On a recent Friday morning in November, about 200 North Vancouver shoppers waited in line for a sleek new tech store to open, eager to get at door-crasher deals on the shiny gadgets within. The shop wasn’t Apple. It was Futureshop.ca, a new concept being tested by Future Shop that aims to integrate online with bricks-and-mortar retail. At just 5,000 square feet, the store is one-fifth the size of an average Future Shop, offering a pared-down selection of 1,000 bestselling products on the sales floor. Shoppers can access the brand’s entire 60,000-unit inventory at computer kiosks around the room, then order them to the store or their home.
Call it the high-tech return of the Sears catalogue outlet. The experiment is meant to neutralize “showrooming”—when shoppers come in to touch and try out products in a store, then buy them more cheaply from an online competitor. The phenomenon has been blamed for the declining fortunes of big-box retailers. Many observers point to undercutting by online giant Amazon for hastening the demise last month of Comet, the second-largest electronics chain in the United Kingdom.
If Future Shop’s new hybrid is about bringing the Internet’s advantages to in-person shopping—not to mention saving overhead costs such as heat and rent—London Drugs is trying the reverse. The mass merchandiser based in Richmond, B.C., is attempting to bring its personalized shopping experience to the revamped website it unveiled on Nov. 5. The site allows sales associates to query buyers about what they’re looking for while they shop using a message board. While other sites already do this, London Drugs has an ultra-local twist, says chief operating officer Clint Mahlman: its online salespeople are the same ones customers know from their neighbourhood store.
In both cases, channelling as many warm bodies as possible to stores, where they tend to make unplanned purchases, is the goal, says Arcus Group retail strategy consultant Merril Mascarenhas. But if stores are going to effectively combat sales lost to showrooming, they’ll have to offer value. Here the new retail models show promise.
Inside the new Futureshop.ca store, placards read, “We’ll beat any price you find—even online,” a policy introduced in July. Kiosks provide hotlinks to competing retailers so consumers can comparison shop. As long as the product is from Canada, the store will refund the difference, plus 10%, up to 30 days after purchase.
That “Price Beat” strategy has boosted sales, says Christopher Bennett, director of corporate communications for parent company Best Buy, which opted to close 50 of its U.S. stores in March after reportedly losing sales to Amazon. “We have seen a double-digit increase in our closing ratio, the number of customers who inquire about a product and then buy it,” he says. If the Futureshop .ca stores (a second is due to open soon in Brockville, Ont.) are a hit, he adds, “it’s something we would look at for Best Buy as well.”
Stores will continue to shrink their physical footprint, says Mascarenhas. “They’re centralizing products in the warehouse, so you don’t have dead products on the shelves,” he adds. “That’s an enormous cost saving.”
Still, if customers are bothering to showroom, it means they see value in the in-person experience. Buyers favour physical shops for red-hot items such as video games; those asking for the newly launched Assassin’s Creed III at the Futureshop.ca store wanted to take it home right there, says spokesman Elliott Chun. But only when stores put the lie to the notion that better deals await online will they convince customers to take the products they’ve pawed to the cash register.