Six Pixels of Separation - The Blog
March 29, 2013 8:34 AM

How To Curtail Showrooming: Charge Admission

What would you pay for an opportunity to browse a store?

There have been a couple on instances in the news this week that highlight the general challenge that retailers face in the age of showrooming. For those uninitiated, showrooming is when consumers go to the physical stores, wander the aisles and perform price comparison and/or complete the purchase on their mobile device. In short, they're getting the full, physical retail experience - which could even include some consultation by the sales associate - only to lose the sale to the online channel or another retailer who is offering a better price. Best Buy has been at the center of this mobile trend and his been fighting - with all guns blazing - by offering matching prices and more. Many retail pundits agree that physical stores need to offer more services and value if they are ever going to compete. Looking at platforms like the Genius Bar at Apple's retail experience points to a retail environment where physical goods are sold alongside of services and more experiences.

Would pay for the opportunity to wander the aisles.

At first blush, this sounds insane. Do we actually think that consumers would pay a fee to come into a store if they don't buy anything? It's already happening. In Brisbane, Australia a specialty food store got international attention this week for posting a sign on its door that read: "As of the first of February, this store will be charging people a $5 fee per person for 'just looking.' The $5 fee will be deducted when goods are purchased." The sign goes on to explain its reasoning: "There has been high volume of people who use this store as a reference and then purchase goods elsewhere. These people are unaware our prices are almost the same as the other stores plus we have products simply not available anywhere else. This policy is in line with many other clothing, show and electronic stores who are also facing the same issue."

They are not the only ones.

This type of "pay for admission" is a little bit more prevalent in the luxury goods space. It has been reported that a Vera Wang boutique in Shanghai charges consumers $3000 yuan (almost $500) for a ninety-minute appointment to try on dresses. Strange, how it seems somewhat viable for Vera Wang but completely misguided for the specialty food store. If the prices are the same and the retailer offers products that are not available anywhere else, they have a business model that could be augmented by services, loyalty programs and more that could easily counter the effects of those who are showrooming beyond reason. Local book stores (who are as challenged as others with showrooming as more and more consumers buy e-books), have extended their businesses into coffee shops, selling gifts, holding events, teaching courses and more. Does this offset showrooming or the digitization of their core products? It doesn't. But, it does force them to become hyper-competitive instead of the alternative.

There is no solution.

While there will never be a solution for retailers when it comes to offsetting those who are doing competitive price checking or ordering from their smartphones, there is still a vast majority of human beings who aren't looking for the cheapest price, but rather the best experience and help with their purchase. It is (usually) a misguided strategy to make everyone pay for the changes in an industry. An admission charge to walk into a store will only be a smart, strategic and effective move if there truly is a value in exchange for the fee. Could retailers charge a fee if there's something more than products to look at beyond the front doors? Absolutely. Could retailers charge a fee if they're simply worried about showrooming? Not a chance.

Would you pay to simply browse a store?

By Mitch Joel


Comments Comments Feed
  • Posted by Eden Spodek
    Mitch Joel

    Mitch, I couldn't agree with you more. The solution for staying competitive is for retailers to step up their game and provide more value to customers. I spoke with a retail manager recently who has cultivated a customer-centric culture, even if it means not making an immediate sale and guess what, that approach has lead to increased revenues.

    Reply
  • One thing retailers could do to improve customer experience if they want to charge is have entertainment from local artists. This would benefit the local community and provide an added value experience to the shopper.

    Reply
    • Posted by Whitney hoffman
      Mitch Joel

      This is an interesting idea. Could Best Buy sell more stuff (or guitar center) if they had local artists or community members in who use the stuff demonstrating real results? I could see that working for cameras, video, audio gear.... Cool idea!

      Reply
  • Posted by Bruce Runions
    Mitch Joel

    Great insight. Companies that see the bigger picture by sacrificing short term profits for continually innovating and looking for ways to provide value to customers in hyper competitive industries will win in the end.

    Reply
  • Posted by Darren Barefoot
    Mitch Joel

    "There is still a vast majority of human beings who aren't looking for the cheapest price, but rather the best experience and help with their purchase."

    Citation needed here. I'm not sure if you're right, but I also don't think this is self-evidently true.

    Reply
  • Posted by Jeff Harbert
    Mitch Joel

    "These people are unaware our prices are almost the same as the other stores plus we have products simply not available anywhere else."

    Two things. 1) If that were true, customers wouldn't be showrooming, they'd be buying. 2) That's a marketing and messaging problem that needs to be fixed, and one "these people" should not be blamed for.

    Reply
  • Posted by Jay
    Mitch Joel

    Hi Mitch,

    I feel that negative tactics like forcing the customer to pay a visit fee is detrimental. Rather positive re-enforcement like nice ambiance, personal attention from Customer Service Rep, Play area for kids, More variety and discounts offline would propel people to visit the stores more often. I think one decisive factor could be the "Personal" touch that can be offered to the customer offline.

    Regards,
    Jay

    Reply
  • Posted by Sass Peress
    Mitch Joel

    Retailers could:
    1. Give a greater discount than the fee based on amounts purchased.
    2. Provide for comparison terminals showing their confidence in their value proposition, this allowing their clerks an opportunity to engage in customers in front of a joint screen experience.
    3. Use the Macy's approach in that old familiar Christmas movie where customer satisfaction was placed above all in helping customers find what they really want . If that customer tells two friends and they tell two friends about how selfless the store staff are, rewards will ensue.
    4. Donate part of the fee to a local charity as a gesture of goodwill and shared responsibility.

    Reply
  • Posted by DISRUPTIVE Dave
    Mitch Joel

    Just wrote a full blog post diving into the Showrooming Issue (link below). I'm really spending some time thinking about a strategy that hinges on pop-up retailtainment (enough buzz words there for ya?!) as the main combatant against showrooming. Instead of working against them, why not work with them?

    http://mydisruption.wordpress.com/2013/03/03/sunday-musings-2/

    Best,
    Dave

    Reply
  • While every suggestion here seems practical and do-able, each of them comes with a cost. The ultimate question will be, 'Will the customers be willing to pay the extra price for the experience on offer?'. Trying to answer this question shoots up a whole new bunch of problems, like 'does every segment of customers that step into the store derive similar value from the add-on experience?'.
    This is a major issue for retailers and is a hard problem to deal with.
    But Mitch, I completely agree with you when you say that there is no way a retailer can successfully charge 'fees for looking' just so they can avoid showrooming.

    Reply
  • Posted by Dee S
    Mitch Joel

    On principle alone I would not enter a store that posted a sign like this, even if it was my favourite store in the past. Did someone get really drunk one night and dream up this business-killer? What an idiot!

    Reply
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