The Canadian retail landscape is shifting with the imminent withdrawal and closure of Target. Comparisons to Nordstrom’s entrance into Canada have been brushed aside as “apples and oranges,” which is true from a variety of perspectives—audiences, product, etc. What is irrefutable, though, is that Nordstrom has learned from Target’s missteps by overstocking certain goods and easing into the market with a slow and deliberate approach to openings.
Aside from changes in the players on the field, another challenge facing the industry at large is the growing phenomenon of “showrooming.” Showrooming occurs when consumers visit a retail location to look at a product in-person, and then go online to find the lowest price to make the order—sometimes even while they’re still in the store. The numbers are not on the side of bricks-and-mortar retailers having to pay for leases, staff and inventory in comparison to a website with a virtual warehouse. For those of you who can remember, the virtual “consumers distributing” wins here. (Please note that this is the second story in which I’ve made reference to consumers distributing—in one week!)
How big is this trend in Canada? We asked our H+K Perspectives Panel, “Do you ever go to a retail location to look at a product, but then purchase the product online instead?”
A whopping 46 per cent of Canadians said yes—26 per cent of which responded with ‘frequently’ or ‘sometimes.’ Yikes! And, 82 per cent of the time, their rationale for the decision is price.
The digital battlefield is now just as important as bricks and mortar—this hasn’t happened over night. We’ve seen brands slow to embrace this trend, but eventually have to catch up (Canadian Tire and The Bay, to name a few).
The solution? Unfortunately there isn’t a one-size-fits-all fix. We’ll probably see more strategies to limit price variability like Apple or Bose, but that won’t work for those wanting the access and scale that Walmart or Costco can provide.
Digital can’t be ignored and different approaches are showing encouraging results. For example, we have found that content strategies at Barney’s have led to dramatic increases in average purchase size per consumer relative to those consumers who did not engage with the content. Digital relationships and engagement matter especially when the measurable outcome is activation to purchase. Showrooming is a challenge that makes what’s at stake on the digital battlefield even more compelling.
This is the first in a regular series of H+K Digital Insights that are powered by the H+K Perspectives Panel.