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Showrooming Evolution

02/08/2013

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Retailers, in general, are unsettled by “showrooming” – the practice of consumers viewing product in a store then price-comparing online and usually buying the product from another retailer.

The problem for retailers is the concept works. Consumers know it as well. There’s no turning back at this point. For most retailers this is a problem. But not all.

Restoration Hardware is looking showrooming in the eye and saying, “Bring it.”.

The company positions its relatively small, mall-based stores as showrooms for its brand, letting catalogs and its website act as virtual extensions with more merchandise.

The showrooming strategy has been a boon for direct-to-customer sales. They rose 27% last fiscal year and are approaching half of its total business. Of its direct revenue, web sales represent nearly half as well, based on estimates from Internet Retailer magazine. And its website traffic has surged: comScore estimates unique visitors to Restoration Hardware’s site jumped 49% in November, 18 points above closest rival Pottery Barn.

Restoration Hardware’s success at showrooming is partly a function of its market. Furniture and decor, unlike consumer electronics and other items, aren’t easily searchable by specifications. A highly fragmented market, home furnishings sellers benefit from many players having proprietary merchandise, which stunts online competitive threats.

However Restoration Hardware’s model would be unlikely to help Best Buy – perhaps the biggest loser in the showrooming concept.

But that’s not the point. Best Buy’s woes are entirely self-inflicted.

The point is that Restoration Hardware reinvented itself during the bust (as in the recession and associated real estate and housing implosion) and positioned itself to be where the customer was going to be – not where he/she was. Big difference.

As I said in yesterday’s post “6 Brands Closing Stores in 2013

Retailers today must do two things to survive and thrive in the years to come:

  1. Think and act like merchants. Sell, add value, be unique, take care of your customers, value your employees, be bold with product and how you sell it
  2. Be future oriented. Business models are changing – rapidly. Create a department of future trends. Stay on top of mobile, social media,  Be innovative, but test, test and test again

Or as Walter Gretzky, father of NHL great Wayne, is quoted as saying, “Skate where the puck’s going. Not where it’s been.” Good advice for today’s retailers.

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