Omnichannel and Solutions

For some retail sectors, showrooms may provide an attractive combination of consumer experience and compelling
economics.

Many retail executives may take a dim view of conventional “showrooming” — visiting a store before making a purchase online — far from seeing it as the solution to big challenges. But as it evolves in a way that lets retailers help customers make purchases on-site and have items delivered to their homes, many retailers are finding that the showroom phenomenon can be leveraged to their advantage in the form of higher sales, fewer returns, and lower costs. Put simply, showrooms offer the alluring prospect of a unique consumer experience and solid economic fundamentals.

Ever since Amazon began selling books online in 1995, retailers — and plenty of other commentators — have been asking what role, if any, physical stores might play in the retail arena. Some have gone so far as to predict the ultimate demise of stores, and others expound the virtues of various hybrid omnichannel solutions.

Omnichannel efforts have underperformed

Omnichannel strategies — which seamlessly synchronize many forms of customer experience, including brick-and-mortar store environments, online sales, smartphone connectivity, and voice connections — have been a success for a few retailers. Generally speaking, though, these efforts have not succeeded in arresting declines in store activity, improving retailer profitability, or boosting online sales. Although many traditional retailers today highlight the healthy growth rate of their online sales, most are actually lagging behind and losing market share to Amazon and other online specialists. And even as their revenue is disappointing them, they are learning how costly the omnichannel approach is, as it requires retailers to maintain multiple supply chains (one direct-to-home, one to the stores); support networks; and, often, inventory pools.

The showroom option

Given the obstacles facing retailers today, we believe that there is an additional, largely complementary sales approach that retailers in some sectors should consider. They can replace underperforming stores and support e-commerce efforts with showrooms. A showroom, in its purest form, is a store that showcases products, but sells nothing — in the sense of providing goods to consumers. Instead, a showroom offers items for inspection, gives advice on products, and takes orders. The products are then shipped to the customer’s home from some other location.

As it happens, many consumers use retail stores in this way already; they browse in person and purchase online. But because retailers still aim to sell from their store inventory, they have to maintain the full range of existing store support infrastructure, making the current arrangement not economically beneficial. A dedicatedshowroomhas a cruciallydifferentintent.

Making it work

Bonobos, a trendy men’s clothing company that caters to 18- to 40-year-old men, aptly illustrates the showroom retail concept. Since 2012, the company has been experimenting with showrooms it calls Guideshops, now in 30 locations. Consumers can walk in or book an appointment, and have a beer or a drink of water as knowledgeable salespeople called ninjas take measurements and help sort styles and sizes.

Guideshops have all the advantages of a high-end, high-touch retail store. Customers can try on clothing, get plenty of advice — and be enticed with possible accessories and add-ons. At the end of the sales appointment, the goods are ordered online and shipped to the customer at home. “We said we would never be offline, and then, wait a second,” Bonobos CEO and cofounder Andy Dunn told the New York Times in 2014. “We hit a big turning point. We realized offline really works.”

 

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