museums&MORE Fall 2014

A Survival Guide to Combat Internet Lowball Pricing

Many retailers today worry about the effect of the Internet on their brick-and-mortar business and feel that customers will buy from the Internet long before they buy from the store, mostly because of pricing and convenience. This has been made worse by the practice of showrooming,” which happens when customers come to the store, look at a product they want, note the UPC or vendor’s style number and then go online and find it for less than what you offer.

In fact, one of the larger online retailers who shall remain nameless became famous last year for offering a five percent discount to customers if they went into a local store, scanned the UPC code and bought the product online. That was a brutally competitive move.

So how do you survive while such tactics are practiced? Here are some tips that we have seen work, from retail stores that are successfully beating the online merchants.

Shopping is Still Fun

Through all the years that I have been in retail, the death of the brick-and-mortar store has been announced several times. I remember when the catalogue business grew substantially and there was great concern that no one would go to the stores anymore. That has never happened, and even though it can be great to shop online, it will never compete with the social interaction and fun of shopping at a retail store.

Customers still love to go to the store to feel the merchandise, to interact with friends and store associates and to enjoy an experience you don’t get when you’re all alone in your room.

So the first thing I would recommend is to make sure that your store is a fun place to shop. When you open the doors, it’s “retail theater” and the party should be going on right then. The more fun it is to visit your store and the more the customer relates to and has a great experience with your staff, the more they will visit and the more they will buy. Keep it fun by having great events and cool contests that make your store the “place to be.”

On top of that, make sure your sales people are offering incredible customer service and that they understand the basics of selling and of caring for and offering help to your customers. The better the customer service, the more likely the customer will feel compelled to buy from you, right there on the spot, rather than waiting for an Internet company to ship them.

Better Merchandising

Along the same lines, one of the things that helps defeat showrooming is to have great merchandising that makes the product even more desirable. If your merchandising shows the product well, you can create instant demand for it. And the best part about instant demand is that customers want that product now, not 2 to 4 weeks from now.

Entice your customers with great displays that show off the product and how it’s used and your customer is more likely to buy it right then and there.

The Best of The Best

Remember, one of the reasons that people go to boutiques is that those boutiques have scoured the market to find the best of the best. Sure, if you know the brand you like you can go to their website and buy there, but what if you want to mix and match brands (to get the best of the best) and you need to know how to combine products from different brands for one solution? For example, you might find an ensemble from Vendor A that works really great with balloons from Vendor B but the gift bags from Vendor C. That’s hard to do on the Internet and why it’s important for retailers to provide a one-stop-shop for customers.

Prepare Your Argument

The main advantage that brick-and-mortar retailers have over online merchants is that the product is right there, right now. It can be a gamble to buy the product online because it could be backordered, or they could ship incorrectly. Dealing with returns with online merchants can also be a major hassle.

So when you find someone who is in your store and they appear to be showrooming, we suggest you play offense, not defense. Tell them the two things above, but also remind them that you are a local merchant adding dollars to their local economy and hiring local people, and the best thing they can do is to support local business.

At the same time, you can put the product in their hands and tell them, “You can have this right now, right this second, or you can go home and order it and have it a few weeks from now. Which is better?” We have seen this work very effectively. As such, it would be worthwhile to spend a little time on this topic at your next staff meeting (you do have staff meetings, right?) Talk about these strategies and get your staff ready to combat showrooming with better service, better merchandising and better selling.

Promote Like Crazy

One more thing that will help defeat lowball Internet pricing is to make sure that you are actively promoting your store. This means broadcasting your message on all the important channels — Facebook, Pinterest, Instagram, Twitter, etc.— and in those posts you should be showing how relevant and important your store is.

Talk about how you are watching the latest trends, how you are bringing in the most relevant merchandise, how you are ensuring that your customers always have the best of the best, etc.

Remember that with the massive explosion of online outlets for promotion, your biggest challenge is mindshare. You want to make sure your customers think about you when you talk about the products that you sell. The more you can outflow (including email and all the websites mentioned above), the more likely people will think of you and your store and come in when they need those items.

Sure, lower prices online can be difficult to overcome, but the Internet isn’t that different from any other store that offers low pricing. Somehow though, since it has the apparency of being “huge,” retailers seem to think it is harder to compete against this segment.

The truth is that if you apply the basics to your business, control your inventory well and use the above strategies as best you can, you’ll keep the register ringing.