure way to grow market share.  There are still opportunities to better integrate multiple retail channels so they are more perceptive and responsive to consumer needs, but another time, another blog post.

The biggest buzzword now hitting the retail streets is "showroom shopping." Ever heard of it? Well, showroom shopping or showrooming is when customers use on-site retailers to shop and compare products in person and then go back online to a competitor (gasp!) to purchase the same item for a cheaper price.  Amazon was recently featured in the news encouraging their customers to do...just that (showroom).

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“The traditional retailers are still doing business the old way while Amazon has reinvented the model,” says Sucharita Mulpuru, retail analyst at Forrester Research. “Wal-Mart and Target are willing to sell a few things at a loss. Amazon’s whole business is a loss leader.”

Read more: http://business.time.com/2012/01/24/target-doesnt-want-to-be-a-showroom-for-the-stuff-you-buy-for-less-at-amazon/#ixzz2IYx3fr3D

Comparative shopping is not a new concept, just the speed and efficiency to do so, due to the use of mobile devices, has changed and caused on-site and multi-channel retailers to worry.  


This type of shopping behavior, of course, benefits retailers like Amazon or E-bay which do not have on-site stores, but want to keep that customer who you and I know will inevitably drift into an actual store as some things do have to be seen in order to be believed, enjoyed, or at least understood.  At this point, show rooming has a relatively impact on U.S. customers (only 7%); more popular in China (26%) and India (13%), but based on holiday shopping data, this figure could grow for U.S. customers.  I have to admit...I'm guilty of whipping out my mobile phone when I'm shopping on-site...mainly "just" to see customer reviews and ratings...this doesn't make me a bad person, just more informed, like most of today's customers.

I want to stress that retailers, like Amazon, realizes their tenuous position in the marketplace by only offering products via online/mobile and have decided to go into attack mode in regards to its relationships with on-site retailers by offering lower prices to customers and encouraging consumers to showroom shop.  

As I've often stressed, competitive advantages are those that are long-term; price wars, due to its easy duplication, is not a sustainable competitive advantage.  In the need to drive prices lower, quality is compromised which creates a situation where "everyone" (vendors, retailers, consumers) loses.

I just want to stress that online retail advantages do not necessarily bode as disadvantages for on-site retailers, but instead must be looked as opportunities for brick-and-mortars to tap into the needs and interests of their consumer markets. 

Successful retailers remain relevant and viable due to their ability to recognize and most importantly adapt to their customer's changing needs and interests.  Ways on-site retailers can begin to adapt as following:

• Multi-channel retailing = Increased market share which increases potential buying power; lowers scales of economies and allows retailers to offer more competitive prices to consumers
• Quality assurance = A sustainable competitive advantage which cannot be easily duplicated, but can be built into the cost of goods sold and net big pay-off to retailers in terms of margins and increased consumer confidence.
• Niche, exclusive merchandise = Partnering with vendors to create unique, private-label merchandise that can only be purchased from your store.  Target and H&M does an excellent job of building customer loyalty by providing niche, exclusive merchandise.
• Technology = You can't beat them; so join them! Transparency goes a long way with today's savvy consumers.  Incorporate tablets or electronic devices throughout the store so customers can conveniently price check items with competitors, compare ratings, view customer comments, ring items and check-out (no-lines make happier customers!).
• Create value = Customers typically make a very informed and conscious decision to visit a retailer. Retailers have to make sure a customer's travel time and expense was worth it for them.  This means "upping" the sensory experience that customers expect and enjoy when visiting their favorite retailers.  Improved customer service, lounge areas, restaurants, offer special complementary services, such as massages, mani/pedis, haircuts, child-care, etc., may be a few ways to increase perceived value and compete with online/mobile retailers.

“Whoever said money can’t buy happiness simply didn’t know where to go shopping.” Bo Derek

I would love to continue this discussion.  Leave me a comment or contact me directly.  Fashion Freelance Works! Find out how I can work for you by submitting your contact information on this website.