WWD.com/globe-news/trends-analysis/perfect-storm-drives-showrooming-6341635/
government-trade
government-trade

Consumers Embrace Showrooming

Leading the charge are consumers in their mid-30s who are typically referred to as Gen Y or the Millennial Generation.

The confluence of demographics, economics and technology is creating a perfect storm that’s pushing showrooming to the forefront of consumer shopping behavior.

Leading the charge are consumers in their mid-30s who are typically referred to as Gen Y or the Millennial Generation. While economics has all consumers seeking value, the rise of smartphones and tablets has also enabled consumers to do price comparisons while in a store. Moreover, it’s the Gen Y and younger consumer who is most comfortable using technology as part of their shopping skill set.

According to an AlixPartners survey completed last month, a sampling of 2,010 adults comprising 960 men and 1,040 women indicated that more consumers are purchasing online after having “shopped” or visited a physical store. While the mean age was 45 in the survey’s age range from 18 to 65 and over, it’s those between 18 and 44 who are driving online sales of category purchases percentage-wise when compared with those 45 to 65 and up. Category purchases across the board, from apparel to consumer electronics to even small and large appliances to hardware, show bandwidth gains skewed more among the younger consumer profiles than those of the more mature consumer groups. The average household income was between $50,000 and $74,999, with the majority stating they had full-time jobs.

Among product categories, those age 25 to 34 were the largest demographic group that made an apparel and footwear purchase after visiting a brick-and-mortar site. The top three online purchase drivers were free shipping-home delivery, lower price and desired item not available at the store. Online reviews and ratings placed fourth. For jewelry and watch purchases, online purchases after visiting a physical store were primarily by those ages 18 to 24. The top purchase driver for going online was price, while free shipping-home delivery was second. The ability to check product reviews and consumer ratings was third. With luggage, handbags and briefcases, those 35 to 44 drove the purchasing behavior online, with the top three drivers the same as those for jewelry purchases.

Joel Bines, managing director and coleader of the retail practice at AlixPartners, said showrooming will grow since the tools that are available are making it easier to do. “Now that we can check online prices instantaneously by scanning barcodes, taking pictures or speaking into our smart phone, the barriers have come down and it has increased dramatically,” he said.

The concept of showrooming doesn’t apply to luxury purchases, but that’s because of two key dynamics involving scarcity and consistent pricing in the sector, Bines said. He noted that the “further away you get from Chanel, for example, the easier it becomes to showroom.”

The key going forward for brick-and-mortar stores will be how they figure out a competitive response to the growing use by the showrooming consumer of the reviews and ratings that are available online, Binder said. While reviews and ratings placed fourth for apparel and footwear purchases, it was consistently third in other categories, whether in accessories or non-fashion ones.

Even e-tailers are eyeing showrooming as they try to capture more market share. They’re opening select freestanding stores so consumers can feel and touch the physical product before they buy. Bonobos just opened such a shop in Palo Alto, Calif., as did Gap Inc.’s Piperlime in New York’s SoHo neighborhood and prescription eyeglass e-tailer Warby Parker at its New York headquarters in the Puck Building.

When Eaton Hudson eyed the pop-up store as part of its asset disposition business model, it was looking at how brands can use the temporary store as a consumer outreach tool to promote and showcase merchandise in a cost-effective way, according to James Schaye, chief executive officer.

Lifestyle brand Serena & Lily, currently in the home sector, plans to launch fashion and accessories in 2013. The current product line for home is available direct to consumer. Lily Kanter, ceo, said she’s in the process of considering a pop-up store as a marketing vehicle for a physical presence in locations where consumers are unfamiliar with the brand.