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TORONTO – Canadian retailers will aim to counteract the ultimate betrayal this year — customers who browse and inspect items in their stores before they buy them online from a competitor for less.
It’s a practice called “showrooming,” and analysts expect the industry to shift more energy towards reshaping the role bricks-and-mortar stores play in getting customers to spend money.
“This is the year of action,” said Jim Danahy, chief executive at CustomerLAB, a retail advisory firm, and a veteran retailer himself.
“All these retailers are now struggling to hit that balance.”
Danahy has watched the traditional retail space fall out of favour with some customers, and says executives have been searching for new ways to keep feet walking into their stores, and walking out with products.
Working against them is the behemoth online retailer Amazon.com, which undercuts most of its competitors because it doesn’t have to pay overhead for multiple retail stores or employees.
Yet, when it comes to the lowest price, few customers want to hear excuses about why they can’t buy items for less.
A survey released last fall by consulting firm Accenture found that nearly two-thirds of respondents planned to visit traditional stores to browse gifts over the Christmas shopping season, but then ultimately buy them online.
What retailers want to do is stop those shoppers in their tracks, and ease them towards the cash register with incentives.
Interactive technology will play a major role in the process with more advanced smartphone apps that integrate location-based technology with in-store offers and the ability to pay for products directly from the device.
Already, retail chains such as Best Buy and Target Canada have jumped on aggressive price strategies that not only match competitors, but also tack on an extra five to 10 per cent discount.
While customers used to fumble to present ad flyers as evidence of a lower product prices, a growing number of retailers now accept a quick glimpse of a competitor’s website by a staff member to match the price.
Those types of discounts will only be part of the strategy.
Other major changes will affect the design of stores and the number of employees who work at each location, said Daniel Baer, a retail analyst at Ernst and Young.
“People who are buying online are not going to stores as much, and that means revisiting the business model,” he said.
“Retailers won’t look at their store as a traditional bricks-and-mortar store, but as a distribution centre, or part and parcel of their e-commerce strategy.”
During the past few months, evidence of the changes have become apparent at big names such as Best Buy Canada and Canadian Tire Corp. (TSX:CTC.A).
Last week, Best Buy announced it would show 950 employees the door as it reduced its layers of management at Best Buy and Future Shop locations. The retailer has put more energy into its “reserve and pick up” strategy which allows customers to buy items online before they swing by the store.
Meanwhile, after years of staying out of online retail all together, Canadian Tire Corp. (TSX:CTC.A) plans to launch an e-commerce website later this year that allows customers to buy items on the Internet before they pick them up at the store.
“You’re going to see more hiring in technology and systems and IT and distribution centres,” said Brian Yarbrough, a research analyst at Edward Jones in St. Louis.
While naysayers have suggested that retailers will continue to lose marketshare to online retailers like Amazon, not everyone is convinced the situation is so dire for traditional retail.
Shipping packages to a customer’s home can still be wildly expensive and it delays the instant gratification that come from buying online and then picking up the item in a nearby store, said Danahy.
“The last mile in the e-commerce world — delivery to home — is what has defeated most purely online (companies),” he said.
“At some point it becomes more expensive to ship it then you actually make on the goods, and that’s especially true with perishable products.”
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