Nothing has done more to create anxiety among retailers, with the exception of a bad economy, than "showrooming." Consumers come to stores for holiday deals, find what they like and then buy it online from e-commerce companies, led by Amazon.com Inc. (AMZN). No matter what retailers do to encourage shoppers to buy items in their stores, the practice persists, threatening store chain revenue and, in some cases, their viability.
According to a new Gallup poll on showrooming:
Six percent of recent U.S. retail shoppers indicated they "showroomed" in early November -- meaning they examined merchandise in a traditional brick-and-mortar retail store, but made the purchase online instead. Another 3% say they intend to buy the merchandise online. In other words, brick-and-mortar stores may be losing nearly one customer in 10 to showrooming.
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To add to the problem the bricks-and-mortar companies face, the same poll shows that 40% of Americans have showroomed. Presumably, that makes it possible they would do it again.
The few percentage points do not seem like much, until the razor-thin margins on which most retailers operate are taken into account. More particularly some major retailers like J.C. Penney Co. Inc. (JCP) and the Sears and Kmart operations of Sears Holdings Corp. (SHLD) cannot afford to lose a single sale. Both companies continue to fight for their lives as sales stagnate or fall. The forecasts both have given for the holiday season are less than optimistic. At stake for them during the upcoming six weeks are thousands of jobs and scores of store locations.
Even retailers that are financially very viable cannot withstand the showrooming trend indefinitely. In its most recent fiscal year, Macy's Inc. (NYSE: M) had net income of $1.2 billion on revenue of $27.7 million -- little better than 4% growth. Every dollar Macy's makes, therefore, is precious.
Sometime after the holidays are over, experts will post the numbers for how many dollars spent for the period were spent online. The number grows as each year passes. The conventional wisdom is that even the strongest retailers eventually will have their profits severely threatened by consumer e-commerce, of which showrooming is a primary tool. In this case, the conventional wisdom is right.