Customer-centric · Digital · Luxury · Mobile · Omni-channel · Uncategorized

The showroom of death

Maybe you have noticed that e-commerce has been growing far faster than brick and mortar retail. That’s been true for years and it’s not changing any time soon.

Maybe you have noticed the explosion in comparison shopping sites that allow customers to easily search for the merchant with the best price. The number and quality of these sites will continue to grow, with powerful mobile applications right around the corner.

Maybe you have noticed that as more retailers cut back on sales associates–or fail to train them so that they become merely order takers, baggers or direction providers–the “value proposition” of actually buying something in a physical store becomes less and less attractive.

So I have to ask you, is your store a relevant, differentiated and remarkable experience for your target customer?  Or is it slowly, but inexorably, becoming a showroom; a place for the customer to see, touch and feel your product, but less and less a place to actually buy stuff.

The economics of leasing a store, fixturing it, filling it with inventory and staffing it are untenable if an increasing percentage of your customers are only there for research and will ultimately buy elsewhere because the experience or price is better.

Blockbuster and Borders may well be on the way to insolvency because they botched this transition. Best Buy is doing far better, but faces significant risks of their physical stores becoming more and more a showroom every day. And this is just the “B’s.”

Becoming a showroom is death.

Do you know what percent of your traffic uses your physical stores mostly for research purposes, only to buy elsewhere?  I bet it’s higher than you think.

 

 

 

6 thoughts on “The showroom of death

  1. While creating the best possible customer experience is important, in traditional retail nothing will change the fact the selection of goods is extremely limited compared to online retail.

    In traditional retail, decisions in terms of buying and merchandising are often made by not the brightest people in the industry that do not see obvious things.

    For some retail categories, such as fashion retail, it’s also the length of purchasing cycles, the cost of storing inventory that go into play.

    Unless those factors change as well, I don’t think m-commerce alone will be able to help.

  2. Nicely played Steve.

    I think the guys who have a shot at avoiding this are in FMCG, specifically grocery. However, the ones that win will have a multi-channel approach, and will have a very different model than the one they are using today.

    Given the fixed cost of the showroom, the face of the biz will change quickly, and the commitment to change will have to be made quickly.

  3. Very insightful. In the end however, the ability to touch, feel, smell and see a product, something that ecom can’t offer, may be the saviour of traditional retail. So how to make a traditional store offer the best of both worlds? How to offer experience and community that draws people in, and the selection, convenience and prices of e-commerce?

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