Commentary

If Your Phone Is So Smart, What's It Doing In A Best Buy?

Like most everybody, I remember where I was when I heard Kennedy was shot, when I saw the second plane hit the towers and when I realized Best Buy was doomed.

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, TheWall 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.

5 comments about "If Your Phone Is So Smart, What's It Doing In A Best Buy?".
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  1. Doug Garnett from Protonik, LLC, October 14, 2013 at 11:12 a.m.

    Interesting study. As typical of these studies used as promotion for a specific agency, we need to take big caution listening to it. Wish you'd spent a bit more time on the true participation in the survey. They are looking at only 21% of shoppers. That's a bit small for broad conclusions? And other studies show that the vast majority those who do SOME mobile shopping while in stores are exceptionally casual - only doing so a few times a year at most.

  2. Harrison Dunne from Triad Retail, October 14, 2013 at 12:26 p.m.

    Hey Bob,

    Always value your articles and insight but I have to say the opening analogy is a little tacky. Our greatest American tragedies as a sarcastic comparison for an article about advertising... Maybe I'm being overly sensitive but there are probably more clever and appropriate references you could have come up with.

  3. John Casey from Carmichael Industries, October 14, 2013 at 3:21 p.m.

    SMERSH...short for smert shpionahm. Russian for 'death to spies'. A KGB saying. I also thought the opening analogies were tacky.

  4. Philip Moore from Philip Moore, October 14, 2013 at 3:53 p.m.

    I had my first "showrooming" experience this weekend. We were shopping for luggage at Kohls and I was flabbergasted by the prices. I went on Amazon.com and looked up the prices across multiple online retailers for the bags I was looking at on the shelf. There were some cheaper online, but not by much. Just when I was about to leave, I noticed a strategically placed coupon for $50 off luggage purchases of $200 or more. The $295 bag I wanted was already on sale for 50% off, so I got another bag that moved me over $200. At the register, my wife used her 20% discount and her $20 Kohls Cash coupon. When all was said and done, the receipt was for $92 and it also proudly claimed "You saved $320 on this purchase"
    Now I know why the initial price seemed so high. Retailers inflating prices so they can 50% off and coupon you back down to a reasonable price is really annoying to me, but my wife loves the game. Anyway, without my smartphone access to Amazon to see that the sale price was within a few dollars of what I could have achieved ordering online, I would have walked out without buying anything.

  5. Robert McEvily from MediaPost, October 18, 2013 at 5:06 p.m.

    Just confirming that Bob does look bitchin' in those sunglasses.

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