Retailers are as mad as hell and they’re not going to take it anymore. For years, consumers have been going into bricks and mortar stores to size up the look and feel of a product and then head home to buy it online. The most crushing blow came late last year when a leading online retailer promised consumers a discount on their digital purchases if they emailed a snapshot of competitors’ prices as shown in the store. Retailers call this trend ‘showrooming’ and they’re rapidly developing new strategies to better compete with online marketers.
During the most recent holiday season, store retailers recorded a 4.1% sales increase while the typical online retailer saw sales rise by 15%. Though online sales comprise about 8% of all sales, many retailers see the writing on the wall. Savvy consumers like the convenience of shopping online. In many cases, there’s a price advantage as sales tax is largely ignored in these transactions. (However, the tax advantage might not last for long as legislators are taking up the issue and looking for a national solution to what has traditionally been a state issue.)
Writing for the Wall Street Journal, Ann Zimmerman highlighted one tactic that retailers like Target are taking to improve their competitive position. Instead of selling the same products that can be found at competitor stores or online, the company has asked manufacturers to develop unique items which would be sold solely at Target. Another problem many retailers encounter is the manufacturers set the minimum advertised price (MAP) which is designed to protect a product’s market value. In cases where the online price is set at MAP, traditional retailers cannot make even a small profit on their sales. To improve their chances of snagging a sale, Target has “asked the suppliers to help it match rivals’ prices.”
Some analysts worry that Target’s strategy might not work because online retailers may have fundamentally altered the business model. However, the changes the retailer has in store this year, and one that is likely to be initiated by many other retailers, means forming partnerships with new vendors to boost sales of unique items. For example, Target plans to debut products from a San Francisco-based confectionery shop in hundreds of its stores later this year. These partnerships and store-within-a-store concepts will drive the need for more and unique marketing campaigns to lure consumers who are looking for something different.[Sources: Zimmerman, Ann. Showdown Over ‘Showrooming’. Wall Street Journal. 23 Jan. 2012. Web. 1 Feb. 2012; Ross, Andres. Pop-up shops at Target sweet deal for Candy Store. Sfgate.com. 18 Jan. 2012. Web. 1 Feb. 2012]