Revenge of the SMBs – How Small Businesses Can Turn the Tables on Showrooming

Summary: Brick and mortar stores were leapfrogged by Internet retailers in the dot-com era. Now it’s their turn to leapfrog their e-commerce rivals.

Eric Lai

By Eric Lai – Republished from UberMobile

 

showrooming ecommerce retail Traditional retailing, at least in the U.S., is in a funk. Of the 100 largest U.S.-based retailers according to STORES magazine, only 17 are growing in the double digits. Fast risers are either growing overseas or are in hot categories like mobile phones (Verizon Wireless and AT&T) or discount goods (Dollar General).

You could blame this on the uncertain U.S. economy. But I put equal blame on the mainstreaming of e-commerce. Everyone I know who is my age or younger buys a ton online. There are sexy category specialists – Newegg, Gilt Groupe, Groupon and Zappos – but Amazon.com gets the lion’s share of their dollars.

Fittingly, Amazon.com is the fastest riser on STORES’ list (42.5% year-on-year growth). Ranked 15th, Amazon.com already sells more than Safeway, Sears and Macy’s. It is the poster child of how to win in e-commerce: low prices, speedy shipping and personalized offers that leverage its rich data on customers. Add a fourth factor: the hot trend of consumers “showrooming” goods at a brick-and-mortar store while checking online prices via a smartphone, from whom they will presumably eventually buy.

How can retailers fight back? I don’t think it’s through expensive attempts to amp up the EQ (Entertainment Quotient) of their stores. It doesn’t fly with time-pressed moms, who control the majority of household budgets.

Nor is the solution to further streamline their supply chain in order to compete with Amazon.com and its ilk on price. Most of the retailers around today survived the initial dot-com onslaught by deploying ERP software and successfully adopting lean and Just-In-Time techniques to cut costs.

In other words, they’ve done a good job of playing defense. Now, it’s time to play a little offense – use technology to enhance customer service, boost sales and, rather than lamenting sales lost through “Showrooming,” take advantage of it.

Mobile Point of Service

On customer service, retailers are arming their floor salespeople with smartphones and tablets and apps that allow them to reprice items, check inventory for customers and speeding transactions by conducting them where-ever they are in the store.

showrooming retail ecommerce wal-martLarge retailers doing this include Lowe’s, which has given iPhones to all 42,000 employees, Sear’s, J.C. Penney, Costco, Sam’s Club, Nordstrom, Apple, Urban Outfitters and Sephora, the 1,300-store cosmetics chain.

Sephora is using the Mobile Point of Sale app for iOS developed by SAP and partner, Agilysys. Check it out at the SAP Retail Forum North America in Dallas this week.

 

 

 

Precision Retailing

Good customer service is not just providing information on demand and accelerating purchases. It’s also about anticipating consumer wants, and delivering them personalized discounts and offers not just in real-time, but at the right time.

If it sounds like I’m going to talk about marrying Big Data and mobile, you’re right. This is taking customer data from every channel, from Web to POS, and applying predictive analytics to it, so that you can augment the in-store shopping experience with mobile coupons and reminders that are relevant and not spammy.

“Instead of old-school loyalty programs with their points and reward schemes, you want to give consumers real, meaningful relevant information based on what they’re looking for,” said Colin Haig, the retail industry principal for SAP.

In other words, the exact opposite of that scene in Minority Report where Tom Cruise is bombarded with ads as he runs through the shopping mall.

That puts the Precision in Precision Retailing.

Rather than describe how this would play out real life, I’ll let this video do it so much better. Click on the image below or this link. Added bonus: there’s a rom-com storyline cuter than a Katherine Heigl movie and a box full of kittens:

sap precision retailing video

SAP is showing off a Precision Retailing solution, which combines a mobile app with cloud-based analytics courtesy of SAP HANA on the back end. Retailers from L’Oreal, European grocer Groupe Casino and the Montreal Transit Agency are already using SAP Precision Retailing, said Haig.

Haig says that Precision Retailing’s ability to help shoppers build lists of recurring items (think kids’ clothes, batteries or toothpaste) and offer them discounts means that the solution today makes it perfect for grocery stores and other general stores (think Wal-Mart or Target).

But Precision Retailing can also help speciality stores, the kind that offer high-ticket items or are beset by showrooming customers. Here’s how. First, we must note that only 25% of shoppers who check competitor prices in a store actually end up buying the item online.

That means 75% of shoppers or more are potential net new customers for the store. And the amount of sales lost to showrooming can be reduced – through precision.

Imagine a consumer visiting a retailer’s Web site to check if a large-screen TV is in stock. That raises a red flag to a retailer that the consumer may be coming to a store soon to inspect that particular item. When he or she enters the store, the store’s app on the customer’s smartphone can immediately open and buzz, alerting him or her to a coupon that for that item or category of items that would match or beat competitors’ online prices.

Such tactics can win back the shoppers who came into a store fully intending to showroom, says Roland Gonzalez, senior directory for mobile industry marketing at SAP.

“Retailers have always been customer-centric. But now they are trying to be customer-intimate,” Gonzalez said.

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Clinton Global Initiative America and SMBs: Hot Stuff or Hot Air?

Gabrielle Lyon

Gabrielle Lyon - Photo by Chris Guillen

In early June the Clinton Global Initiative America  will descend on Chicago with a magnetic field attracting cross-sector C-Suite representatives from around the country.

If you’re unfamiliar with the Clinton Global Initiative (or its younger sister, CGI America), here’s how it works: CGI entices a who’s who to come together to work on fixing big problems with new ideas.  People are put into rooms with a working agenda and through the course of two days (give or take) they surface a bunch of ideas, mix or mash them together, and come out the other end with an ambitious agenda, a big vision and a set of commitments that leverage funds or access to resources to move the needle on the big problem.  CGI America is specifically focused on developing solutions that will “address unemployment, prepare Americans to be competitive global citizens, and rethink current models that shape our economy and society.”  Solutions take the form of commitments. Commitments are what the convening is all about.  It’s all about commitment.

I’ve been asked to serve as one of a handful of advisors for the STEM Education strand.  Along with 11 other working groups (including Clean Electricity, Early Childhood Education, Housing Recovery, Small Business, and Workforce Development), STEM Education will have a hundred or so CEO-level representatives from corporate America, philanthropy (individual and foundations), government and a scattering of nonprofits.

I’m the cofounder of a science education organization based in Chicago called Project Exploration.  Our mission is to make science accessible to students of color and girls through personalized experiences with science and scientists.  We’re trying to change the face of science – literally and figuratively – by creating out of school time experiences for young people to work with scientists and experience the wonders of discovery first hand – in labs, on expeditions and, most of all, in their own lives.  We foster long-term relationships with middle and high school students and reach out especially to young people who struggle in school.  After a decade of this work our students are graduating high school at more than double the rates of their peers in Chicago Public Schools and more than half of them go on to pursue higher education and degrees and careers in science, technology, engineering and math. (See more about our 10-year study here:  Link)

I served as the Executive Director of Project Exploration for nearly 12 years and in that role focused on slow and steady growth: being able to support personalized relationships with our participants has been central to our organizational development strategy.  A dozen years after we opened our doors we’re a 15-person, $1.8 million-dollar organization with a growing national reputation (and national recognition) for leveling the playing field in STEM education.

We’re small – we’re not the smallest nonprofit, but we’re no Field Museum or After School Matters.  So how are we going to contribute to the impact of a conversation where the landscape is being defined as the whole darn ocean?  We’ve got two places: the agenda itself and how we think about scale:

We’re in the midst of setting the program agenda for the STEM Education working session and trying to design a program that will address the weak STEM education program in the US.

The first rub is a philosophical and educational (or, more specifically, a curricular) one: which part of WEAK is actually the issue? This set of choices will shape the agenda and, in turn, define how the proverbial needle-moving, solution-focused “commitments” get made:

  • Is it workforce development? (Students aren’t getting real-life skills to be able to work in the STEM companies who want to hire them?)
  • Is it that students can’t pass national and international tests of science proficiency?
  • Is it that students of color and girls are underrepresented in the workforce we have?
  • Is it that teachers are underprepared and under-resourced and that’s why students don’t do well in STEM or pursue STEM as a career?
  • Is it that STEM initiatives focus on some students but not others – that is, STEM as it’s currently taught focuses on engaging students in the top 5% or 10% academically and the rest are written off?
  • Is it that STEM is supposed to teach critical thinking and wonder for the world but instead the curriculum teaches memorization and accumulation of random facts?

So many weak options to choose from: each suggesting a different set of solutions and strategies.  In an advisory role I’ve got a great chance to leverage Project Exploration’s experience to help shape and agenda that draws on what we’ve seen matters for young people least likely to get involved with STEM.

Here’s the second rub, and the one that most pertains to SMBs (Small and mid-sized businesses).  The CGI game plays on a court that lends itself to BIG: commitments need to be about affecting things “at scale,” “taking things to scale” or “being ambitious.” “Ambition” and “Vision” are the currency of the land. (For example, last year the STEM group emerged with the 100K in 10 initiative focusing on teachers. The goal: prepare100,000 teachers to be STEM teachers over the next 10 years.)

To (perhaps) state the obvious, the issues facing SMBs participating in the CGI scene come down to:

1)     Getting in the door. Getting an invite is all about who-knows-who and who can contribute to commitments; and

2)     Cold hard cash: With a $3K price tag for participation you might ask is it even worth it (that’s a blog post in and of itself).  Sparse comps can be leveraged by getting a recommendation, getting a sponsor or bringing something for a commitment.

If you’re in the door you potentially get access to big fish and big fish-food.  If you want to take something BIG or to scale this would be the place to try to launch.  But what if you like being small or mid-size?  What’s the game?  How does a small or mid-size group make use of a seat at the table?  This is what I’ve been thinking about.

Being close to the ground – when everyone else is up in the air – can make a difference for real impact that matters vs. real talk that never materializes into anything tangible.   When you get this many well-intentioned, well-connected networkers together there’s a good chance that everyone will have something to talk about.  But the real question is can rubber connect with road?  This is where having data, being a model and being able to contribute real-life stories that can help others think about realities and opportunities of operationalizing becomes a set of chips worth having, holding and showing.

The issue of engaging and retaining young people of color and girls from families who may be poor or living in under-resourced neighborhoods to STEM is an issue that’s been on the national agenda for 50 years with little to show in the way of impact.  Project Exploration has data and a model based on personalization that lends itself to adoption rather than replication.  In a big ocean being a landmark can really help navigators – and that’s how I’m hoping to approach it all.

So to the question of “Hot stuff or hot air?”  I’m inclined to think being an SMB with data and real-life stories will offer a great chance to be hot-stuff – and, perhaps importantly for CGI – a chance to keep the overall program being too much hot air.

About Gabrielle Lyon

Dr. Gabrielle Lyon is the Cofounder and Senior Explorer of Project Exploration, a nationally-recognized nonprofit organization dedicated to changing the face of science by ensuring students of color and girls have personalized experiences with science and scientists.  Lyon has nearly two-decades of experience as an education activist, convener and nonprofit leader.  She received her BA and MA from the University of Chicago and her PhD from the University of Illinois Chicago. She blogs for Project Exploration and her personal blog, Schooling Science. www.schoolingscienceblog.org.

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