If Your Phone Is So Smart, What's It Doing In A Best Buy?
This was in an optical store in 2010, when before pulling the trigger on a pair of Ray-Bans that make me look exactly like a SMERSH agent, I pulled out my phone to compare prices online. That little move yielded me $39 and an epiphany: the store, with all its overhead, had just salvaged the transaction only by cutting its margin to zero or worse.
“My God,” I thought. “What if…what if the sunglasses had been Polarized?!”
And what if people did the same for $2000 computers and televisions? A few months later, The Wall Street Journal ran an article posing that very question: How could brick-and-mortar retailers survive if consumers use them not as stores but as showrooms for online merchandise?
Obvious answer, as mentioned above: doom.
Except, to quote Ira Gershwin, it ain’t necessarily so. A study from the Columbia Business School Center on Global Brand Leadership reveals that my personal predilection for apocalyptic vision may not always be validated by conditions on the ground. Turns out that while smartphones are increasingly used in-store by shoppers, not everybody deploys them as a weapon of mass-merchandiser destruction.
“We had the feeling that that narrative was overly simple,” says David Rogers, director of Columbia’s executive education program of digital marketing strategy and co-author of the study. “There are threats and some opportunities. People are using their smartphones in stores for a variety of reasons. It isn’t always about price, and it isn’t always about planned showrooming.”
The sample consisted of 3000 shoppers from three countries who had used their phones in physical stores over the preceding 12 months. The survey suggests that the cohort represents 21% of all consumers (other studies have found rates as high as 45%). But what are they doing with their phones on the premises?
While 52% of them did check competing prices, 50% checked for third-party reviews, 39% contacted family members or friends for direction, 34% searched for an online coupon, 24% posted on social media, 17% logged into the store’s loyalty program site and 10% used an e-wallet to pay for a purchase. In other words, some of the behaviors militated against an in-store transaction; others may have stimulated one. And still others might have simply changed venue.
“The Walmart.com mobile Web site,” Rogers says, “detects if you’re in a Walmart, and now gets 12% of its sales from people in a store.”
In addition to giving in-store shoppers easy access to a proprietary shopping app or loyalty program, opportunities may exist under the rubric of “overall value.” Free samples -- perhaps donated by manufacturers -- or overall discounts can sweeten a deal when price-matching on the main shopping items is too expensive or cumbersome -- and the study shows that 83% of customers are responsive to them. That’s the same percentage that responds to price-matching. Furthermore, what’s clear is what I and other prophets of doom often forget: price is not synonymous with value.
For many, there is value in an on-premises shopping experience, in carrying away today what you buy today, in connecting with live, often human sales reps and so on. Speaking for myself personally, I actually feel better about myself when not screwing a retailer whose overhead I benefit from. The sunglasses episode was my first and last of its kind. In fairness, I look totally bitchin’ in them. Bitchin’.
Naturally, “Showrooming and the Rise of the Mobile-Assisted Shopper” breaks down results in demographic segments and also psychographic ones: Traditionalists, Experience Seekers, Exploiters, Savvys and Price-Sensitives. (How come all these psychosegmentation labels sound them same? Is there an app for that? ”Savvys?” So generic and trite. Why not “Cheapwads,” “Ho Shebangs?” “and Sphincterifics?”) Naturally, too, some of these segments represent little threat to traditional retailer. Generally speaking, if an elderly, male, Canadian “Traditionalist” enters your store, you can charge him whatever you want and probably talk him into an extended warranty for a thumb drive and a pack of peanut butter cups. If a young, British “Price-Sensitive” woman walks in, you'd be wise to have enormous, irritable bouncers escort her off the property. You lose her future traffic -- Jeff Bezos loses a sale.
The main thing revealed by the Columbia study, however, may be this. Things aren't always as they seem to be -- and when they are, not for everybody. As Rogers says: “Humans are inherently complex, so we should never assume people are behaving the same way for the same reason.”
Mind you, I still would bet a bucket of spit on the future of Best Buy, but they do have some stuff going for them. In fact, that’s where I bought my smartphone.