Over the last two weeks I’ve posted thoughts about how the smart phone is creating a revolution in retail transactions and ways that the smart phone can be used to provide more convenience to the customer. Although it is still too early to tell what the industry standard will be for both of these uses, I think it is pretty obvious that smart phone technology will help customer service through speeding up transaction times and providing more convenience for the customer while, at the same time, reducing employee time requirements and cash security issues.
But there is another way that the smart phone can be used that may not be to our advantage. Over the last couple of years, retailers have been complaining about the practice of “showrooming”. Showrooming is when a customer goes into a store, inspects an item to see whether they like it, and then uses their smart phone to go online to see if it is offered at a cheaper price and, if it is, purchase it from the online retailer – sometimes while they are standing in the original retailer’s store!
In effect, the customer is using the brick and mortar shop as a product showroom- nothing more than just a display area for products that they can touch and feel before buying in a virtual store. A couple of weeks ago Amazon announced that they are going to introduce a new phone that contains their Firefly feature that claims to recognize more than 100 million products and will tell you how much you can buy them for on Amazon.
Granted, this is much more of a problem for retailers that sell large durable goods such as Best Buy and Home Depot rather than for the convenience store industry. But I think that there is a lesson here for all retailers.
The c-store industry is already in hyper price competition mode regarding gasoline pricing. We all know that customers are using apps such as GasBuddy and Cheap Gas! to find out about competitive fuel prices. Social media offers convenience retailers a way to send price promotions and discounts to your customers to entice them into their stores. Eventually, a showrooming app is going to be created that allows your customer to check to see the price your competition is offering on beer, cigarettes, and soft drinks.
You may not always have the lowest price in the market. Sometimes your economics won’t allow you to be competitive with a larger retailer or a business that is trying to drive sales with deep discounts. After all, you have to make a profit on what you sell to be able to stay in business. Sure, I can sell a lot of products for a price below my cost. But I’m not going to be in business for very long (the truth is that you can’t really make it up in volume).
So how do you compete with someone who is undercutting you on price and your customer’s phone is telling them that they can buy that can of Coke for a lower price elsewhere?
It all comes down to customer service and presentation. If you provide outstanding service, a clean and friendly store, and the products that your customers are looking for you can overcome a price disadvantage. Most of our c-store customers are not overly price sensitive when it comes to products bought inside the store (gasoline pricing is a slightly different matter). They are more concerned about convenience, time, and service. Stay competitive on these points and you can fend off price cutters.
The good news is that I don’t think that showrooming will have a big impact on our business. The better news is that the weapon you can use to overcome showrooming – excellent customer service – will benefit your entire business.