Can Showrooming Save The High Street?

Mike WestonI got into one of those ‘future of the high street’ discussions at a party over the holiday period. My fellow partygoers hadn’t been reading the latest research, they were merely commenting on what is becoming increasingly clear for all to see: the way we buy things is changing fast.

But the researchers clearly back this up - such as GfK’s press release mid-December talking about the changing role of the High Street in 2012’s UK Christmas shopping plans. It seems only a third of consumers were planning to make ‘most of their purchases in High Street stores’, down from 42% just one year earlier. The better news for the wider economy is that online purchases will more than make up the slack. Emerging financial statements post-Christmas from the retail industry back this story up.

This doesn’t appear to be affecting the actual footfall in stores, however - just the queues at the till, as consumers increasingly research in real life what they go on to buy online. That same GfK report suggested that 57% of us would browse in-store for inspiration.

Already in 2013, the cost of that gap between browse and purchase is starkly illustrated by a series of high profile failures: entertainment retailer HMV has gone into administration and the camera retailer Jessops has closed in recent weeks. Meanwhile Italy is losing both FNAC and Blockbuster, while the French high street will have to carry on without its 25 Virgin Megastores.

I’ve been fascinated by how retailers are choosing to respond to this. John Lewis, the UK’s largest department store retailer, had a cracking Christmas, both online and offline. In 2012 they enabled free Wi-Fi access across their stores, recognising that it could help increase average spend-per-customer significantly.

Marks and Spencer, electronics retailer Maplin and others seem set to follow suit, having announced or commenced trials of free Wi-Fi services.

I see it as a realisation of the cross-channel approach that the smartest marketers (retail or otherwise) are embracing. John Lewis, for example, has a fully integrated online business that allows online orders to be easily collected at hundreds of their Waitrose supermarkets as well as in John Lewis stores. As MD Andy Street put it: “It’s a bricks and clicks story; it’s obvious that the same customers are using both channels”.

For me though, the biggest surprise is the partnership forged in 2012 between UK bookseller Waterstones and ‘formidable competitor’ Amazon. Since October, the retailer has sold Amazon’s Kindle range direct to its own customers, right next to the paperbacks and hardback books. Waterstones’ boss, James Gaunt, acknowledges that ‘some’ of his customers choose to read books digitally - “… actually, they choose to do both,” he adds. His job as a customer-centric retailer is to help his customers get what they want.

This is probably the highest stake bet on the ‘showrooming’ phenomenon I’ve seen in Europe. If he’s wrong, and Waterstones’ Kindle customers simply go direct to Amazon to buy their ebooks, then the (already challenged) business could be finished.

Arguably, though, his customers will migrate to Kindle reading with or without his help, making this ‘deal with a ruthless devil’ his best option. At least this way he retains a commercial interest in ebooks, as Gaunt insisted in an interview with the Daily Telegraph last year, “…Waterstones will make a cut on every single Kindle that the book chain sells and every single e-book that is downloaded over the Waterstones Wi-Fi.”

This policy allows Waterstones to focus on providing a welcoming ambience for book lovers - even funding the retail estate improvements the chain has planned, including in-store coffee shops and providing that free Wi-Fi. Owners of Waterstones-bought Kindles can even ‘borrow’ books for an hour a day over the Wi-Fi while they sip their beverage, much the same as they might skim a hardback book in store.

In other words, Waterstones are banking on the idea that customers they’ve sold Kindles to will still want to ‘showroom’ back at their high street stores - and maybe buy other items while they’re there, too… even if those items are coffee and croissants.

So will the winning strategy lie in crafting the retail experience, unconcerned about whether it’s driving sales online or in-store? At least one retailer doesn’t think so.

A leading kids’ retailer, operating across Europe and internationally, is rumoured to be launching a new retail concept that sounds a lot like the complete reverse. Instead of creating an environment where products are set out for playing with, or closer examination, they intend to create what sounds like a retail catalogue shop, with a smaller footprint, designed to function purely as a utilitarian, transactional environment.

Which way wins? I suspect one answer will not suit all cases - but I very much look forward to seeing what the more creative retail marketing brains come up with as 2013 progresses.

Mike Weston
Managing Director

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