How to Prevent Price-Comparison Apps From Killing Your Business

Shannon Denton is the president of the central region for Razorfish. He is also executive sponsor of Razorfish's global practices focused on retail innovation, multi-channel commerce. and emerging experiences.

I've done it. You've probably done it, too. I tried to be discreet. I did my research, online then looked around the store and chose the Blu-ray DVD player that I wanted. I glanced carefully around to make sure nobody was watching, kept my smartphone low, and scanned the product barcode. Sure enough, I found a lower price online. And with a mix of guilt and glee, I showroomed the retailer.

As a consumer, I think showrooming — the act of checking out a product in a store then buying it online for a lower price — is awesome. But if you're a retailer, it's not so great. In fact, it's a huge threat to your business. How big? Let's start with what we know: Online sales reached $200 billion last year, according to Forrester Research, with about half of online shoppers first doing some form of in-person product experience.

In a 2011 survey by the Codex Group, 39% of people who bought books from Amazon said they had looked at the book in a bookstore before buying it from Amazon.

That makes sense. Books and media have been the leading categories but electronics, apparel and furnishings are also feeling the heat. Forrester estimates that by 2015 10% of all retail will be online, and for some specific categories the figure could be as high as 40%. Thanks to showromming this could be a multi-billion dollar headache for many retailers. So what can they do?

To fight against showrooming, retailers tend to focus on two things: pricing and merchandising. Regarding pricing, some retailers provide store associates greater flexibility to price match. Though it may save an individual sale, this approach could be a race to the bottom and favors the online retailer who likely has a cost advantage. On the merchandising front, retailers are pushing for greater product differentiation and white labeling to eliminate the ability to compare products across retailers.

In particular, exclusives and celebrity labels have proven effective in the apparel category by creating customers loyal to a particular line — Target and Macy's have been well-documented success stories. However, exclusives can also lead to SKU proliferation, consumer confusion, and require strong advertising/promotional support. Finally, many consumers in various categories still seek out the well-known brands they know and love.

The best way retailers can compete against showrooming is by greatly enhancing their in-store experiences. Only a few years ago, interactive digital experiences in retail environments consisted of a website kiosk over in a corner. Today, large-screen, immersive digital experiences utilizing touch-screen and gesture-based interactions engage consumers in entirely new ways.

They can help consumers compare products, find the right color or style, visualize product combinations, and even try their favorite outfit on virtually. These digital in-store experiences show promise to counterattack showrooming in five ways:

• 1. The Consumer can Finalize Their Decision in the Store

A lot of people leave the store because they still aren't sure if the product is right for them. Digital experiences in the store can enable access to consumer reviews, interactive product specifications, videos, and product comparisons. Thus, the consumer can make the final decision in the store, increasing the chance the store gets the sale.
• 2.The Retail Store Becomes the Most Convenient Option for Purchases

OK, maybe I can't decide which item I want to buy while in the store. But when I do decide later, it often is just more convenient to search on Google or buy it on Amazon.com. Today, through near-field communications or wireless connectivity, it is possible to let consumers "move" a product they are researching in a store to a wish list or shopping cart on their smart phone. When I decide to buy it later, it's a single click away.
• 3. It's a Way to Overcome Barriers

We all know holding expansive inventory isn't getting any cheaper for the retailer, which is why issues like out-of-stock items become barriers. Digital experiences allow retailers endless shelf space without traditional costs.
• 4. It Empowers the Sales Associate

Good ol' person-to-person selling still works sometimes –- as long as the associate is friendly and knowledgeable. The problem is, in most stores, the associate isn't that much help. On a recent visit to Nordstrom to buy a gift, the associate used her iPad to show me product options and store locations that had items in stock. She even offered to have a necklace sent over from another store that I could pickup in the morning. I ended up purchasing an item she had in her store because the service was personalized and I felt like I had been shown via the iPad a full range of options beyond the store's current inventory.
• 5. It Leads to a Unique and Memorable Experience

Immersive digital experiences such as virtual dressing rooms, augmented reality, and interactive fitting are fun and helpful at the same time. As retailers focus on creating unique experiences, digital can play a bigger role in developing that shopping experience.

For retailers, future shopping experiences will certainly include a mixture of in-store and online digital experiences that complement their physical presence, with a focus on the shopping. That will help address showrooming because a stronger overall customer experience will address many of the reasons this issue occurs in the first place.

Image courtesy of iStockphoto, webphotographeer