Why (and how) retailers should embrace 'showrooming'

It's a mobile shoppers world. By 2016, smartphones could influence close to 20 percent of retail sales.
Written by Heather Clancy, Contributor

More evidence emerged this week suggesting the power of smartphones to reshape how retailers stock, merchandise and track purchasing habits in-store.

New research from Deloitte suggests that more than 5 percent of store sales during 2012 will be influenced by smartphones. For the purposes of the survey, Deloitte defined "influence" to include activities such as product research conducted by shoppers with their mobile device, price comparisons and other mobile application usage. By 2016, that influence will grow to 19 percent of sales, or $689 billion, the Deloitte research suggests.

This phenomenon is rather disconcerting for the retail industry, and some retailers have actually banned Wi-Fi in their stores in an effort to prevent the activity and lock in customers. But a growing number, such as The Home Depot, are viewing mobile technology as a new way to inspire customer loyalty and accelerate the purchasing process. Those retailers are embracing 'showrooming' with technology of their own.

Alison Paul, vice chairman, Deloitte LLP and retail & distribution sector leader, commented on the trend:

"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."

Smartphone Users Are More Frequent Shoppers

Deloitte's research suggests that smartphone users aren't only becoming more common, they are more likely to make a purchase than those who aren't using them. For example, 48 percent of smartphone users said what they saw on a mobile application affected an in-store purchase decision. Approximately 72 percent of them made a purchase on that day.

The other thing to consider is that smartphones aren't just influential in-store. More than half of the smartphone users surveyed by Deloitte said they started doing research on the way to the store. (I'm hoping they weren't driving while they were doing that, but that's a whole other story.)

Here's some more perspective from Deloitte consultant Kasey Lobaugh:

"Retailers that do not engage shoppers through specialized mobile applications or targeted smartphone-based promotions leave the door open for competitors to reach a customer who is standing in the retailer's store and at the point of purchase. To make the connection with consumers, retailers need to understand how mobile shoppers are willing to interact with their specific store category, format and merchandise, both inside and outside the store, and customize their mobile strategy around the shopper's needs and experience."

No Shortage of Emerging Technologies

Last week, Motorola announced a major mobile technology push intended to help retailers become more savvy about showrooming and to help them develop applications that embrace, rather than discourage, mobile technology usage in their stores.

Microsoft is also hoping to benefit from the phenomenon. Its Microsoft Tag mobile scanning technology supports both 2D barcode formats (including QR Codes and the Tag format) as well as Near Field Communications. This month, Procter & Gamble are running a month-long test in the Chicago and New York areas of "pop-up stores," where consumers can buy household items. The idea is to help urban shoppers avoid having to lug heavy purchases on subways.

Other technology companies are explicitly positioning their technologies as a way to help retailers embrace and benefit from the usage of mobile technologies in the store.

For example, Mirror Image Internet is using geolocation to help retailers get smarter with mobile advertising, allowing them to serve up coupons for items that customers might be near in an aisle, said Martin Hayward, director of marketing.  "We can help our customers serve up content to people while they are at the store or even while they are at home to get them into the store," Hayward said.

The company even allows for device detection, so that the format is correct for the mobile technology being used. And, conversely, it can help retails block offers that are not available in certain geographic areas.

RadialPoint is another company seeking to help retailers attach more value to their offers, making them more competitive if someone decides to price shop with their smartphone while shopping in a store. The company allows retailers to attach technical support and service offerings, like installation, to commodity items such as consumer electronics technologies, said Jordan Socran, vice president of business development.

There are even technologies emerging to help small local businesses. One example is Goodzer, a "local shopping" search engine that covers inventory from more than 500,000 stores in the United States.

Image: Courtesy of Microsoft

This post was originally published on Smartplanet.com

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