U.K. Retailers Embrace Showroomers
The store as shop window concept is taking hold in the U.K., where the Centre for Retail Research recently predicted one in five shops could shut down over the next five years, hit by the tide of consumers using stores as showrooms but making purchases online.
A recent IBM study of 26,000 shoppers in 14 countries found that "showroomers" accounted for nearly half of all online purchasers in retail categories, proving that in-store shoppers are fueling the rapid growth of online retail.
Still, some stores are taking extreme measures to lock customers into the old-fashioned retail experience. There are stories of "fitting room fees" in the U.S. and Australia, where retailers charge customers up to $50 to try clothes or shoes on, in an attempt to stop them from buying the same item for less online. The fee is refunded if an in-store purchase is made.
But a new $2.3 billion development in London's docklands, called Silvertown Quays, is embracing showrooming. The plan is to build an avenue of "brand pavilions" where, theoretically, Apple, Burberry and Nike will build spaces for customers to browse -- but not buy -- their products.
Elliot Lipton, CEO of First Base, one of Silvertown's development partners, said in a statement, "The growth of internet sales means companies are seeking new ways for customers to interact with their brands in the physical world. These pavilions will allow global brands to influence the online spending decisions of customers."
Silvertown Quays would not to comment on whether the brands they are targeting have shown interest in the pavilions, but Richard Dunn, chief strategy officer of Wunderman U.K., thinks it may be a step too far.
"The key opportunity for showrooming is to combine the reassurance on price and research that you get online, with at least the possibility of the instant gratification you get from walking away with a product there and then," Mr. Dunn said. "The successful retailers will be the ones who have the scale to compete [with online stores] on price or the ones who make shopping enjoyable and inspiring."
Some major U.K. retailers have already built showrooming into the business model. John Lewis and Marks & Spencer are rolling out free wi-fi in stores as part of a strategy to become seamlessly multi-channel, enabling customers to move freely around the different points of connection with the brand -- whether it be an app, a physical store or a website.
Mark Lewis, online director at John Lewis, said, "Although we can't predict the future of the high street, we see showrooming as an opportunity. We encourage customers to test us on our 'never knowingly undersold' price commitment, and adding wi-fi to our shops makes it even easier for them to do so."
In contrast to Silvertown Quays' grand avenues of brand pavilions, Box Park Shoreditch, which opened two years ago, has come up with a different showrooming model by tempting big brands -- including Nike, Puma, Vans and X-Box -- to occupy space in a pop-up mall made out of converted shipping containers. The Box Park micro-shops act as a taster for the full brand experience, which is available online or at one of the flagship stores.
"There's very little product on view because they can't hold much stock -- it's more about brand experience and stimulus to log on," explained Cameron Day, business development director of The Marketing Store. "The sales staff are knowledgeable about the full range, clearly making the link between the offline and online worlds."