There’s a debate about just how real “showrooming” is today. For example, UK-based affiliate network Tradedoubler published European consumer survey data that makes the threat of showrooming look pretty dire for retailers:
- 22% of in store smartphone users decide to buy online instead
- 20% changed their minds about buying “at all”
- 20% bought elsewhere (another physical store)
- 19% bought in that store
By contrast, Consumer Intelligence Research Partners argues, based on its own survey data, that most Amazon shoppers start and end on that site rather than go into stores and opportunistically buy online for a better price. In other words, smartphone shoppers buying from Amazon are primarily Amazon customers.
Regardless of which one of these arguments you’re inclined to accept, Pew, Opus Research, the eTailing Group and others have clearly established that consumers do use smartphones in stores and that the information accessed can and does impact buying decisions, sometimes validating the in-store purchase, sometimes causing them not to buy.
I’ve argued that indoor location is a beneficial way to enhance and personalize the consumer experience. However most of the (sensational) press converge on indoor location to date has focused on privacy and less on the potential benefits to consumers. Accordingly, while retailers are all testing indoor analytics and location most of them won’t discuss it because they’re scared about the fallout over privacy.
Some large retailers are taking a kind of “wait and see” approach allowing others to make mistakes before they proceed. However doing nothing is really not an option. But most retailers don’t fully understand why. They don’t feel any external pressure to act right now.
At the initial Place Conference in San Francisco last fall there was a discussion called “Microfencing: Targeting In-Aisle Customers.” During that discussion the question arose: who will own the in-store shopper? (Place 2014 is July 22 in NYC.)
While retailers have tasted the fact of showrooming they still assume in-store shoppers are “theirs.” If they fail to embrace indoor location as a way to improve in-store shopping, over time they will simply be reduced to commodity providers (truly showrooms) of goods that can be bought elsewhere for less.
But that’s not even the biggest threat. The biggest threat comes from brands.
Right now retailers, drug and grocery stores make billions from brands that pay them to advertise or market to in-store shoppers at the point of sale. Some of this money will inevitably flow into digital, in-store marketing channels. Opus Research has estimated that indoor analytics and in-store marketing could together be worth up to $10 billion (or more) in the next several years.
Brands are much more aggressive, proactive and ready to act compared with most traditional retailers. Brands will be ready to market to consumers in stores, through retailer apps or third parties, whatever is going to deliver effective reach and targeting. That means if retailers “wait and see” third parties such as Google, Facebook, Catalina, Coupon providers and a range of others may be able to grab the lion’s share of brand digital dollars aimed at in-store shoppers.
There are many analogies. Newspaper and yellow pages publishers were, for the most part, disrupted by third parties that acted faster and provided a better experience for consumers. It would be very easy to imagine third party ad networks or app publishers using “tight geofences” of store perimeters to deliver promotional messages and offers to grocery or in-store shoppers — siphoning off marketing dollars that would otherwise go to the stores themselves.
Don’t believe me retailers? Wait and see at your own peril.