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Ken Magill

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Why Showrooming is Probably BS

11/6/12

By Ken Magill

At first glance, a survey recently published by Accenture paints an alarming picture on the rise of so-called showrooming for bricks-and-mortar retailers.

However, common sense and a look at some numbers says fears over showrooming—where people supposedly use bricks-and-mortar stores as showrooms and then research and buy with their smartphones online—are probably overblown.

First, the scary news for retailers: 56 percent of consumers said after seeing a product in a physical store they would search online for the best price and then purchase online this Christmas-shopping season, according to the Accenture 2012 Holiday Shopping Survey.

Also, 27 percent of these same shoppers said they would probably make the purchase online via their smartphone or tablet while they are still out shopping, compared to 17 percent in 2011, according to Accenture. The top reason cited: to compare prices while in a store, Accenture reported.

"Showrooming is a very real phenomenon; however, retailers can compete with, and even beat, the online pure play retailers," said Chris Donnelly, managing director of Accenture's retail practice in a statement. “Consumers don’t just want to shop online; they want a simple and seamless shopping experience that offers them convenience and value. As recent announcements have shown, some traditional retailers are starting to tackle showrooming head-on this holiday season with tactics such as price matching against their online competitors but they must also strengthen their customer service and product availability in order to really fight back.”

Maybe. Maybe not.

The percentage of people who say they engage in showrooming says nothing about the market share of online retailers versus bricks-and-mortar stores.

The National Retail Federation earlier this month predicted Christmas sales overall this year will increase 4.1 percent to $586.1 billion. Shop.org projected online sales to grow 12 percent over last Christmas to as much as $96 billion.

So no matter how much “showrooming” is going on, the vast majority of Christmas purchases will still be made in stores.

Then there’s the history of direct marketing to take into account.

One of the reasons the direct-marketing list industry exists is there are people who will buy mail order and those who won’t. Some people simply prefer to shop retail.

As a result, simply compiling names out of a phone book and mailing catalogs to them would be a recipe for disaster. At the risk of gross oversimplification, list companies have for sale names people who have at the very least raised their hands and said: “Yes, I will buy mail order.”

While possible, it’s hard to believe that the Internet has eliminated the preference of many people to hop in their cars and get instant gratification by taking their new flat-screen TV home.

However, this isn’t to discount the influence Smartphone usage may have on in-store sales.

Smartphones influence 5.1 percent of annual retail store sales, translating into $159 billion in forecasted sales for 2012, according to Deloitte research published in August.

According to Deloitte, the so-called mobile influence factor is in-store sales driven by consumers’ store-related smartphone activity such as product research, price comparison or other mobile application use.

Deloitte reported it anticipates mobile’s influence, based on consumers’ smartphone use, will grow to represent 19 percent of total store sales by 2016, amounting to $689 billion in mobile-influenced sales.

By comparison, direct mobile commerce sales will pass the $30 billion mark by that time, Deloitte reported.

“Mobile devices’ influence on retail store sales has passed the rate at which consumers purchase through their devices today,” said Alison Paul, vice chairman, Deloitte LLP and retail & distribution sector leader in a statement. “Consumers' store-related mobile activities are contributing to – not taking away from – in-store sales, and our research indicates that smartphone shoppers are 14 percent more likely to convert and make a purchase in the store than non-smartphone users. This means that mobile is an important tool for retailers to incrementally drive traditional in-store sales, strengthening the relationship between retailer and consumer to increase engagement and loyalty.”

So rather than fear consumers whipping out their smartphones while on their premises, retailers should embrace them.

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