Commentary
Showrooming & the 20% Mobile Deal Factor
- by Chuck Martin , Staff Writer, April 5, 2013
It may only take up to a 20 percent deal to drive a mobile shopper out of a store to purchase online.
Some years ago, I was walking through Sears and came across a couple looking at a Kitchen Aid mixer, with the price prominently displayed. The man pulled out his smartphone, read the barcode and told his partner “it’s cheaper at Best Buy. Let’s go.” And they left Sears, presumably headed to Best Buy.
Out of curiosity, I loaded one of my barcode reader apps and checked the price. Sure enough, it was available at Best Buy for 10 percent less at Sears.
Since that encounter, I’ve continually wondered what it would take to drive a consumer to leave a store to purchase elsewhere or online, AKA the dreaded showrooming.
A new piece of research on coupons this week mentioned in passing that 67 percent of shoppers check their smartphones to see if there’s a better price elsewhere.
Digging deeper into the nationwide study, conducted by Anderson Robbins Research for Linkable Networks, further identifies that there are some hardcore deal seekers, with 13% checking their phones all the time for better deals elsewhere.
A more interesting stat in the study is what it would take for a shopper to leave a store and purchase online instead.
The study found that the majority (62%) of shoppers would leave a store and buy online for a price up to 20 percent below the one in the store.
For a discount of 5% and 10%, a store would lose almost a quarter (23%) of its price-checking shoppers and for a discount of 15% and 20%, another 39%.
Viewed another way, many of the relatively small number (13%) of hardcore, mobile price-checkers will leave and buy elsewhere for almost any deal.
The red flag for retailers: that 13 percent is destined to go up.
Chuck Martin is Editor of the AI & IoT Daily at MediaPost and writes the daily Connected Thinking column. He is a NY Times Business bestselling author and his latest book is “Digital Transformation 3.0” (The New Business-to-Consumer Connections of The Internet of Things.) He is CEO of Net Future Institute and a frequent keynote speaker internationally. Follow him on Twitter @chuckmartin and contact him at Chuck@MediaPost.com.
An interesting topic, but these statistics seem useless without knowing the price. I might leave for 5% off on a $1000 TV, but I would not leave for 100% off on a $1 pack of gum. Did the study report that?
Unfortunately no, Richard. The only money references are in the demographic data, though the study was primarily focused on coupon redemption. But your point (and logic) makes sense. Will be on the lookout for additional research on the topic.
Electronics and appliances, maybe even car parts like tires, are ripe for show rooming when the price differential is substantial and immediacy is not involved especially when on line can get you points. Clothing that fits, puppy dogging, is not as susceptible. Less expensive items (relative term) can face a relative immunity (volume, principle, knowledge of consumer - Dylan's Candies 12.99/lb, local store 6.99/lb - etc.).
Interesting breakdowns, thanks Paula. Based on a study or other research?
sad part is that Sears probably would have matched the price if they just talked to them on the spot
Retailers like Staples have been price matching, and keeping my business for years. Thanks for your post and insight Chuck.
You may be right, Cheryl. Part of the issue at retail today is the lack of identification of the mobile shopper on the part of retailers. Another part is the lack of awareness of price matching policies by many consumers.
You are very welcome Jeff. (I was at Staples yesterday and they price matched everything I bought).
Great post with interesting stats that are not surprising.
I think by leveraging mobile and smartphone tech, retailers can stay relevant and enhance the consumer experience, and thus keep their valued customers in-store.
At zaptap, we help brands and retailers achieve just that! (and without an app)
Again, great post!
Cheers,
Jimmy MacKinley
www.zaptap.com
Thank you Jim, appreciated. And with or without an app, in-store engagement can be key.
I've still never seen anyone doing showrooming, not even one person, despite me being on the lookout for it. Also I don't believe that checkout assistants have the power to reduce prices just like that - their tills don't allow it. Where is this showrooming allegedly happening?
You may want to give Best Buy or Staples a shot, Pete. Both retailers routinely price match at checkout and they generally know the rules. For example, Best Buy sales people know that they will price match Amazon and Staples salespeople know they will match prices at a physical store. Hope this helps.
Just realised: your data shows price matching. *Nobody* does that in store, it's always for a fairly expensive purchase that you researched back home on the coupon sites etc. You have to do that because so many of the online prices and coupons turn out to be incorrect or invalid for one reason or another (for example because stores provide false prices to the comparison sites). You really don't want to be faffing about in the shop for a hour while your girlfriend dies from embarrassment. The scenario you're discussing, where people go to the store and *then* price match is not what people are measuring.
@Chuck. Best Buy and Staples both closed down in the UK.
In the U.S. market, 42% of smartphone owners have compared prices online while in stores and 70% changed where they purchased based on the price check, Pete. Almost a third (32%) have have used a barcode scanning app for price comparisons. Again, these are US stats.
In many stores in the US, especially those with Wi-Fi, barcode scanning to price check is a very fast process, using apps like ShopSavvy, Amazon Price Check or Red Laser.
In answer to your sweet question: Besides knowing the price of some "drugstore' candies, I have bought chocolate rocks on occasion at a local store (which sells the same items in Ralph Lauren's daughter's store) many times for various occasions so I know the price. The local store also sells toffee coated pecans and so much other better stuff that Dylan's does not have, too, just in case ;)
Thanks Paula for clarifying that it is, indeed, real research.