Showrooming: A New Threat in the Retail Industry

Jennifer RodriguezBrooke Maddock

Brittany DesmondGreg Grant

What is Showrooming?

Wall Street Journal

Online shopping

Potential Problem for the industry

Targets product variety• food

Electronics

Targets plea to supplier

Other business/industries Bookstore industry

• Codex survey

Amazon PriceCheck app

Overlapping products• Target/Wal-Mart/Best Buy vs. Amazon• William Blair and Co. study

Financial Implications Trouble keeping up with

competitors prices

Vast increase in online sales

Slow increase in sales• Target

Decrease in sales for Target

Financial Implications cont. Online companies

sell products in different ways

Wal-Mart and Target have similar problems

Marketing Implications

Product Target: Different Services and

exclusive products

Best Buy: Partnered with Geek Squad

Wal-Mart- In store greeters

Price

o Target, Best Buy and Wal-Mart are unable to compete with Amazon’s competitive prices.

Promtotion

Target: Commercials, catalogs, brochures

Wal-Mart: Layaway program

Best Buy: Geek Squad

Marketing Implications cont.

Place

Target: Opening smaller store

Wal-Mart: Wal-Mart Express

Best Buy: Plans to open smaller stores

Operational Implications Average overlapping income for

customers• Costo $96,000• Target $64,000• Wal-Mart $40,000

Number of stores in U.S.• Wal-Mart with 3,759 stores• Target with 1,750 stores• Costco with 425 stores

Continued Number of stores located

outside of U.S.• Costo with 157 stores• Wal-Mart with 4,557 stores

Each store is on average 170,000 sq feet

Wal-Mart Express Stores• 15,000 sq feet

Overhead Cost

Does showrooming/online shopping present a threat or

opportunity for Target?

Recommendations Unique customer experience

• No cost product service for products purchased in store

Red Card• Loyalty programs to retain customers

International expansion• Smaller stores highlighting most

successful and popular products

Any questions?

Works cited Bustillo, M. (2011, March 15). Best Buy's Net Drops 16% on Declining Sales.      Retrieved February 6, 2012, from The Wall Street Journal website:      http://online.wsj.com/article/SB10001424052748704425804576220391321433866.html   Cheng, A. (2011, July 11). Retailers face uphill battle against Amazon.      Retrieved February 6, 2012, from Market Watch website:      http://www.marketwatch.com/Story/story/      print?guid=92c14726-ABC9-11E0-002128049AD6   Invictus. (2011, March 25). Best Buy: Amazon's showroom? Retrieved February 6,      2012, from The Big Picture website: http://www.ritholtz.com/blog/2011/03/      best-buy-bby-amazons-amzn-showroom/   Krause, R. (2012, January 1). Amazon Disease Plagues Retailers. Retrieved       February 7, 2012, from Regional Business News database.   Osman, J. (2011, December 4). Book Shopping in Stores, Then Buying Online.      Retrieved February 6, 2012, from New York Times website:      http://mediadecoder.blogs.nytimes.com/2011/12/04/      book-shopping-in-stores-then-buying-online/?pagemode=print   PR Newswire. (n.d.). Retail Holy Grail and the 'Showrooming' antidote: Shopkick      Drives More Than $110 Million in revenue for Retail and Brand Partners in      2011 [article]. Retrieved February 6, 2012, from Regional Business News      database. (201201310900PR.NEWS.USPR.SF44582)   Zimmerman, A. (2012, January 23). Showdown over 'Showrooming'. Retrieved      February 6, 2012, from The Wall Street Journal website:      http://online.wsj.com/article/SB10001424052970204624204577177242516227440.html