Target takes aim at 'showrooming'
More people are visiting stores to 'test-drive' the merchandise, then going home to buy it online.
Retailers have a term for a type of comparison shopping that's increasingly commonplace. It's called "showrooming" and it occurs when you visit a brick-and-mortar store to view and touch a product you desire -- only to run home and buy it for less online.
Nervous traditional retailers are working on strategies to get shoppers to return home with bags full of in-store purchases instead. The Wall Street Journal reports that Target, the nation's second-largest retailer, has developed a three-pronged plan. Post continues below.
- Get suppliers to produce unique products that are immune to price comparisons via computer search or smartphone app. Marc Sanchez on American Public Media's Marketplace explains it this way:
So if you're Kraft, and Target sells your macaroni and cheese for 99 cents a box, but thrifty customers can get that same box for 89 cents online, Target wants you to make Target Macaroni and Cheese (bull's-eye-shaped pasta?), a product that can only be found in the store.
- When comparisons are possible, get suppliers to match the lower prices offered by its online-only competitors.
- Possibly offer a loyalty discount to Target shoppers for items they regularly buy.
Target outlined its plan in what the WSJ described as an "urgent" letter to vendors last week.
Experts are skeptical that it will work. But what's clear is that a war between traditional and online-only retailers -- with Amazon leading the charge -- is heating up, and online has the momentum. The share of retail sales by online vendors is 8% and growing rapidly. And showrooming is a very real threat to brick-and-mortar stores. The New York Times reported last month:
According to the survey, conducted in October by the Codex Group, a book market research and consulting company, 24% of people who said they had bought books from an online retailer in the last month also said they had seen the book in a brick-and-mortar bookstore first.
Thirty-nine percent of people who bought books from Amazon in the same period said they had looked at the book in a bookstore before buying it from Amazon, the survey said.
Traditional retailers could counteract by lowering prices, but there are limits to that. WSJ readers had some other suggestions, including:
- Build a better website and improve delivery. "I would advertise on Amazon and Overstock that I don't charge shipping and that most items could be picked up the same day," WSJ reader "Andrew Brown" wrote.
- Improve customer service at the store. How about having sales associates who are knowledgeable about products and who proactively engage the customers? But that would probably require hiring more people and spending more money to train them.
Maybe it's too late. Online retailers can sell for less because they have lower costs and often don't have to collect sales tax, the WSJ notes. It added:
More important, the growing competition from Amazon is based on a different business model entirely: Amazon can sell products so cheaply because it uses its other profitable units -- such as cloud data storage and fees it charges others to sell on its website -- to subsidize the rest of its business.
Are you among those who are doing more of their shopping online or using a smartphone to get an instant price comparison while they're still in the store? How can stores like Target and Barnes & Noble entice you back?
Meanwhile, there's not much sympathy for the big-box stores. For instance, WSJ reader "Dan Jones" wrote:
I remember hearing all the tales of woe about mom-and-pop stores closing because of the big-box stores like Wal-Mart and Target. Now it's their turn to feel the heat and they don't like it. Turn-about's fair play. This is evolution at work in the marketplace.
More on MSN Money:
For me, its not a matter of arguing back and forth about shipping vs. sales tax. I agree with the person in the article that indicated customer service might be a novel idea for the big box stores. I absolutely hate shopping at Wally World due to the poor customer service and rudeness of the employees. Target is only slightly better. This year i spent all my Christmas funds on Amazon and a local only retailer and I was very happy. No Stress and no annoyance at the usual, untrained, unhelpful, temporary Christmas staff that you run into in the stores.
The sa;es tax in the state of Michigan is 6%. So $10 shipping means the sales tax = shipping at slightly over $150. So anything under $150 with $10 shipping means paying state sales tax would be a cheaper price.
A few years ago I went to Best Buy (Bad Buy as I call it) and asked if they would match the price from Amazon knowing I would pay more because of sales tax. Wouldnt do it. They wont take less than 100% markup for stuff. If Amazon is willing to sell it for 50% markup and I am saving $100 why would I buy from Bad Buy? If they had matched it I would have gladly bought from them but nope. GREED! And that is why the only way I wil shop at Bad Buy is if I have a gift card given to me.
Shipping costs in most cases are higher than sales tax so the claim that Amazon is unfair because they dont charge sales tax is just bullcrap. Yes a lot of people will use the free super saver shipping but then again there are a lot of people out there that will pay the $10 for 2 day shipping. Have any idea how much sales tax $10 is?
Want to know why I buy from Amazon? I have 30 days to return something in which they pay for the return shipping and shipping a new item to me if I have to exchange it for being defective, and since all my receipts are online I dont have to worry about losing a receipt or bringing one back in to a store. And if I return something and do not want another item they refund my card they dont give me a gift card or tell me I have store credit. Thats what crooked companies do and when you try that with me thats the last time I buy from your store.
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