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New App Can Help Turn 'Showroomers' Into Paying Customers

April 9, 2013
URL: http://www.entrepreneur.com/article/225787

With two stores in New York, one in Los Angeles and a robust website, the upscale consignment sneaker store Flight Club has remained popular with trendy teenagers and the "sneakerhead" set since 2005 by selling vintage shoes "new in the box."

Flight Club's New York flagship on the corner of Broadway and 11th Street has no shortage of visitors, but director of business development John McPheters faced a challenge in getting them to buy. It seems many shoppers would see a shoe in the store and immediately go on their smartphones to find a better deal online--a process known as "showrooming."

"If you look in our store, you might see a $3,000 pair of sneakers," McPheters says. "When kids see these shoes, they're in sticker shock, and there's a knee-jerk reaction to see where else they can find [them]. So they go onto their phones and search."

The Fix
McPheters turned to Swarm Mobile, a service launched in February 2012 that can help turn showroomers into paying customers. It does this by offering customers an app that pops up on their smartphones via Wi-Fi as soon as they walk in the door of a participating store. If customers click "yes," a store-branded web app opens, and the retailer can track their web use and see what sites they're visiting to check out price comparisons.

The Results
McPheters set up Swarm at the New York flagship and the Los Angeles store and liked what he saw. "People who've interacted with Swarm buy more from us," he says.

Swarm can also be used to offer customers on-the-spot deals and incentives; at Flight Club these can include a free hoodie with a purchase of $400 or more.

Because the service automatically loads all of Flight Club's deals into the app, customers have information they need at their fingertips, freeing up the sales staff for more personalized service.

"We get super slammed sometimes, and having this functionality takes the burden off our salespeople to remember every single price," he says.

"As we worked through the holidays, this became especially important."

McPheters declined to break out how much revenue has come via Swarm or how much Flight Club pays for the service (plans start at $49.99 per month). But Swarm claims that its pilot run at 30 retailers last year resulted in a 2.5 percent increase in per-store gross revenue, and that among customers who used the app there was a 12 percent increase in purchase price and a threefold increase in repeat visits.

A Second Opinion
Sucharita Mulpuru-Kodali, principal analyst at Forrester Research Group in Cambridge, Mass., points out that there are a number of mobile services that track customers in brick-and-mortar stores, including shopkick and Euclid, and that it's too early in their development to tell how effective they are at driving sales. "Just by being in the store, the consumer is already pretty far down the purchase funnel," she says. "They're likely there to buy anyway."

Of more concern to Mulpuru-Kodali is the privacy issue raised by these technologies. "A single piece of legislation could kill all of these mobile-marketing businesses. We just don't know how it's going to ultimately all shake out."