Retail Brand Watch
Showrooming is Down, But Retailers Need to
Exploit Big Data to Connect with Consumers
Dale Buss
Showrooming is way down, sharing is way up. Those are two
pieces of good news for retailers from a new study by IBM
about consumer behavior in and expectations about the new
era of “omnichannel” retailing.
Yet huge challenges remain for retailers that want to
optimize relationships with their customers using big data
and digital technologies. “You have to be able to gather all
the unstructured data and understand what is the next best
action for you as a retailer,” Keith Mercier, associate partner
in the IBM Retail Center of Competence, told brandchannel.
“That’s where they’re trying to build the next phase.”
The new IBM study—shared today at the National Retail
Federation’s annual conference—surveyed more than 30,000
consumers around the world. It showed a nearly 40 percent
drop in online purchases resulting from showrooming,
Mercier said.
That’s a remarkable development, considering that retailers
such as Best Buy warned over the last couple of years that
showrooming— in which consumers browse merchandise
and prices at brick-and-mortar stores and often take
advantage of free advice, then buy the merchandise online
instead for less, from that retailer or another brand—could
be an existential threat. Major retailers including Target and
Walmart stopped selling Amazon’s Kindle devices in 2012
after the e-commerce giant launched several efforts to
undermine physical retail sales.
But retailer stores have learned to play the digital retail game.
“Retailers have done a good job of understanding that the
phenomenon is happening, and can use it to their advantage
or defend against it better,” Mercier explained. “Also,
channels are blending so much today that no [shoppers] truly
understand where the true retail-shopping journey begins or
ends.”
As a result, only 30 percent of online purchases last year
resulted from showrooming versus 50 pecent a year earlier,
the IBM survey found. Retailers also are benefiting through
increased personalization of their digital relationships with
consumers. “In starting down the personalization path
and learning more about their consumers,” Mercier said,
“they’re able to convert more purchases in the store. They’re
pricing better in real time in the store. And they’re starting
to understand consumers’ cross-channel behaviors better.”
Mercier said more retailers are succeeding in “drawing
consumers into loyalty, pricing and personalization programs
to keep them locked into the brand—to not allow them to
stray into generic pricing tools.”
Big data and cloud computing, provided by IBM and others,
offer huge opportunities for retailers to do even better in
this area. “Every consumer interaction has a piece of data
attached to it, something retailers can learn” with consumers’
permission, Mercier said. “But to capitalize on it, retailers
have to be able to manipulate that data very fast. It’s highly
unstructured, such as point-of-sale data and information
about social interactions and online navigation—and all of
this is coming form multiple sources.”
Thus, for example, retailers could be monitoring the online
sphere and see that a registered customer is tweeting about
“wanting a pair of boyfriend jeans”; About 30 percent of
consumers now are posting about items they’ve purchased,
Mercier said, up from just 23 percent a year ago. A retailer
then could quickly “reach out to the consumer and say, ‘We
have boyfriend jeans and, by the way, you’re just five blocks
from one of our stores.”
And to get to that point, Mercier said, “is where cloud
computing and big-data analytics come into play—they’re key
enablers that allow these interactions between retailers and
consumers to happen. And they help make that experience
part of the retailers’ brand.”