"Showrooming" Whaddya Think?

[martyp]

I treat the big box stores like I buy cars. I use the internet to do my research which means I'm not really depending on the salesperson to know anything and I give them the least amount of opportunity to steer me the wrong way. When my Tivo DVR died last year I just found the model I was looking for on the internet and then called around to find the BestBuy that had one in stock because I was in a hurry to get back online with the TV. I used them like a delivery warehouse. If I want customer service, such as in buying a major appliance, I'll go to a locally owned establishment. I'm usually looking for quality and value rather than the lowest price. Several years ago I bought my flat screen TV at BestBuy because I was nervous about doing it through the mail. I expect that places like BestBuy will continue to struggle but in ten years they will be a thing of the past.

[imoldernu]

Am sulking... My post #31... was a boiled down result of a $5 million study financed by Exxon Mobil, that I was involved in in the very early 1980's. Based on a quarter century of retail experience, I still see this as the future of the industry. The penultimate "showrooming".
No one to discuss this with here...

[Lazarus]

Quote:

Originally Posted by imoldernu Am sulking... My post #31... was a boiled down result of a $5 million study financed by Exxon Mobil, that I was involved in in the very early 1980's. Based on a quarter century of retail experience, I still see this as the future of the industry. The penultimate "showrooming". No one to discuss this with here...

I reread your post #31. I don't know anything about retail but in 1980 I doubt the internet was part of the equation.

Would have just been Exxon in 1980. I don't know what they were doing in retail then. I know Mobil owned Wards for a while back then. Oil company management did not work out so well in retail.

[imoldernu]

RE Exxon... Correct... It was Mobil then, and Mobil's connection with retail, came from it's purchase of my company... Montgomery Ward, back in the 1970's when Mobil had to buy something to offset its' windfall profits from the gas crisis.

The study was commissioned as as an attempt to "catch up" with the then rising star Walmart.
For anyone who remembers Service Merchandise, this was the original meaning of "showroom"... thus the reference to Trade shows... which are "Showrooms".

Most here are too young or don't really understand retailing. Walmart essentially introduced several radical concepts that counted toward their success.

Minimal stock - daily replacement of sold goods.
Electronics - Scanners, Computer based ordering, departmental control.
Central Warehouses- Circled major markets away from major cities
Random access Warehousing-
Centralized management
Buying power -
The use of electronic technology to robotize people actions, from management to physical actions.

Our study led to to Showrooms... Where customers could be exposed to samples... to try, feel, and see... along with people who know and understand the product.

The warehouses would be bigger than anything now in use. Mechanized. Shipments a mix of UPS equivalent or direct to the Showroom for warehouse pick up.

A system infinitely adaptable to any number of SKU's... Instead of One or two hundred thousand items, perhaps a million or more. Easily handled in the framework system.

Think Amazon on steroids... centralized in the malls that are currently being skeletonized. Think of megawarehouses in Houston to serve Texas... In Portland to serve a 300 mile radius. In Denver to serve the Central states...etc... Then think of the current Super Malls.... replacing the 100 stores with 1000 showrooms, each as "showrooms" with no stock except the samples.

The coming year will see hundreds of malls turned into money losing ghost towns.

That is what we were looking at back in the 1980's. Walmart basically did this. In their own way. Their sales are now larger than the next 7 largest retail stores combined.
.................................................. ............................
The showroom would be symbiotic with online retailing.

[Midpack]

Quote:

Originally Posted by martyp I treat the big box stores like I buy cars. I use the internet to do my research which means I'm not really depending on the salesperson to know anything and I give them the least amount of opportunity to steer me the wrong way. When my Tivo DVR died last year I just found the model I was looking for on the internet and then called around to find the BestBuy that had one in stock because I was in a hurry to get back online with the TV. I used them like a delivery warehouse. If I want customer service, such as in buying a major appliance, I'll go to a locally owned establishment. I'm usually looking for quality and value rather than the lowest price. Several years ago I bought my flat screen TV at BestBuy because I was nervous about doing it through the mail. I expect that places like BestBuy will continue to struggle but in ten years they will be a thing of the past.

For some items or services, online is an easy choice. But would you be willing to buy EVERYTHING online sight unseen? Using your example (but please don't get hung up on the details of one item), what if you could no longer buy "major appliances" at a "locally owned establishment," and your only option was online? That's the question...

[bUU]

I'm not that far away from that, Midpack. Heck, I happily bought our big-screen television online, and had a better appreciation of the purchasing experience than our first big-screen which we bought at Circuit City years earlier. I'm really not quite sure what I could get out of standing in a showroom with a washing machine or dryer to make myself feel more comfortable that I'll be happy with the purchase. The specs are available online, and the physical presence in the same room doesn't really do much for me. I need to use the sucker to get much out of the experience sharing time with it. That's when you find all the nasty little secrets.

And that's one thing that Amazon.com helps out with quite a lot. More so than any other source, I trust their (certified purchaser) reviews. I gain far better insights into what I'm going to encounter using the device from those reviews than I would get from touching an item on a shelf in a store.

[Lsbcal]

On my last trip to Best Buy a few months ago things went pretty well. They had reworked the store and it looked a lot better. There was no annoying loud music playing.

I had looked up routers on Amazon and read the reviews and sort of knew the pricing. The Best Buy guy answered most of my questions before drifting off somewhere else. I'd rate him a B for sales effort -- maybe I was hitting the limits of his knowledge with my questions although I'm no expert in that area. I bought the Netgear router on that trip.

When I go there it is on the weekdays and in the morning to get the best attention, hopefully.

Took a look at the BBY stock. Not pretty but not in single digits yet.

[BigMoneyJim]

Quote:

Originally Posted by Midpack That was the central point to me and the central question is do people who take advantage of BnM service/knowledge AND then buy online (all premeditated) realize they may be forced to buy everything sight unseen if they keep it up? Will they live to regret it? Frankly, I'm afraid they are and they will regret it...but it will be too late. Another central point IMO. Do folks who criticize BB (or other retailers) service realize they accelerate the demise of service by showrooming?

I don't see it as an extinction, if I may set up a strawman rephrase your point.

Before the Internet was full of (semi-) trustworthy reviews on everything from socks to TVs I went from store to store comparing items and prices. Sometimes one store would have a display of the exact product I decided upon, but another store had it cheaper, and I went to the cheaper store. I went to used car lots to scope out car models I was more likely to buy from an individual via the newspaper classifieds. I'm sure I wasn't the only one.

There has always been competition. I don't recall having bookstores with embedded coffee shops, lounge chairs and board games where people are implicitly encouraged to hang around and read for free before Barnes & Noble, but I know of no other B&M type of (new retail) bookstore now (university bookstores and used bookstores notwithstanding, although some of those follow the Barnes & Noble model, too). B&N did something seemingly counter-intuitive by encouraging people to lounge around and read their books for free and ruled the B&M book retail world until Amazon.com got going.

And while finding cars for sale from individuals is easier now with the Internet, I bought my last car from Carmax and plan to buy my next one from them. They have a huge selection, built a reputation, and I'd now rather do business with them than try to figure out which individuals are sincere and which are "curbside dealers" who are flipping cars of unknown quality. As long as the price is inline with the benefit. In my last deal I figured I paid a bit more than I would have from an individual, but the loan and paperwork went very smoothly, and I like the no-haggle setup, and I have a better trust factor with them than many individuals.

I used to buy electronics at a store call Best, or a place called MacDuff's I think, and one other place...maybe it was Wards. (And Service Merchandise a time or two...you're welcome.) When Best Buy was new they had better overall pricing, and their no-interest financing was handy. A Best Buy credit card is the only store card I kept and used for an extended period of time, and I did much of my electronics shopping there for years. Later some other places opened up and BB wasn't as competitive, and they did a couple of things to annoy me. So yeah, I'll complain about them. But I will add it's been a few years since I've compared prices and policies there, so maybe they're better now. Nowadays I usually price things at NewEgg and go to Fry's. Sometimes Fry's is cheaper, sometimes I buy there even if it's a bit more, but sometimes it's almost twice as much. Like I say, Fry's is weird and they change prices a lot, but I shop there as long as I can compare. For a while it was all Fry's-or-NewEgg.com for me, but lately I've found deals other places including Amazon, Target and Wal-Mart.

The point I'm failing to illustrate is that things will adapt. I think bookstores are an endangered species...I just don't know if there will remain enough of a demand support retail B&M new-bookstores. But for other items I think enough of a market will remain of people who want to touch, feel and try out before buying. I generally want to try out consumer electronics in the store, and certainly large appliances. (I was going to include clothes, but then again I could probably last quite a while just reordering the same lines of shoes, pants and work shirts I've been wearing.)

I don't know how things will look in 5-10 years. Here are some possibilities that jump to mind:

- Super stores like Wal-Mart and Target absorb any "showroom penalty" and make enough sales from the showroomer traffic to make it worthwhile

- Online retailers open showroom stores; perhaps they sell stock from the stores, or perhaps it's order-only

- Localized or regional truck/van companies cover the retail equivalent of the "last mile" in telephony terms (from the TelCo central office to your house) from the local/regional distribution warehouse and avoid long-haul parcel shipping costs, and I'm thinking these companies are independent and serve several online retailers' warehouses

- Brand names open their own showroom stores. Disney, Microsoft, Apple...these are largely already showrooms for other distribution channels and partnered services. Ikea may already fit this model. This way the brand controls the presentation of their product.

- Only a few big-box B&M retail chains survive, and specialty value-added shops fill in the reduced market for customers who want/need to try out the product and get in-person assistance with it.

- Rampant shilling causes most review sites to become untrustworthy, and there aren't enough trusted sources to cover all products, so consumers shift purchasing back to retailers with solid return policies, brand names that maintain a reliable reputation or stores with knowledgeable and helpful staff

Carmax is a huge place, and while there are three of them in my area, it's a pretty big area and there are probably a couple hundred or more other new/used car dealers in the same area, many of which are closer to me. But I noticed they got a small pad lot and have a remote sales office in a neighborhood distant from their stores. I haven't been inside, but it looks like they'll help you search their stock and even have a small car-hauling rig (looks like it holds 2-4 cars) bring the car to the remote store for inspection and presumably complete the sale onsite if sold. The lot is about as big as an average fast-food lot, an including customer and employee parking there look to be about 15-20 spaces, so I don't imagine they keep any stock sitting on their tiny remote lot. If a (mostly used-) car company can manage to maintain a remote showroom--I'm guessing there's more than one, but I've only noticed the one--I'm guessing new-item retailers and/or brand can manage to do the same if their B&M retail channels falter so much as to impact their meatspace presence.

All that said, I do feel I have some loyalty if there is a value. I value ease of return to a local store with good return policies, especially with bulky and/or expensive items. I can't recall offhand buying an item online if I felt I needed the showroom tryout to make a decision or if I needed advice from the employee, although I may have done so. I live alone, so I have some concerns about parcel delivery during the day when I'm not home. I don't want to leave an expensive item on my front porch, and I don't want to advertise that my house is empty during the day. (But beware of attack cat!)

But lets say (what I think are) your worst fears happen, that rampant showrooming and bargain chasing drives B&M category store chains out of business, and then the hordes of showroomers then invade big-box stores and specialty retailers and start reducing their ability to serve paying customers. At some point the retailers will implement a way to stop the showrooming or enough will go out of business that overall sales will be impacted because buyers don't have the confidence to buy without the showroom experience. After that happens, somebody--the product brands or the online retailers...heck, maybe even a distributor or two--will experiment with their own B&M showrooms to stimulate sales. In this scenario there is probably plenty of empty retail strip-mall, mini-city-mall and traditional indoor mall space available for such showrooms.

I just thought of another possibility: maybe instead of showrooms, a brand or retailer sponsors select homeowners or businesses that then act as localized showrooms. Perhaps Kenmore supplies my house with the latest refrigerator, washer/dryer, gas range and outdoor grill and has me host weekly or monthly product demo parties. Perhaps Black & Decker equips a lawn care team and demonstrates their products by doing lawns on successive blocks. Or maybe it's like some of the specialty bed/vacuum/other home products that offer a free in-home trial.

[bUU]

Quote:

Originally Posted by BigMoneyJim I don't know how things will look in 5-10 years. Here are some possibilities that jump to mind:

Quote:

Originally Posted by BigMoneyJim - Super stores like Wal-Mart and Target absorb any "showroom penalty" and make enough sales from the showroomer traffic to make it worthwhile

I don't think "absorb" really captures it. There's going to be a cost, and it's going to end up being paid by those who choose to patronize those stores. As things are now, they pass that cost along in the form of less technical know-how, far more limited choices, etc.

Quote:

Originally Posted by BigMoneyJim - Online retailers open showroom stores; perhaps they sell stock from the stores, or perhaps it's order-only

I don't see this happening. Amazon.com has made a clear choice to expand its footprint in the direction of more distribution centers, focusing on getting to the goal of same-day delivery, not opening showrooms. And now that Google seems to be heading toward directly competing with Amazon.com someday, I think we can expect to see online retailing to get more "big box store-like" (in other words: less focused on helping customers check out a product so that they can then go and buy it from their competitor).

Quote:

Originally Posted by BigMoneyJim - Localized or regional truck/van companies cover the retail equivalent of the "last mile" in telephony terms (from the TelCo central office to your house) from the local/regional distribution warehouse and avoid long-haul parcel shipping costs, and I'm thinking these companies are independent and serve several online retailers' warehouses

That's already well underway, and it is actually worse than you've described. They are not only independent from the retailers (a good thing) but their delivery staff are practically all "independent contractors" - i.e., people so desperate that they're willing to work for small compensation, no benefits, paying for their own delivery vehicles, managing their own expenses thereof, etc. My spouse does a lot of ordering from Drugstore.com and we've "lost" a couple of packages already this holiday season. They were picked up by Lasership, but never arrived on our doorstep. Strange that every single UPS package makes it here.

Quote:

Originally Posted by BigMoneyJim - Brand names open their own showroom stores. Disney, Microsoft, Apple...these are largely already showrooms for other distribution channels and partnered services. Ikea may already fit this model. This way the brand controls the presentation of their product.

This definitely sounds viable, but think about the context: These showrooms only will exist to showcase premium products. Samsung will have a showroom to show-off their magnificent 9000 Series televisions, but Insignia won't have a showroom to help customers realize how much crappier their cheaper televisions are, and Vizio will avoid having a showroom because they don't want all their customers who were told to "buy a new television" when the display in their year old Vizio died to come in and make a stink.

Quote:

Originally Posted by BigMoneyJim - Only a few big-box B&M retail chains survive, and specialty value-added shops fill in the reduced market for customers who want/need to try out the product and get in-person assistance with it.

There will always be a place for the super-deluxe customer, but you don't need a public showroom for that. How then? The key, for any consumer-facing business, is how to segment the market. Someone serious about buying a major appliance, who wants superior service, won't blink twice about evaluating the "big box consultants" offering their services to the market, and then agreeing in advance to pay them for their services (regardless of what is purchased from where). They already do this with architects and interior decorators. So given that, these "consultants" can have consumers make an appointment to bring samples to their home, to try out for a few days perhaps, at least for smaller items, and have a private showroom for larger items.

And unfortunately, the budget, affordable and even (non-super) premium customer doesn't have access to showroom services that way.

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Originally Posted by BigMoneyJim - Rampant shilling causes most review sites to become untrustworthy, and there aren't enough trusted sources to cover all products, so consumers shift purchasing back to retailers with solid return policies, brand names that maintain a reliable reputation or stores with knowledgeable and helpful staff

Amazon.com has that addressed, at least for now, by labeling the reviews that they certify were posted by people who actually purchased the product. Sure, the manufacturer can go onto Amazon.com, purchase their own product, and post a review, but that's just one review. The only way for the manufacturer to make profit on the arrangement (as opposed to just padding Amazon.com's coffers) is to have the number of real customers making purchases far outnumber their own "shilling" purchases, so invariably (as things are working out today) the vast majority of certified reviews are almost surely genuine and sincere.

Furthermore, Amazon.com's generous return policies also help in this, though admittedly that could change over time.

Quote:

Originally Posted by BigMoneyJim But lets say (what I think are) your worst fears happen, that rampant showrooming and bargain chasing drives B&M category store chains out of business, and then the hordes of showroomers then invade big-box stores and specialty retailers and start reducing their ability to serve paying customers. At some point the retailers will implement a way to stop the showrooming or enough will go out of business that overall sales will be impacted because buyers don't have the confidence to buy without the showroom experience. After that happens, somebody--the product brands or the online retailers...heck, maybe even a distributor or two--will experiment with their own B&M showrooms to stimulate sales. In this scenario there is probably plenty of empty retail strip-mall, mini-city-mall and traditional indoor mall space available for such showrooms.

As I indicated before, for premium products from premium brands, perhaps, but that's going to leave the vast majority of purchases (including all bargain-hunting) out in the cold. What's going to happen? I think that people (especially bargain-hunters) will (a) take a lot more risks than they've had to in the past, and have no choice but to accept the consequences; (b) rely much more heavily on neighbors and friends for recommendations, though that will still result in a sharp narrowing of "available" choices (i.e., those that some friend took a chance on and was pleased with - a substantially smaller range of choices indeed), and therefore will likely result in some significant sub-optimization for the budget consumer. Given that showrooming, itself, represents budget consumers gaining benefits that they end up not paying for, this sub-optimization makes sense - it reflects the system re-balancing itself in response to the imbalance that showrooming itself brought about.

[Midpack]

Interesting discussion, much of thought provoking - a good thing. Where I may disagree, I'll refrain from . Thanks...

[Katsmeow]

Quote:

Originally Posted by Midpack For some items or services, online is an easy choice. But would you be willing to buy EVERYTHING online sight unseen? Using your example (but please don't get hung up on the details of one item), what if you could no longer buy "major appliances" at a "locally owned establishment," and your only option was online? That's the question...

I don't think it's the end of the world. In an ideal world I could look - in my home - at every single product I want to but before hand and then I could pick out what I want and instantly receive it.

But that ideal world never existed. Before online - you were limited by where you could were willing to drive to and by the selection that existed in that store. Way back when I bought all my computers at bricks and mortar stores. Now, I don't. Why? I get better selection and more choices by buying online (sometimes better price but for computers it is mostly the ability to get exactly what I want).

Yes, when you buy sight unseen there is some risk but the better selection and often better prices make it worthwhile.

The other day I wanted to buy a new DVI cable. I looked online to see what Best Buy had in stock at their store. I then looked at Amazon. The cost was about half on Amazon and it would be delivered to my house (I didn't have to drive the 20 minutes each way to Best Buy). The negative was I had to wait 2 days to get the item. I waited the 2 days.

About the only thing that I absolutely feel like I want to buy in an actual store is clothes. I've even wavered some on that particularly where return policies are very easy (the shoes I bought at Zappos that didn't fit well for example).

At the end of the day, though, if I had a choice of buying everything online or going back to nothing online I would choose to buy everything online.

[Katsmeow]

Just a Best Buy follow up. DH wanted to buy some Ethernet cables the other day. He looked online at Amazon and could get the shortest one for $3 and the longest one he wanted was about $8. These were name brand products. He then looked online at Best Buy and found they had the shortest one for $3.99 so he decided to go into the store so he could get it that day.

Goes to Best Buy and the cheapest short cable was $18! He asked why it was so much since the cheapest online at Best Buy was $3.99. He was informed that was for a different brand and could only be bought online. So, Best Buy basically showroomed itself. He didn't want to pay $18 for the cable (the longer cables were also very high priced) so he went home and order from Amazon. He declared to me that he will never set foot in Best Buy again as it is just a waste of time....

[martyp]

Quote:

Originally Posted by Midpack For some items or services, online is an easy choice. But would you be willing to buy EVERYTHING online sight unseen? Using your example (but please don't get hung up on the details of one item), what if you could no longer buy "major appliances" at a "locally owned establishment," and your only option was online? That's the question...

No. I don't want to buy everything online. I think more purchasing activity will go online but eventually some kind of equilibrium will occur. It has to because that is how economics will work. But for some of us the world won't be a better place once we get there.

My wife thinks nothing of buying online and then sending it back if she doesn't like something. I hate going through that process but how many people out there will do that?

[bUU]

Well, be careful: Equilibrium could mean simply a number of different online vendors, selling increasingly smaller arrays of products for each category (i.e., vendors compete for market strata based on price, because of consumers settling at their current level of bargain-hunting fixation).

[samclem]

One answer to showrooming would be for brick-and-mortar stores to charge a small membership fee. If you want to come in and try out the keyboard on that laptop or see the real color and fit of those shoes you saw online, you'd need to be a member. That would help assure the people getting the service (the close-up view of the product) pay for that service. And it could allow the stores to decrease prices so customers would be more likely to buy at the B&M store rather than online.

It would be a tough sell--customers will avoid the membership if any store with the goods on display are still non-membership. Maybe Best Buy could get away with it (Circuit City is gone and they stock lots of high-dollar stuff and carry a wide variety--appliance, electronics, etc) and maybe some niche retailers.

[Meadbh]

It's happening here too. Yesterday, Best Buy and Future Shop suddenly closed 15 Canadian locations, including the Future Shop close to my home, which opened just over a year ago. I will miss it. I have visited it four times, to buy a cover for my iPad, a cable, a backup device......oh and yes, once to research a GPS. I got to play with them, but they didn't have the one I wanted, so I bought it online. So I guess I'm part of the problem!

Best Buy, other big-box stores being cut down to size by consumers | Retail & Marketing | News | Financial Post

Do you remember the early days of Amazon when so many people thought Jeff Bezos was out of his mind? Not me. I always admired his vision. I'm glad we were ready for it.