Consumers today have unlimited access to retailers. Thanks to smartphones, they can walk into a store, experience the product or service, but then actually make the transaction online—where products might be 10% to 15% cheaper—with the added bonus of having it delivered to their doorstep. This is called "showrooming"—and it’s causing a lot of businesses to scramble.
With Amazon prices sitting 9% to 14% lower than most retailers, the online-only retailer jumped from 19th to 13th largest retailer between 2010 and 2011, during which time Best Buy’s company stock lost 40% of its value. Target is struggling, too, but a New York Times article recently outlined how that retailer is fighting back by pulling Amazon Kindles off its shelves while talking to vendors about developing new pricing strategies and brick-and-mortar exclusive products. And, as the Wall Street Journal reported, stores like Target and Walmart are adding digital incentives like revamped websites and mobile coupon offerings.
But simply adding enhanced digital options or haggling over price will not solve the showrooming problem, since it means a company is looking at the problem through the wrong lens. It’s not about making a website better or the products cheaper—it’s an omni problem, one that stretches across all of a business’s channels.
At Continuum, we often approach the showrooming problem by first thinking of the business as an ecosystem that exists holistically, rather than a system of channels. In order to boost the value of a brick-and-mortar shopping experience, a business needs to step back and look at its offerings together on the whole, in order to become a true service provider. Instead of creating a multichannel strategy, what companies really need is a customer-centered strategy. At Continuum, we think the answer is service innovation.
The WSJ piece maintained that: "If brick-and-mortar stores can’t compete on price, it is unclear how successful they can be with tweaks to merchandising and customer service." And it’s true: Tweaks will never be enough. What’s required is a bottom-up approach to better understand the context of the consumer. Through a customer-centered strategy, a company can create a service innovation that affects the business as well as have an impact on the consumer.
Here’s how some businesses are innovating their services and winning back customer loyalty in-store.
At the yoga-gear brand Lululemon, local stores hand-select brand ambassadors who represent the Lululemon lifestyle, creating a community of consumer partners who are constantly spreading the word. Retailers that laser in on a targeted demographic benefit from the greatest "social media tool" in existence: word of mouth. A customer who feels catered to can be a retailer’s most powerful sales tool.
This year, Disney unveiled its new Disney Store, completely redesigning its brick-and-mortar retail space into a full-fledged Disney experience that mimics its parks with "pixie dust trails," a custom-designed theater for watching Disney movies and shows, and an interactive "magic mirror" for princesses-in-training. Designed to be "the best 30 minutes of a child’s day," the stores have become both a seamless extension of the Disney brand as well as a place for families to linger, experience, and shop.
Shoppers of the big-box retailer Walmart are forced to navigate cavernous stores—108,000 square feet on average. This frustrating in-store experience can drive customers online to make purchases, finding exactly what they need much faster than roaming through store aisles. To combat this, Walmart added an in-store mode to its smartphone app, which helps customers locate aisles for the items on their shopping list. They’ve also debuted Walmart Express stores which are significantly smaller, at just 12,000 to 15,000 square feet.
Employees and the help they offer are the backbone of brick-and-mortar stores: Their knowledge and the way it’s delivered shape the shopper’s experience. Wegmans, a supermarket chain with a loyal, cult-like following, invests heavily in its employees, even sending hundreds of staffers on trips around the world to become experts in their products. The Canadian bicycle manufacturer Cervelo sends its staff out to meet with the bike designers. Those real education experiences drive the staff to communicate their firsthand accounts, giving shoppers a more authentic and educated retail service.
Before building a complex system, you first need to build a prototype. At Continuum, we call this "failing fast." When building digital apps, you can mock up smartphones with foam core and build the apps out of sticky notes. If you design a 10,000-square-foot mock-up of a hotel lobby, you make the intangible tangible, saving time and money before you build the real thing. We do this regularly with our Sprint client, dropping life-size prototypes into a test store, so consumers can "kick the tires" of an idea.
It takes an entire organization to truly innovate a service, from the folks on the frontlines to those sitting in the C-suite. Most organizations are segmented into silos, with the only shared connection at the top of the chain, but in order to create a seamless experience, those silos need to connect at every level. That’s why when starting any of our projects we involve representatives from every group, particularly those who interact directly with customers. With the international bank BBVA, we created an experiential model that showcased the interactive touch points that would be used in a new retail model, which we took on the road to share with other members of the global organization. Ultimately, BBVA’s entire global management team embraced the vision and new direction. Working with Holiday Inn to develop a new hotel lobby experience, we had every silo represented on our project team from the beginning, from operations to marketing, giving everyone a sense of ownership of the project.
For retailers to provide an engaging and unmatched shopping experience—and avoid becoming a showroom for online competitors—they need to consider human-centered service innovation that not only enhances the brick-and-mortar experience but offers a seamless experience across all channels.