(This piece originally appeared on Mobile Payments Today's sister site Retail Customer Experience.)
Unless you have been living under a rock lately, you'll know that showrooming is one of the hottest topics in retailing. Consumers are increasingly using their smartphones to shop online for better deals while standing in the store aisle. Macy's just announced an innovative approach of using their audio system speakers to market to consumers already standing in their aisles. What makes Macy's approach so interesting is the speed and affordability of instantly implementing mobility marketing across hundreds of stores. As technology barriers are coming down for mobility marketing, omni-channel retail marketing is becoming the norm ... and a requirement.
I won't even attempt to list the plethora of recent articles of consumers practicing "showrooming" in the retail store aisle. And, I have recently spoken with a number of retailer staff who openly admit that even they check prices online with their smartphones while shopping in categories "not carried by their store". With the growth of smartphone penetration and better mobile devices, consumers will increasingly become mobile shoppers.
Showrooming can be a death spiral for a bricks and mortar retailer attempting to compete on assortment and price. We have posted previously that the "race to the bottom" competing on lowest price is a race that store based retailers can't afford to win. The retailers most vulnerable to showrooming are those primarily using price to drive store traffic, as well as converting sales through price matching guarantees.
Big difference between generating traffic and converting visits to sales
All retailers face the critical challenge of driving consumer traffic to their stores. To sell them something, they must "come" ... whether it is online or to a physical store. To generate interest and incentives to shop, retailers use a variety of levers to drive traffic, including but not limited to: ads, promotions, bundles and discounting prices. The better retailers also drive return traffic through merchandising, store design, professional staff and service. The best traffic of all is repeat visits of consumers who are loyal to the retailer and their experience.
The danger of showrooming is that retailers get anxious, even paranoid, about converting the consumer visit into a sale. When they see fewer consumers buying at the checkout, the retailer's comfort zone is to discount prices even further in order to convert a sale today. The huge challenge with advertising lower prices, or price match guarantees to increase store conversion rates, is that it lowers prices and margins on every single sale. Once a consumer has invested in making the trip to the store, the strategy needs to become one of how to most cost effectively convert that sale opportunity while they are at the door.
Mobility marketing = Opportunity to selectively target and convert sales
Ok, consumers are coming to your store. Maybe they saw your ad, or maybe they came in response to a promotion. Maybe not, but the key is that they made the effort to visit your location and they are predisposed to walking to shop right now. So how can you convert this opportunity literally standing right there at the door to come in and make a purchase?
This is where the new mobility marketing comes to the forefront. For consumers who have their phones on (and who doesn't), retailers can reach consumers who "opt in" through services like shopkick. Shopkick literally enables the retailer to offer incentives to walk in through your phone app. Consumers are increasingly using shopkick and other similar mobility apps because:
- They earn incentives just for walking in the door at participating retailers
- Get exclusive deals and offers from specific retailers, even specific stores
- Collect rewards for just scanning products on their phones (giving the retailer an opportunity to make offers to convert sales that might be lost to showrooming)
So why hasn't every retailer jumped on the mobility marketing bandwagon? Historically, it has required costly infrastructure and resources to implement mobility marketing, which is something cash strapped retailers have been reluctant to do across hundreds of stores.
Macy's and Mood Media breakthrough in mobility marketing rollout
Shopkick is just one example of mobile technology designed to market through mobile phone apps. These mobile apps enable retailers to drive real consumer traffic in the door, and then interactively engage consumers who are there. The win-win is creating both low cost traffic, with more targeted cost effective conversion. Consumers receive value from the store and are further incented by "kickbucks" that they can spend at other shopkick locations.
The challenge with executing shopkick and other mobile strategies has literally been reaching consumer's phones in stores. Macy's just announced a partnership with Mood Media to be able to execute the "shopkick signal" through its existing audio system speakers. This is significant innovative breakthrough for retailers because this type of Macy's execution:
- Tremendously lowers infrastructure and startup costs.
- Enables very rapid, low cost implementation across hundreds of stores.
- Enables shopkick detection inside the store, even departments within stores.
- It enables very store specific messaging and offers to real customers in aisle.
- It creates a proactive opportunity to thwart some showrooming purely on price.
Mobility is now a requirement in a consumer driven omni-channel world
To say that retailing is becoming more competitive is a gross understatement. Multichannel retailing has become the norm rather than the exception. Even mass merchant giant Walmart is investing billions to develop online retailing that will keep it competitive in an Amazon world. However, retailing always evolves. The new frontier is the store literally reaching out to your phone ... and even becoming an extension of your phone.
Mobility marketing is no longer a quirk, but will become a requirement for retail success in an omni-channel world that is increasingly consumer centric. Macy's and Mood Media have just executed real world case study in how to take down the barriers of entry and instantly rollout it out to 800 stores. So it is no longer a question of if, but when and how to engage consumers in where and how they prefer to shop, and with much more targeted offers.
It's no longer a question of online versus in store, but how they come together on the device(s) the consumer is using when shopping and at the moment of purchase.
Chris H. Petersen, PhD, CEO of Integrated Marketing Solutions, is a strategic consultant who specializes in retail, leadership, marketing, and measurement. Chris is the founder of IMS Retail University, a series of strategic workshops focusing on the critical elements of competing profitably in the increasingly complex retail marketplace.