Page 437 - Foundations of Marketing

404 Part 5 | Distribution Decisions

Marketing Debate

Is Showrooming Fair?

ISSUE: Is it fair for customers to visit local stores, examine gadgets on display, testing the features, checking prices
products, compare prices, and then buy online? via smartphone, and then buying from an online competi-
tor if they can find a bargain.
“Showrooming” is the trend toward treating local stores To combat showrooming and reassure customers that
as showrooms—not as places to buy but as places to they’re getting a good deal, Best Buy and other stores have
see products before buying online from other retailers. been matching the prices of certain competing stores and
Online-only retailers and marketplaces such as Amazon. online retailers. Knowing that price isn’t the only factor con-
com and eBay even provide free mobile apps so custom- sumers consider, a growing number of brick-and- mortar
ers who are standing in a store can quickly check the retailers are enhancing their services and the in-store
online price of a particular item and, with the conve- experience. Many now offer their own apps with special
nience of a click, buy from the Web if they choose. Best deals and exclusive content to reinforce customer relation-
Buy, a category killer in consumer electronics, has been ships. Small retailers are trying to counter showrooming
hit particularly hard by showrooming. Some customers by trumpeting their unique merchandise and community
b
are visiting its big-box stores to see televisions and other connections. Do you think showrooming is fair?

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T.J.Maxx, Marshalls, Stein Mart, and Burlington Coat Factory, have grown. Off-price retail-
ers typically perform well in recessionary times, as consumers who want to own name-brand
items search for good values.
Off-price stores charge 20 to 50 percent less than department stores for comparable mer-
chandise, but offer few customer services. They often feature community dressing rooms and
central checkout counters. Some of these stores do not take returns or allow exchanges. Off-
price stores may or may not sell goods with the original labels intact. They turn over their
inventory 9 to 12 times a year, three times as often as traditional specialty stores. They com-
pete with department stores for many of the same customers: price-conscious customers who
are knowledgeable about brand names.
To ensure a regular flow of merchandise into their stores, off-price retailers estab-
lish long-term relationships with suppliers that can provide large quantities of goods at
reduced prices. Manufacturers may approach retailers with samples, discontinued prod-
ucts, or items that have not sold well. Also, off-price retailers may seek out manufacturers,
offering to pay cash for goods produced during the manufacturers’ off-season. Although
manufacturers benefit from such arrangements, they also risk alienating their specialty
and department store customers. Department stores tolerate off-price stores as long as
they do not advertise brand names, limit merchandise to last season’s or lower-quality
items, and are located away from the department stores. When off-price retailers sell
stocks of in-season, top-quality merchandise, tension builds between department stores
and manufacturers.

LO 3 . Explore strategic issues in STRATEGIC ISSUES IN RETAILING
retailing.

Whereas most business purchases are based on economic planning and necessity, consumer
purchases are likely to be influenced by social and psychological factors. Because con-
sumers shop for various reasons—to search for specific items, alleviate boredom, or learn
about something new—retailers must do more than simply fill space with merchandise.

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