Brick-and-mortar retailers feel under siege by mobile price-checking tools. They shouldn't panic.
For retailers, especially those who just can't compete with big discounters on price, the concern is growing about new mobile shopping behaviors. The core phenomenon, often called pejoratively "scan and scram" or "showrooming" is now widespread: customers shopping at brick-and-mortar retailers examine physical merchandise at the shelf but use smartphone price-checking tools such as barcode scanners to buy the product at a better price online or at another store.
The implicit accusation of these new catchphrases is that shoppers are doing their research furtively, and that they are violating a quid pro quo with retailers by reducing venues to "showrooms" for business they intend to transact elsewhere. But the language of criminality is misguided. It perpetuates the idea that an adversarial relationship is inevitable between shoppers and retailers around smartphone usage, and that retailers should be on the defensive. In what follows we'll argue that relationship is not inevitable, and that retailers have to assume a different stance; they must learn to work with these new developments in ways that keep them on the customer's side.
That's hard for local or regional store owners to remember sometimes, especially amid the flames that online competitors are stoking. An aggressive move by Amazon this past month showed the online giant adept at exploiting brick-and-mortar retailers' fears. In a one-day promotion on Dec. 10, 2011, Amazon offered 5 percent off to consumers who would use its Price-check app to scan items in stores but buy through Amazon. It was a move to gather pricing intelligence as well as to increase usage of its scanning tool. And by requiring both online buying and in-store price-checking, it effectively co-opted consumers as criminals, heightening fears and keeping brick-and-mortar retailers on the defensive.
Businesses need a plan. But they've got to keep their cool. Following are seven ways we think they ought to respond to mobile consumers to regain a positive footing.
1. Do no harm. Mistakes handling smartphone shoppers are still far more common than positive steps forward. So our first piece of advice is really a set of "don'ts."
Despite Amazon's move, don't label in-store smartphone activities - even those that may lead consumers to shop elsewhere - as malicious. Assume that shoppers would prefer to have a fair transaction with the retailer they're visiting rather than be forced to leave. (After all, they took the trouble to visit the store in the first place.) They also see themselves as empowered and resourceful. Retailers who hope to succeed with them will have to see them in the same way.
Don't obstruct the mobile research process. Retailers should not cover product UPC codes or take other measures to prevent consumers from scanning their products or barcodes to find prices and other information. Doing so will not only frustrate potential buyers but is increasingly useless, anyway. Apps like "Flow" and "SnapTell" can easily identify books and CDs using a smartphone's camera and will soon be able to identify (and price) other products by similar means.
Don't create new restrictions. Don't slap down new rules preventing smartphone use in stores. This will simply discourage mobile customers from coming into the store in the first place. In-store phone use is the new normal. The sooner retailers accept the new reality, the sooner they can learn how to use it to their advantage.
2. Go native. Become knowledgeable about mobile apps and sites that consumers are using to price check goods in stores. Use them, and get staff to use them, too. When talking with customers, know what they have in mind.
3. Be clear about your value. What are the benefits of doing business with the retailer, in the store, on a given occasion versus with a competitor elsewhere? Unless the retailer is specifically in the volume-discount business, there have to be some benefits beyond price, or its doors actually should close. Identify those benefits, articulate them, and share them with customers. Then reinforce them through simple mobile tools and services that can be built and monitored.
4. Talk about price. Ask customers to share their best price. (At least one large electronics retailer we know of, Fry's, is actually promising to match online prices; but not everyone can do this.) At the worst, doing this will produce two sources of valuable information: (a) where customers are getting the price information, and (b) the price you need to match or beat.
It may be that the source is inaccurate. Or more likely - we've seen this all the time in in-store ethnographic research - the price the customer's found doesn't consider "total savings". What are all the cost savings that customers enjoy by buying at the physical store that they might be forgetting by looking only at the price tags? Rewards or year-end dividends from your loyalty program? Occasion-based discounts? Free returns? Gas money and travel time to get to the next store? Shipping costs? These all factor in against price. Help customers see the bigger picture of how they can save more by purchasing the product in-store. Build these reminders into the mobile app or mobile web site as actual line items, so customers can't forget about them.
5. Deliver a mobile experience. Retailers that fail to provide a mobile site or app for customers to use in-store are simply ceding the conversation about their products to competitors (and to price-checking services) already delivering mobile experiences. But those that do provide them can build value that will keep them involved in the online conversations occurring in their aisles and better compete for mobile customers' business. In-store smartphone shoppers are learning to expect services and tools to help them figure out not just whether to buy but what to buy - from product reviews by local store patrons to views of available store inventory.
6. Design the mobile experience to compete. The mobile experience does not have to be complex. But it must (a) give people a reason to download it (or click on the site); (b) a path to quickly consider the products; and (c) a means to correctly appreciate total value.
7. Talk about mobile. Engage customers in conversation about ways they can use their smartphones to help them find what they need in the store. Do they know the retailer has an app or mobile web site? Do they know how they can benefit from using it? According to our research, consumers feel awkward using their phones in stores right now. Make them feel more welcome by telling them it's okay to use their phones to help them shop. Suggest behaviors that might help them (and the retailer): evaluating product reviews submitted by other customers, texting product details and photos to someone helping them shop, conducting online features comparisons, selecting appropriate mobile coupons, or other behaviors that make best use of services provided by the retailer's mobile experience.
Ideally, initiating the conversation with the consumer about their smartphone use in the store should take place with the retail app as the centerpiece. We've observed this done very effectively by staff at Apple stores, during our recent in-store research with Hispanic smartphone users. The minute the customer approached with her smartphone, an employee advised her to download the store's app to see if the store carried the item, a specific kind of printer, which she had in mind. Next, he walked her through the key benefits of using the app in the store- focusing mainly on the one "killer feature" the app contained (called Easy Pay), which allows the user to scan accessories and pay for them through iTunes.
The customer didn't buy the printer at Apple that day. (She had a specific size in mind that Apple just didn't stock.) But in the few minutes it took for retail staff to promote the store's mobile experience, she grasped the mobile modality as a way of keeping connected to Apple. She had the app on her phone as a constant product reference and she was primed her for future positive experiences at the store. Most importantly, the customer actually used the app to thoroughly examine all the printers the Apple store carried.
Given the likelihood that mobile experiences will fail if unsupported, and the possibility that they will succeed if they are supported, it is surprising that the vast majority of retailers, even those who have released developed great apps, web sites, and scanning experiences, fail so consistently to encourage customers to download and use them. They will have to, if they are to compete successfully with large online retailers like Amazon.
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Will Reese is a Ph.D. cultural anthropologist who leads the White Horse Digital Futures Group in Portland, OR. White Horse is a web marketing and strategy firm; its Digital Futures Group is an insights team that evaluates the human relevance of emerging technologies (especially mobile) to create compelling new digital experiences.
An expert on human cognition, motivation, and behavior, he has helped design a huge array of products and services, from devices for robotic surgery to household goods and home appliances; from smartphones to trains stations; from games to retail environments - and much in between.
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