Sales & Marketing

Should SME retailers be worried about showrooming?

4 min read

10 December 2014

The omnipresent rise of the smartphone and ecommerce means more shoppers are checking prices online while they shop – so-called “showrooming” – meaning smaller and independent retailers face losing sales to low-margin websites.

It is a phenomenon that’s becoming increasingly prevalent. Digital marketing agency Tecmark found 50 per cent of smart phone owners are performing price comparisons in store, with the figure rising to 67 per cent for shoppers aged under 34. A similar survey by design firm Foolproof, found only 24 per cent of people showroomed just two years ago in Christmas 2012.

“These stats show that trend has grown exponentially,” said retail expert and high street campaigner Clare Rayner. “It wasn’t quite so prevalent in the UK four-five years ago, but it’s become increasingly normal behaviour.”

Rob Weatherhead, operations director at Tecmark, said he expects the share of shoppers who showroom to reach 75 per cent in the next 12 months, with retailers advocating the practice when they know they are the cheapest, matching prices seen elsewhere and interject on the comparison services through in-store WiFi.

When it comes to SMEs, Weatherhead believes the impact depends on the type of products they sell. “Price comparison is easiest on branded goods and commoditised products. Where a product is bespoke or original it is more difficult to compare pricing, so independents operating in this area are less at risk. If you are an independent selling the same products as are available online through a multitude of retailers then you could risk out on losing custom if you can’t match competitors’ pricing.”

It’s less likely smaller retailers will compete in selling these products and the exponential increase in showrooming may mean more diversify away from sales that fall into this category. 

Rayner added: “Independent retailers cannot afford to be selling comparison products at the same prices as the big guys. The reason for that is they can’t buy the volumes, they don’t have the economies of scale, and they won’t achieve the margin and have the opportunity to discount. The way they have to avoid this is to work with smaller and more niche brands. Work with their supplier base to find exclusive models they won’t sell to anyone else. Develop a smaller boutique environment.”

Purchasing on a co-operative basis could provide another option and structures like this have existed for some time. Electronics chain Euronics is an international association of over 11,000 independent electrical retailers in 30 countries. It sells unique products at standardise prices, helping its independent retailers compete on aggressive big-ticket retail items and deal with issues like showrooming. 

Those facing a more immediate threat can look at improving the overall retail offering. Weatherhead advises independent retailers to look at adding value to the purchasing process, delivering a service as well as a product and taking the focus away from price. 

Rayner explained: “The top tips are avoid comparable items. Sell something that’s unique and stands out, and focus on a customer who is price sensitive, but really values these things; don’t get hung up on the discounters.”