GroupM Next-White Paper-Showrooming and the Price of Keeping Buyers In-Store

August 2012

Authors: J. Patrick Monteleone, Ph.D., Director, Research Jesse Wolferseberger, Director, Consumer Insights

Showrooming & the Priceof Keeping Buyers In-Store

Showrooming and The Price of Keeping Buyers In-Store

The rise of smartphone usage has fundamentally

changed the way people behave. From the way people

socialize to the way information is derived, the mobile

revolution has had a profound impact. A decade ago,

consumers began to use the Internet as the initial step

in a purchase path that often times ended up in a brick

and mortar store. Now, ‘the Web’ has changed the way

we shop – again. Nearly 50% of shoppers are using

mobile devices in-store to inform a decision to walk out

the door and complete their intended purchase online.

Showrooming is the modern trend in shopper behavior

where customers go to a brick-and-mortar retail

location, make a decision on what item to buy, and

instead of heading to the check-out aisle, they use a

mobile device to find a better price online – where they

ultimately make their purchase.

GroupM Next conducted research to take a close look at showrooming, its influencing factors, and

identify the tipping point when the difference between an in-store and online price is large enough

to lure shoppers out of stores.

To help brands better understand the showrooming effect and take smarter action, our research

also identified the following:

» How much of a discount does it take to pass over immediate product availability?

» How many purchasers leave for 5% off? How about 10%? How many will walk for pennies?

» What demographic and behavioral flags might identify a shopper who is more likely to stay in

the store vs. leave?

» Is there a media opportunity to encourage shoppers to behave in a desired manner, be it stay

in-store or depart?

Showrooming & Digital Camera DiscountsTipping point when consumer leaves store and buys online

% Buy In Store % Buy Online

Use mobile to shop in-storeDo not use mobile to shop in-store

In-Store Shopping andConsumers Using Mobile

Percent Discount Online

100%90%80%70%60%50%40%30%20%10%0%

2.5% 5.0% 10.0%

56.3% 43.7%

Discount Offered Online

% P

urc

has

ing

In-s

tore

Impact of Online Cost Savings ($)On In-Store Purchases

80%

70%

60%

50%

40%

30%

20%

10%

0%$0 $20 $40 $60 $80

Figure A Figure B

Figure C

Sensitive to pricing, but can beinfluenced to stay in-store

Profile of the Marginal Showroomer Brands Can Target

90%+ male

Average age: 52 years old

Median income: $60,000/annually

98% some college or higher education

55% buy online once per month

21% once per week

11% more than once per week

Figure D


% P

urc

has

ing

In-s

tore

Impact Online DiscountsHave on In-Store Purchases

80%

70%

60%

50%

40%

30%

20%

10%

0%0% 5% 10% 15% 20%

Source: Study – Showrooming & The Price of Keeping Buyers In-Store; GroupM Next; August, 2012




1


August 2012

2

Showrooming Survey Findings

Our research revealed that while customers would

rather have the product immediately, finding only

a small price difference elsewhere using a mobile

device is enough to entice them to leave the store and

buy online.

When the online price is just 2.5% lower than the in-store

price, 45% of customers say they would leave the store to

buy online. When the discount increases to 5% off, 60%

of customers say they would leave. At a 20% discount

level, only a small minority of shoppers (13%) will stay

in-store.

Of the products in the survey, consumers considered

head-phones (the top-most point at each discount

level in Figure B) differently than the other products. While there was nothing in the language of the

question to suggest it, the surveyed appeared to assign

an implied urgency with headphones. It took a larger

discount for shoppers to leave the store when buying

headphones, which, interesting to note, were not the

cheapest product featured. This finding suggests that

when a brand can communicate a “must-have-now”

aspect to a purchase, it can combat some aspect of

showrooming.

Taking the research data a step further, like the trend

revealed when looking at the impact online discounts

have on in-store purchases, a similar story emerges

when looking at the data by dollar amount (Figure C).

However, if the difference is more than $5.00, most

customers say they would leave.


August 2012

When a brand can communicate a “must-have-now” aspect to a purchase, it can combat some aspect of showrooming.






100%90%80%70%60%50%40%30%20%10%0%

2.5% 5.0% 10.0%

56.3% 43.7%


% P

urc

has

ing

In-s

tore


80%

70%

60%

50%

40%

30%

20%

10%

0%$0 $20 $40 $60 $80

Figure A Figure B

Figure C



90%+ male





21% once per week


Figure D


% P

urc

has

ing

In-s

tore


80%

70%

60%

50%

40%

30%

20%

10%

0%0% 5% 10% 15% 20%










100%90%80%70%60%50%40%30%20%10%0%

2.5% 5.0% 10.0%

56.3% 43.7%


% P

urc

has

ing

In-s

tore


80%

70%

60%

50%

40%

30%

20%

10%

0%$0 $20 $40 $60 $80

Figure A Figure B

Figure C



90%+ male





21% once per week


Figure D

Discount Offered Online%

Pu

rch

asin

g In

-sto

re


80%

70%

60%

50%

40%

30%

20%

10%

0%0% 5% 10% 15% 20%





3

The Showroom Opportunity

Showrooming is unlikely to be a fad. Consumers have shifted their path to purchase to include the

store as a step, not the final step. This is likely to only increase over time. This research identifies

that, if a brick and mortar store can stay within 5% of the online price, nearly half of potential

showroomers will choose to complete their purchase in the store.

While pricing is the most powerful aspect in showrooming, there are ways to act based on other

known variables, including the actual shopper. Using a proprietary logistic regression model to

explain the customer’s decision to purchase in-store or buy online, it becomes possible to find the

shopper characteristics that explain the purchase decision.

Our modeling determined that the most likely showroomers are:

» Younger

» Primarily female

» Make online purchases frequently

» Have a lower income

When those variables are considered together, the

resulting profile describes someone who cares

almost exclusively about price. Strategically, it may

be possible to own the mobile experience for this

audience by ensuring that the likely sources, such as

mobile search, Google Shopping or comparison sites,

have consistent advertising that speaks to important

aspects, such as reviews and price comparisons.

About 10% of purchasers surveyed chose to complete

the purchase in-store, no matter the price discount

offered. This is encouraging for physical retailers as

there is a core customer base that appears unlikely to

ever showroom. The key for marketers is to identify the

next 10% – the group of customers that are sensitive

to price, but can be swayed to stay in-store. Using the

model, the group of “marginal showroomers” has the

characteristics profiled in Figure D.


August 2012






100%90%80%70%60%50%40%30%20%10%0%

2.5% 5.0% 10.0%

56.3% 43.7%


% P

urc

has

ing

In-s

tore


80%

70%

60%

50%

40%

30%

20%

10%

0%$0 $20 $40 $60 $80

Figure A Figure B

Figure C



90%+ male





21% once per week


Figure D


% P

urc

has

ing

In-s

tore


80%

70%

60%

50%

40%

30%

20%

10%

0%0% 5% 10% 15% 20%





4

Understanding this profile may enable brands to target through existing loyalty programs, as well

as through online media buys. Using a retargeting strategy that incorporates messaging designed

to give these shoppers the reason they seek to stay in-store before they arrive may prove beneficial.

Additionally, showroomers exhibit behavioral cues. The model identified customers who read reviews

on a mobile device and those who compare in-store prices are more likely to showroom and leave the

store. It shows that shoppers who are price shopping in a store are one step away from pulling out a

mobile device and checking online prices. The model also revealed that associates can be influential,

as customers who interact with an associate are 12.5% more likely to purchase in-store.

Several retailers are taking actions that not only enhance customer experience, but also may serve to

alter the current behavior of customers. Target is offering more in-store exclusive items. Wal-Mart is

giving customers easy access to coupons and lower prices on its mobile application, encouraging

shoppers to showroom in a controlled way. Best Buy is starting to explore smaller stores, which

are focused more on small items, such as tablets and e-readers, and less on large items, such as

televisions. Macy’s and Nordstrom are integrating their online and offline inventories, so customers

can make sure a store has their item in stock, and if not, have it shipped from a different location.

Showrooming is a label for a massive consumer behavior shift brought about by the ease of access

to information on a mobile device. Brands that sit on either side, be it as the physical store or the

online merchant, have multiple opportunities with this consumer change. Understanding the level

at which someone is motivated to leave a store may help with future messaging strategies, not

only in-store, but also online. To date, most brands have approached mobile search buys as an

extension of the desktop purchase. Data from this research may suggest an opportunity to own

the review and price query load in an effort to capitalize on those standing in the aisle looking for

a slightly better deal.

As Google rolls out a paid Shopping product, it becomes increasingly important for brands to be

present, and aware of both the new landscape of competitors and implications for its online and

in-store opportunities. The store was once the final destination for purchase by consumers. Now,

it is becoming another step along the journey. With this understanding, brands need to think more

about how showrooming can be influenced by a brand to navigate would-be buyers to a checkout

location, be it in the store or online.

Showrooming and the Priceof Keeping Buyers In-Store

August 2012

MethodologyGroupM Next, in conjunction with Survey Sampling International (SSI), surveyed 1,000 U.S. shoppers, asking about 10 products in multiple retail categories at varying price points. Shoppers surveyed were given hypothetical showrooming scenarios in which they could purchase a given product and own it immediately, or they could take a discounted price, leave the store and have the product shipped.

GroupM Next is the forward-looking, innovation unit of GroupM, the world’s largest global media investment management group

that is the parent company to WPP media service agencies Maxus, MEC, MediaCom and Mindshare, as well as Catalyst Online

and Xaxis. Together with GroupM agencies, GroupM Next focuses on the curation and application of insight-focused solutions

across online, social, mobile and addressable channels. Through thought leadership, technology, research and education,

GroupM Next delivers data-driven, actionable insights and a clear path to action to help GroupM agencies and their clients

harness the right opportunities made possible in the digital technology and new media industry environments with speed and

relevance. Access our work and discover our perspective at www.groupmnext.com.

Contact us with questions or comments: [email protected]

GroupM Next111 Westport Plaza

Suite 350Saint Louis, MO 63146www.groupmnext.comA WPP Company

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GroupM Next-White Paper-Showrooming and the Price of Keeping Buyers In-Store

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