6 Tips for Keeping Your Store Relevant to Online Shoppers
Likely, we have all done it. We walk into a retail store, browse their huge selection of inventory, talk with their highly-trained salespeople, pull out our smart phones, scan the product barcode and find the same product cheaper online. When we leave the store empty-handed to buy it online, and the retailer is stuck with the cost of their marketing, inventory, staff and real estate without the sale, it's called “showrooming.”
Retailers are clearly feeling the pressure from online competitors and customers armed with mobile devices to help them research. Instead of retreating, make your store relevant.
1. Don't fear the Internet, embrace it. Help customers do the research online to find the lowest prices but, like Best Buy, offer “low price guarantees” that give customers peace of mind. That way, the consumer doesn’t feel guilty about doing that same research on their smart phones and you make at least a low margin sale, which is a lot better than no sale. Encourage your customers to buy from your website where they can save money from lower prices.
2. Don't fear showrooming, embrace it. Thinking out of the box here, retailers should consider showroom partnerships with their vendors, or even their online competitors. Vendors need key retail partners to stay in business. Perhaps they would share in showroom staff costs to protect their own revenues or agree to distribute inventory on a consignment basis. That would allow retailers to compete better on price by lowering inventory costs and risk.
The same logic applies to online competitors. They know offline stores are helping them drive online sales and could look at the retailers as marketing partners for them.
3. Don't fear mobile, embrace it. Turn the consumer's smart phone into an asset with stand-alone apps that improve the users’ experience in the store and get them on your marketing lists, even if they end up buying elsewhere. Apps could allow customers to scan bar codes for past customer reviews while letting you push specific offers on inventory you need to move and upsell bundles of products and services that make it more difficult to compare prices.
4. Don't let price be your key differentiator. The worst thing you can do is make price your only point of differentiation. Where you can, look for exclusive inventory that is only available in your stores. Make the customer service experience so exceptional, with well-trained staff, unique add-ons and offers, customers prefer buying from you.
The pro at this is Abt, a highly successful consumer electronics and appliance store in metro Chicago. They staff plenty of highly-trained salespeople who are available anytime you need them, are not pushy and are free to lower prices with consumers, if it helps them close the sale. They recoup that lost product margin upselling high-margin installation or extended warrantees.
5. Consider smaller formats and alternative uses for space. Retail locations clearly get your product closer to consumers but look for more efficient ways to get more done with less space. If you are locked into long term leases, consider finding a partner to share in your space. It was a very smart move for Best Buy to allow Samsung to become an exclusive store-within-a-store experience. In one move, they got someone to share in their costs and help replicate the enviable Apple store experience.
6. Do you really need a store? It didn’t take iTunes and Netflix long to prove that a Borders or Blockbuster store no longer had a need in the market. Barnes & Noble is still with us thanks to their quick shift to Nook and digital content.
Think about Staples. They are doing around $23 billion in annual sales, about half from their website. Even if they shut all of their stores, to focus solely on e-commerce, and potentially lost half of their revenues in the process, without rent, inventory and staffing stores, their valuation multiple could materially expand (from 1x to 3x revenues), potentially valuing the company at about the same level as they are today.
If you've tried everything and it does not succeed, ask yourself if you really need the brick-and-mortar presence at all.