Showrooming is that obnoxious – if very, very smart – habit consumers now have of coming into a brick-and-mortar store to experience merchandise before ordering it online. It’s such a common practice there’s a term for it.
Retail data shows the power of internet pricing and convenience versus traditional, in-store shopping. Between 2013 and 2014, Cyber Monday sales went up 8.7 percent while brick-and-mortar shopping on Black Friday saw an 11 percent drop according to the National Retail Federation.
You can expect to see a lot of showrooming this holiday season, coupled with lost potential sales you can’t see because it happens completely online (instead of in your store). But you do have one truly effective weapon in the war against online holiday shopping: Price Matching.
When you match prices with your competition online and in the real world, you give consumers a reason to go ahead and make their purchase right there with you. It can mean less profit per sale, but more profit than not making the sale at all. Price matching:
- Gives potential customers permission to become actual customers. As you already know, once the decision to spend has been made it’s much easier to add suggested sales and impulse buys to the cart and defray some of the loss from discounting the initial price.
- Creates word-of-mouth buzz with people leaving the shop bearing bags with your name on them, and telling people where they got their good deal. This is especially powerful during the holidays, when people talk excitedly about the perfect gifts they found, and many are desperately searching for gift ideas.
- Keeps your floor full. A shop that feels like a ghost town is a shop where people who do come in are less likely to buy. A bustling shop gives the impression of quality and feels like a place where people should make a purchase.
- Overcomes objections by eliminating the biggest reason consumers opt to shop online. This lets you leverage the advantages of a brick-and-mortar location like hands-on service, being able to try things out or on and keeping money in the local community.
- Gives you a tag for marketing messages beyond the cliché holiday wishes and general sales talk. With a time limit, it adds a call-to-action that may well prove the most effective messaging of your season.
- Still provides reliable income. If you do your research, you already know how much the competition charges. You can forecast and plan according to those prices. Anything you earn above that is just a bonus.
- Has a proven track record. Although 75 percent of consumers now shop around online before committing to an in-store purchase, they have demonstrated that they will purchase on-site if the price tag is within 14 percent of the online offer.
All that said, it can be hard on a small business to match mega corporations like Amazon and Walmart penny-for-penny. Those giants in the retail playground can afford to make pennies per sale because of their volume, and have been known to sell at a loss just to stick it to their local competition. If you can’t cut your prices all the way to that particular bone (and even if you can), here are some strategies to make customers prefer doing business with you over slightly lower-priced competition.
- Offer In-Store Pickup of orders made online for your store. This typically allows faster delivery, and gets people in the store where they can feel the personal touch…and pickup a few extra items.
- Provide Free Wi-Fi. Beyond just being a nice amenity to offer, you can tie this in with your price-matching offer by labeling it as a way for shoppers to compare your prices to those at Amazon, Walmart and other online retailers. While you’re at it, offer a discount or small freebie for Tweeting or Facebooking about their purchase when they make it.
- Provide Value Instead of Further Discounts. When it comes time to add suggested sales to the final ticket, don’t opt for more price matching. Instead emphasize the extra benefit they’ll get from the purchase, whether it’s quality of work or your no-hassle return policy. This gets shoppers thinking more about why you are the best place to make their purchases and less about saving an extra dollar or three.
- Go Big on Customer Service, especially expert advice. If you have to pay a few extra hours’ worth of wages for training (or offer in-store credit so employees can try out your wares), it’s worth the investment. Anybody can hop online and buy an item, but only in your store can they get the help they need to find the perfect gift. This is especially true for technology and hobby-based retail, where gift shoppers may be utterly clueless about the key features of what they’re buying.
- Floor Models for Everyone! Get customers in the door with the promise of being able to meaningfully interact with anything you offer. Retail clothing stores already do this via changing rooms, and game shops with a copy of each title people can play in-store are another example of this in action. Make events out of this – complete with social media support – to get the word out about this service you provide. Couple with the expert advice benefit mentioned above for a powerful one-two punch.
The good news is that Business News Daily’s survey of over 2,000 consumers found that 48 percent would “definitely” or “probably” pay a little extra (up to 14 percent more) to do business with a local company, especially if that shop offered some of the extra service and personal touch so conspicuously missing from the online experience. All you need is to tip those “probably woulds” and “definitely wills” into “already haves.”
Do you have any experience with price matching, loss leaders and other holiday sale tricks? Join the conversation and help out your fellow Kabbage community members by leaving your comment below.