Rockbridge’s research that models consumer showrooming behavior reveals that charging a fee to visit a store reduces the likelihood of in-store purchase, even when the fee is refundable.
It is no secret that the retail landscape has changed dramatically in the past decade with the increasing dependence on online channels and evolution of mobile shopping. For the most part, traditional brick and mortar retail stores have expanded their presence to online and in many cases mobile channels, but online only stores are often able to offer lower prices due to lower overhead costs. This has given rise to consumers examining products in brick and mortar stores but then purchasing them online, aka showrooming. Retailers are acutely aware of the threat showrooming presents to their bottom lines, and are taking different approaches to mitigate this practice, with some going as far as charging customers a fee for browsing.
In the 2014 National Technology Readiness Survey (NTRS), Rockbridge explored this issue by testing various elements of the shopping experience to determine the factors that have the greatest impact on consumers’ likelihood to visit and purchase. We focused our research on the consumer electronic and apparel industries, which are particularly susceptible to showrooming, as consumers like to test out new gadgets or try on outfits before purchasing. Consumers were asked their likelihood to visit and subsequently purchase from different store configurations, allowing us to model how behavior is affected by store elements and fees.
The chart below shows the importance of each aspect on explaining intent to visit the brick and mortar retail location. As might be expected, charging a browsing fee (refundable upon purchase) strongly discourages consumers from visiting a store. The actual amount of the fee makes little difference; once there is a minor charge, the incremental impact of amount is minimal. What is surprising is that under the pretense that the consumer has already decided to visit the store, the fee has a similar impact on likelihood to purchase. One explanation could be that charging a fee for browsing, while making consumers more monetarily committed to purchasing, frees them from any psychological commitment to the store (i.e., if they paid to browse, they are less likely to feel guilty about purchasing elsewhere). Regardless of the explanation, it is clear that charging a browsing fee is not the answer to the showrooming problem.
So what does encourage customers to purchase in the store versus shopping around? There are a couple things retailers can do to make the in-store experience “stickier”. Consumers are more likely to purchase from stores with expert employees trained to be consultants. Compared to a self-service model, providing expert advice results in a 7% lift in purchase intent in an apparel store and a 6% lift in purchase intent in a consumer electronics store. Apparel customers place particular emphasis on employees being “experts”. In fact, they prefer a self-service approach over access to employees with no special training. Price matching is another way retailers can convert foot traffic into sales. However, for consumer electronics retailers, offering to match the prices of other brick and mortar retail stores is not enough; they must also match prices of major online retailers in order to truly have an impact on purchasing behavior. While neither of these offer a silver bullet for converting visitors to purchasers, it’s clear that charging a browsing fee is a surefire way to lose both.
About this Study: the 2014 National Technology Readiness Survey is based on an online survey of 1230 U.S. adults sampled at random from a consumer research panel. The survey was conducted in February 2014, and results are weighted to match Census Bureau data. The margin of error for the study is +/-3 percentage points. The study is co-sponsored by Rockbridge Associates, Inc. and the Center for Excellence in Service at the Robert H. Smith School of Business, University of Maryland, College Park.
Written by: Robert Devall, Senior Director, Client Services