Retailers offer Wi-Fi to track customers, close deals
TAMPA - Before Jose Burgos buys almost anything in a store, he pulls out his cellphone to scan the bar code and look for lower prices somewhere else. "I can't tell you how many things I've gotten cheaper at Walmart.com," Burgos said while pointing to a price tag on a DVD player at a Best Buy in Tampa. "But I work at a cellphone store, and I'll be selling a phone and a customer will stand right in front of me and do that same thing to me." That dynamic has a name that gives retailers shivers — "showrooming." But some retailers are starting to fight back any way they can. Their latest strategy: Fight fire with fire and offer free Wi-Fi service in stores, track where shoppers surf online with their phones, match prices right on site and offer more exclusive brands that can't be price-matched in the first place."You're about to see a real transformation of brick-and-mortar stores, and the whole shopping experience in general," said Barbara Kahn, a Wharton School marketing professor. The savviest retailers, she said, are taking an "omnichannel" approach where everything they do works together: their website, their social media, their physical stores, their marketing, everything. "It's a very hard thing to do, so that's why you're seeing only a few trying." For retailers, the habit of showrooming seems to explain why their sales remain stubbornly stagnant compared with online sales. Holiday spending in 2012 rose just a few percent over the year before, while spending online surged 14 percent, according to Internet tracker comScore. Already, Internet sales are blamed for helping kill off traditional bookstores, and showrooming is a common culprit in explaining why other stores such as Best Buy are struggling. According to one study by retail researcher IHL Group, 41 percent of smartphone users checked competitor prices on their phones while in a store, either with Amazon's own scanner app, or third-party apps like RedLaser. Increasingly, retailers are finding customers are well into their buying decision before they get to the store, and Forrester Research recently found "the Web is now the de facto channel in which consumers expect to find the best deals and the best value." Once in the store, Wi-Fi systems at least give the retailer a way to participate when a shopper is scanning bar codes. Customers see the retailer's Wi-Fi connection pop up on their phone, and that prompts a log-in screen that can be branded with that store's name, a special deal, or a direction to that store's shopping app. On iPhones, that login screen at Best Buy says "Thank you for visiting our store. Our Wi-Fi is your Wi-Fi. Stay as long as you like." Target last autumn turned on Wi-Fi in stores nationwide, and shoppers now see huge promotions right on the large HDTVs that there is "Free Wi-Fi Here." Publix recently turned on Wi-Fi in all 1,000 grocery stores, company officials say, primarily as a convenience to shoppers. Sears and JCPenney now offer free Wi-Fi. As for how much customers use these links, Saks Fifth Avenue has some initial data. The retailer first launched Wi-Fi in the flagship New York store in November 2011, and AT&T recently helped Saks Fifth Avenue open up free Wi-Fi in all 44 U.S. locations, including Westshore Plaza in Tampa. Since then, shoppers averaged more than 19,000 connections a day in stores, and traffic jumped more than 30 percent during the holidays. JCPenney started rolling out Wi-Fi in stores a few months ago to help customers with cellphones, but also help the store's staff to complete purchases with mobile devices. And the store has iPads in their Levi's Denim Bar to help shoppers pick jeans. Wi-Fi will also be key when JCPenney fully launches its "Street" project that will re-organize stores into avenues in which shoppers browse boutiques, stop for coffee in sit-down areas and surf away on their laptops or tablets. Perhaps the best defense against the mobile price shopper, Kahn said, is one of the oldest ideas in retail: Offer them something special. That could be a line of jeans that's only available in that store, perhaps promoted by a celebrity. Or a store such as Best Buy could have a TV maker build an HDTV just for them or assign a certain TV a bar code that only works at Best Buy. The most interesting stores will have the best luck drawing shoppers who are interested in more than just price. "I just visited a store in Paris that had many of the same things at Best Buy," Kahn said. "But they also had a bookstore, a cute stationery store, and everything was very well merchandised. It was fun to be in, and I think that kind of experience will be more important." A few retail experts envision a more futuristic approach: Physically tracking where shoppers are and how they use their phones in the store. Because a store such as Best Buy would become the conduit to the Internet, they could make "heat maps" of data that show which aisles shoppers price-check the most on Amazon.com. The next step would either be re-merchandizing to combat showrooming, or triggering an employee to find that shopper and engage them in conversation to close the sale in the store instead. "Few stores have gotten there yet," said Doug Lodder, vice president of business development for Wi-Fi system builder Boingo Wireless. "But you'll see more stores in the next 12 to 18 months start rolling out those strategies."
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