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From showrooming to unichannel

by Stuart Wilson, Monday 26 November 2012

The latest buzzword to hit the IT and consumer electronics (CE) retail channel is ‘showrooming’. Visit a bricks and mortar store and you will see customers touching and using the latest devices on display before picking up their smartphone, visiting a price comparison site, finding the best online price and (if it is cheaper) purchasing through one of the hundreds of e-tailers vying for their business.

This process, showrooming, is bad news for bricks and mortar retailers, but could it eventually lead to a new retail channel model that fuses physical retail and e-tail together in a sustainable and profitable union?

Showrooming is here to stay and for retailers that have a huge investment in bricks and mortar stores it has the potential to destroy their business. The bricks and mortar stores are merely providing a free display and product demonstration area for pure e-tailer rivals that can easily undercut them, because they are not burdened by the costs of running physical retail outlets.

The term showrooming has started to crop up more and more recently (it even has its own Wikipedia entry now) and it is already something that major US retailers are openly discussing. The rise of showrooming will put increased pressure on retailers with physical outlets. Even retailers operating a multichannel or omnichannel strategy will suffer. The simple fact is that a pure play e-tailer will maintain a price advantage that the consumers buying on price will find hard to refuse.

Physical future

So is there still a place for physical retail outlets in the IT and CE channel? The answer is yes, but I believe we will eventually see the emergence of a new retail business model that takes the idea of showrooming to its logical conclusion. Imagine going to a physical store where you can try out all the latest devices, make a decision, choose the e-tailer you want to purchase from, complete the transaction online and pick up the item there and then.

This future retail model is based on a service provider operating a showroom for multiple e-tailers (and even vendors) and taking a small commission for each product picked up in store. Let’s say I was interested in purchasing a Google Nexus 7, but wanted to try one out before committing to buy. I would visit the showroom, try out the device and commit to buy, compare the best prices from e-tailers (or even Google itself), decide who I wanted to buy from, complete the transaction online and pick up the product and leave the shop.

If a physical outlet can come up with a viable business model that allows it to operate as a showroom and customer pick-up point for multiple e-tailers, there are immediate economies of scale. How the showroom operator would be compensated and financed is where the proposed business model becomes more complex.

The showroom operator would have the fixed costs of running the store and the logistics of pushing sufficient product to each point of sale to contend with. However, by allowing the customer to walk away with a purchase there and then, this model would free up the e-tailer from the logistics of arranging delivery of items. The showroom operator could feasibly receive a commission or fixed fee from the e-tailer for each item that is sold through its outlets.

Rather than fighting to combat showrooming, I think one savvy retailer will eventually decide to embrace it and build a showroom business that operates for the benefit of multiple e-tailers. The primary benefits of a physical store are the ability to touch and feel the product and the immediacy of fulfilment – you buy it, you leave the shop with it.

Some retailers are already offering a ‘click and collect’ service that links up their e-tail operation with the inventory of each store, allowing customers to go and pick up their product as soon as they have purchased it online.

Bring on the unichannel

The proposed showroom model would see one service provider providing a ‘click and collect’ service that could be used by multiple e-tailers and even vendors themselves if they were selling direct to consumers.

Current retail models do not always make economic sense. In the ICT and CE channel, the product brand has become more important than the retail brand for most consumers. The growth of showrooming is unstoppable and the inefficiencies of a traditional hybrid retail model will be ruthlessly exploited by pure play e-tailers.

We have had multichannel and omnichannel is now all the rage in terms of retail strategy. I think what I’m now proposing as a model of the future is ’unichannel’ – a physical retail display, purchase and pick-up channel that can be used by all sellers.

In the UK we have recently seen the demise of Comet and the ongoing struggles of retailers with physical stores. I believe a new retail model will emerge soon. A showroom in each population centre providing a shared service used by multiple e-tailers and vendors. The customer gets to touch and feel the products, can still access the best prices and can leave with the product there and then.

That’s the dream anyway. The ’unichannel’.

DISTREE EMEA 2013

Top distributors, retailers and e-tailers from across the EMEA region are invited to attend DISTREE EMEA 2013, the premier event for the regional ICT and CE channel, from February 19-22nd in Monaco.

DISTREE EMEA gathers hundreds of senior executives from EMEA’s Information Communications Technologies (ICT) & Consumer Electronics (CE) volume channel. DISTREE EMEA is a powerful business platform for vendors looking to manage, build or launch routes-to-market within EMEA. From A-brand vendors to start-ups, the DISTREE EMEA structure and reach offers business benefits and powerful return on investment.

During the course of the three-day event, delegates take part in thousands of pre-scheduled one-on-one meetings with hundreds of vendors. Each year, hundreds of new distribution agreements are struck across the region as a result of business relationships initiated at DISTREE EMEA.

DISTREE EMEA 2013 will also build on successful initiatives launched at last year’s sold out event including a regional awards ceremony. The ‘EMEA Channel Academy: 2013 Awards’ will include more than 20 categories for vendors and distributors from across the region.

www.distree-emea.com

For more information on attending DISTREE EMEA 2013 please contact fhemraj@distree.com quoting code DEMEA13

DISTREE_Events

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