Before the advent of smartphones, purchasing new items was a fairly straightforward process. One would go to a brick-and-mortar store or shop, choose items from a selection of products for sale, and pay for them on the way out, completing the transaction.
The Changing Marketplace
Today, nearly everyone carries a smartphone, which enables them to easily and conveniently make purchases online. As a result, customers' buying habits have changed, as buyers are drawn in by the allure of lower prices and next or even same-day delivery.
Ecommerce has not yet solved for the need to see, feel, or try on an item, which has resulted in return rates of as high as 40% for some categories. In the early days of mcommerce, there was a rise of a phenomenon known as showrooming, in which a customer browses for products at a traditional store, then purchases the item online. For millennials in particular, for whom smartphones and online purchasing have always been a way of life, this type of shopping offers the best of both worlds; a chance to examine the product in person before buying it, plus the convenience and low cost of an online purchase.
Fueling Retail Contraction
Unfortunately, this trend has also caused a decline in sales for traditional retailers, who have been slow to adapt to the changing needs of the marketplace. Brick and mortar stores carry a high overhead, needing large amounts of land, tons of inventory, and lots of staff to restock items and manage check out. As the online shopping experience improved, fewer customers saw a need to visit the store at all and costs can cut into store profits. As such, the showrooming trend is seen as a threat by many retailers. Amazon (somewhat ironically) has even introduced a patent to block, redirect, or otherwise control customers' attempts to comparison shop on their smartphones when using a store’s Wi-Fi network.
Traditional Retail Evolves
Attempting to combat showrooming is understandable, but ultimately short-sighted. Adapting to a business model which embraces rather than rejects this trend can actually increase profits in the long run, while simultaneously enhancing the customer experience. By accepting that customers will not be making their purchase at the brick-and-mortar store, modern showrooms can eliminate the need for inventory, which also means less space will be required for the store property. By getting rid of check-out lines and restocking, retailers can drastically reduce the number of employees necessary and make shopping trips less of a hassle. This results in higher return on investment for the retailer, and a better shopping experience for the customer.
Nordstrom Embraces Showrooming
Nordstrom has adapted to this new way of shopping by opening Nordstrom Local, a concept store with no inventory that prioritizes the customer experience above all else. The focus of this store will be to offer a personalized, convenient, and all-around great shopping experience. Personal stylists and tailors will be on hand to help with fittings, free returns and curbside pickup are available, and they even offer complimentary cold-pressed juice. A customer can then order the chosen items online and rest assured that they will live up to expectations when the items arrive on their doorstep.
Young people in particular seem to appreciate this kind of business model, which bodes well for its success in the long term. As more customers are drawn in by the smaller, more comfortable stores and wooed by the personal touch of the shopping experience, this type of shopping is likely to become the norm rather than the exception. Perhaps the days of the sprawling shopping centers and long checkout lines are dwindling into obscurity, as savvy retailers get on board with the changing lifestyles of consumers. If stores such as Nordstrom Local succeed and turn a nice profit, other retailers are likely to follow suit.