Wednesday, September 19, 2012

Decrease in "showrooming" - An issue for FMCGs

Last week, @GinoVanOssel published an interesting post on the topic of showrooming. Brick-and-mortar retailers for high involvement goods face an interesting challenge from online retailers. Potential customers increasingly tend to visit showrooms to check out the products and then start searching online for the best bargain on their preferred product. So, the brick-and-mortar retailers invest in showrooms and staff, yet the online retailers get the the deal. This topic is often discussed, but less attention goes to a complementary issue in the low involvement category of FMCGs. With the steadily rising popularity of online grocery shopping and accompanying shopping apps, the producers of FMCGs are missing out on valuable marketing communications precisely because of the decrease of showrooming.

So, what does a showroom offer for FMCGs? A typical grocery store or retailer will have a number of explicit or implicit marketing communication opportunities. Among the explicit ones, we can think of banners, promotional products and demonstrations, coupon dispensers, premiums etc. Among the more implicit ones, we can think of the placing of the products on the shelves (eye-level and left-to-right positioning), facings, packaging, shop atmosphere, loyalty programs, etc.

For a number of these marcoms there is no online equivalent. Indeed, there is little logic in using multiple facings in an online context. For a popular product in a brick-and-mortar store, customers find it reasonable to see it stacked in adjacent rows because not doing so would result in frequent out-of-stocks. Consumers however, are also more likely to choose these products. But why would a website portray a popular product more than one time?

For other store-related marcoms there does exist an online equivalent. For instance, in brick-and-mortar retailers products at eye-level have an advantage over other products. Similarly, one can think about the positioning of items on a retailer's shopping site (see, e.g., the work by my colleague Els Breugelmans). Still, the availability of these online equivalents might be short-lived since different kinds of shopping apps are being developed that start from a shopper's habitual shopping pattern.

For the sake of user convenience many of these apps provide shopping lists, thus skipping out on the massive opportunities the brick-and-mortar store offers to promote products to potential customers. Why is this so important? For one, shoppers typically write down a product category on their shopping list rather than a specific product or brand. This means that targeted or clever in-store communication (and even "just" packaging) might lure customers into buying a non-habitual brand or line extension. Moreover, the brick-and-mortar store is also more likely to trigger impulse decisions compared to the online alternatives.

In sum, the advent of online shopping and the increased user convenience of supportive apps could result in a decrease of marcom opportunities. At the same time, one should realize that this also results in increased opportunities to create customer loyalty: once you get into the shopping list of the customer's mobile app, there's a much better chance of staying there.

No comments:

Post a Comment