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Showrooming shrinks as Foot Locker tackles it head-on

January 14, 2014

Foot Locker's iPhone app

NEW YORK – With new research showing that showrooming has dropped 40 percent over the past year, it is clear that moves by retailers such as Foot Locker to address the issue head-on are working.

Foot Locker’s top executive at the NRF 103rd Annual Convention & Expo cited arming sales associates with in-store tablets that recommend and track down products as one way that bricks-and-mortar retailers can crush online competitors. Also at NRF, IBM released a new report showing that the threat of showrooming has diminished significantly over the past year.

“Arming them with the same information and capability that the customer has [is one way to stop showrooming in-store],”  said Ken Hicks, CEO of Foot Locker, New York. “That may mean giving them scan guns where they can know whether it’s in stock or it’s not in stock, is it in a store or is it online so we have inventory transparency.

“It’s giving them either tablets or computers where they can look up and see what’s online and train [shoppers] about the product,” he said.

“And then it’s also how we merchandise so that they can look and see and say, ‘OK, I’ve got the new Lebron t-shirt that goes with that shoe and here’s the color and here’s why it all works together.”

Bruce Rogers, chief insights officer at Forbes Media, New York, moderated the panel.

Changing consumers needs
During the “Navigating Retail’s Relentless Reality: What CEOs Are Doing to Thrive in a Consumer-Driven World” session, Foot Locker and JDA Software executives spoke about the opportunities and challenges for retailers to keep up with the growth of online pure plays.

The increase in online and mobile commerce has fundamentally changed consumers’ shopping expectations.

According to Mr. Hicks, consumers now expect to walk into a store and see every color, size and style of a product, which flips the traditional merchandising tactics that retailers have traditionally relied on.

Similarly, product launches are now rolled out nationally instead of by market because consumers expect to buy and receive the product instantaneously.

Bricks-and-mortar retailers that used to have a firm grasp on the United States market are now competing head-on with online and international retailers.

For Foot Locker to compete with online giants such as Amazon, the key is to leverage the retailer’s 3,500 locations to communicate one-on-one with consumers.

Additionally, these stores can hooked up to the Web and mobile and offer every possible combination of shipping and payment available so that the consumer is in control of the shopping experience.

Price alone is not enough for Foot Locker to beat Amazon. Instead, the retailer’s advantage is with customer service in locating inventory and showing consumers how products go together.

There are two distinct schools of thought in how retailers approach technology, per Mr. Hicks. There is one set of retailers do not invest in newer technology at all, and another group of marketers who try to change everything to keep up.

However, innovating with technology has to fall between the two polar opposite views, according to the executive.

For example, Foot Locker is willing to test any type of new initiative. If the prototype works, then the retailer will test it to see if it is financially viable. From there, the initiative will gradually be rolled out over time.

At the same time, retailers nowadays must be nimble enough to catch up with consumers who are increasingly becoming more demanding.

“[Shoppers’] expectations in terms of how we handle and manage them is different, how we deliver,” Mr. Hicks said.

“If I want it in the store or if I want it delivered to my home or I want to pick it up in the store — I want to do it the way that I want it,” he said.

I want to pay for it the way I want to pay — cash, credit, debit, Google Wallet, PayPal, Isis, layaway — whatever. So the customer has become more demanding.”

The NRF panel

Keeping up with the times
According to research conducted by JDA Software, 69 percent of executives from the top 250 retailers said claimed that they were confident growth will continue in the next three years.

This confidence was most prevalent in the survey were Germany, the United States and South Africa.

Despite the fact that retail leaders are comfortable about the future, they are focused on growth through traditional tactics and are less concerned about the looming threat of omnichannel.

“As online retail continues to be the growth driver in the retail industry, it’s also going to be the margin killer and that is something that I think retailers have to be careful of,” said Hamish Brewer, CEO of JDA Software, Scottsdale, AZ.

Showrooming threat drops
A new report from IMB also finds that showrooming is becoming less of a concern for retailers. 

According to IBM’s new report, the share of online sales driven by showrooming has dropped 40 percent in the past year.

A year ago, 50 percent of online sales were driven by showrooming, but the latest report shows that only 30 percent of online sales originate from showrooming consumers. The trend away from showrooming is being driven by continued growth in online sales as well as steps taken by retailers to address the consumer behavior.

“In 2013, retailers were really kind of unsure of how to handle showrooming,” said Keith Mercier, associate partner at the IBM Retail Center of Competence. “This year, I think retailers have embraced it and used it almost as an advantage.

“They’ve done some things in terms of making returns easier, in terms of price matching when they feel like consumers are showrooming,” he said. “They actually enable it through Wi-Fi to enable consumers to make an online purchase from their own Web site immediately versus going home and forgetting about and getting it someplace else.”

“I think the big scare is over as online shopping continues to grow and the share of showrooming driving that growth is dropping by 40 percent year over year.”

The report also found that the percentage of consumers willing to share their current location via GPS with retailers nearly doubled year-over-year to 36 percent.

“What they are telling us is that they are willing to share data about themselves,” Mr. Mercier said. “The expectation is that they expect the retailer to share a personalized shopping experience with them.”

Consumers fall into four groups based on their use of mobile, according to the report, with 12 percent labeled as “Trailblazers” who expect retailers to offer mobile technologies across channels. Additionally, 29 percent use mobile extensively but do not necessarily expect retailers to offer it, yet, while 40 percent use mobile mostly for researching products and 19 percent lag behind in their use of mobile.

“The trailblazers are leading the pact and we believe they are setting the tone for where segments are going to go,” Mr. Mercier said.

Chantal Tode, associate editor on Mobile Commerce Daily, New York, contributed to this article.

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York 

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