5 showroom strategies to help transform physical retail channel

This topics looks at some of the key showroom strategies that retailers can develop as means to transform their physical store footprint value proposition and potentially counter the ‘show-rooming’ effect (one where consumers visit physical retail stores only to purchase elsewhere online)

5 showroom strategies

We now know that product & in-person interactions (experiential retailing) is one of the best trump cards omni-channel retailers have over their eCommerce only counterparts and as such…

…showroom strategies outlined are centered around this physical channel advantage; particularly for the discretionary consumer product segment

1. Interactive showroom

Rather than being just a static showroom with products scattered across the store; integrating contextualized interactive experiences designed to enhance customer engagement that no eCommerce channel alone can provide

For example; having consumers to participate in the immersive in-store experience such as –

• In-store fashion shows with integrated social dimension that allows everyday shoppers to take part with the clothing & accessories that they can purchase right then and there in-store
• In-store ‘canvas zones’ where shoppers could design their own room (virtual – VR/AR or actual) using the same furniture & home decor SKUs that are available to purchase at the same time

This type of showroom strategy would typically suit brands that have flagship, large multi-level or even medium store formats within their broader retail footprint

Key Benefit – In most cases, consumer’s positive interaction would translate into an impromptu sale – either in-store or via the retailer’s e-commerce channel

Key Challenge – Complementing existing marketing calendar with plans for fresh impromptu ideas borrowed from ‘now trending’ themes locally, on social media, etc. as well as ensuring tight integration of showroom experience with cross channel purchase experience such as pricing consistency, SKU count, etc.

2. Rent-a-showroom

Leasing unused real estate (showroom space) to manufacturers, designers, vendors, startups or even shared office spaces such that the rental income at the very least offsets their costs and/or has the ability to generate additional income for the retailer

For example;

Vendor Zones – Regardless of how creatively that 4K OLED TV is marketed online, vendors & consumer alike would still prefer an in-person experience and as such large retailers could sub-lease showroom zones within their store footprint to facilitate vendors-consumer interactions

Startup Symbiosis – Retailers could also explore sub-leasing showroom zones to startups who’d like to showcase their innovative products & experiences and build customer relationships through their early stages of development

This type of showroom strategy would typically suit brands that have large / multi-level store format (with unused space) within their broader retail footprint

Key Benefit – Generate higher foot traffic into store leading to increased X-Sell potential. Revenue-share / Sub-lease revenue models from Vendors & Startups alike

Challenge – Partnering with current ‘trending’ entities who complement the Retailer’s overall strategic direction, values, ethos, product range rather than diluting the core brand image

3. Personalized showroom

Providing shoppers personalization zones where they have the ability to instantly customize their purchases either virtually (VR/AR) or actually across select product categories (e.g. clothing, smartphone accessories, et al.)

Depending on the combination of product category and nature of the personalization experience; this type of showroom strategy could suit brands with any size of store formats

Key Benefit – In-Store customization extends the feeling of instant gratification to consumers that could boost satisfaction & NPS scores in addition to incremental ‘personalization revenue’ generated

Challenge – Accurate forecasting of ‘Customized materials’ store inventory & wait times; both of which could lead to negative consumer experience if mismanaged

4. Pop-a-showroom

Theme based pop-up showroom that focuses on providing consumers with a unique specialized experience (e.g. Winter land, Smart Kitchen, etc.)

Pop-ups also serve as a concept vehicle of the retail world where brands could test new products with consumers directly in a controlled yet familiar sales environment and as such retailers with any usable floor space could experiment with this type of showroom strategy

Key Benefit – The pop-up brand gains the ability to engage with target audience within the host retailer’s high foot traffic areas without bearing prolonged high costs of setting up a permanent store whilst…

…the host retailer has effectively converted their unused space into potential revenue stream from entities who would like to market their products within their store footprint

Key Challenges –

• Pop-ups could cost a pretty penny depending on the location and the time of the year and as such would need to be planned to have maximum impact / $
• For pop-ups used purely as a demonstration booth; there is the challenge to seamlessly integrate sales process – for example; placing a tablet based ordering screen that facilitates instant customization & purchase experience from their eCommerce site or pickup from nearest store

5. Local community showroom

Retailers could explore re-allocating part of their unused floor space within their large store formats to promote local (non-competing) small businesses, community events and perhaps even facilitate charity drives

Although this type of showroom strategy may seem suitable to large store formats; brands with any size of store formats could promote community centric events & local small business commerce that could also enhance their overall brand image

Key Benefit – Attracting broader consumer segment (think: sub-segment of millennials) and building brand image around local community ethos

Key Challenge – Aligning with the right local events that trigger a positive response whilst complementing the retailer’s overall strategic direction and brand value

Showroom strategy example

As part of broader retail transformation, developing showroom strategies should be an integral part of the retailer’s sales, supply chain & customer service functions…

…that include procurement, JIT/JIC inventory models, product lifecycle management, omni-channel operations, IT systems, strategic marketing & CRM platforms, customer service & support programs

Retail experience zones + Mini DC

Retailers could explore reformatting parts of their large multi-level store into multiple experience zones (think: elements of destination stores) as well as using any unused space as a localized mini fulfillment center (mini DC)

By implementing such a hybrid showroom model; the retailer has not only expanded their distribution & warehousing capabilities with potentially lower CAPEX & build time but also created a platform for agile customer deliveries and inventory management

Put another way; retailers gain the ability to potentially fulfill customer orders for select products – either in-store, click-and-collect, or delivery to local eCommerce sales catchment area – within a much shorter time period; potentially even besting eCommerce only competitors

Alternatively the retailer could also choose to sub-lease this additional prime real estate as warehouse space to other value chain players for a fee, thus converting unused floor space into a revenue generating medium

Retail industry as a whole is undergoing a transformation and as such how omni-channel retailer’s transform, innovate & utilize their physical store channels will determine their success in the long run