It was around a decade ago that research first suggested the “omnichannel” approach of allowing online shoppers to collect their items in-store. It was an approach that was widely touted for fighting off the demise of the high street as shoppers flocked online.
This approach is now mainstream, as it provides convenience to shoppers but also benefits retailers, who can save significantly on shipping while also attempting to upsell consumers when they enter the store.
Renewed value
Research from the Indiana University Kelley School of Business shows that so-called store showrooms can also be valuable, especially for big-ticket durable goods.
Like in a regular store, showroom customers can touch and check out the products, ask questions, and see how they might fit in their homes. Showrooms have been proven to boost overall demand, attract new customers, and reduce returns. They don’t usually keep products in stock, which lets retailers have smaller locations.
Researchers examined data from over 380,000 transactions at a top Italian furniture store. They wanted to see if customers’ concern about how long it takes to get their purchases, known as delivery lead time, differed when they bought through store showrooms, online, or by phone using a printed catalog.
“Common wisdom in the retail world is that it shouldn’t matter, because consumers are waiting the same amount of time to get exactly the same product,” the researchers explain. “We found that isn’t the case. When people go into a showroom, and they see the product and talk to store employees about it, they simply don’t care as much about the long wait time.”
Delivery time doesn’t matter
The results indicate that customers shopping in showrooms are less affected by delivery lead time compared to those using online or catalog channels. When lead time increases by 10%, daily sales volume in the showroom only decreases by 0.29%, while it decreases by 1.85% for online shoppers and 0.92% for catalog shoppers.
“What we find is that you don’t really need to speed up the delivery process too much; you can make better use of your stores,” the authors continue. “Once people have seen the product personally, they know more about it, and it reduces what we call ‘information uncertainty.’ When you buy online, you’re just seeing the pictures. Especially for furniture, you don’t want to buy something that’s too big for the space, and when you’re buying online, you may not be sure if it will even fit.”
The researchers recommend that retailers offer incentives to encourage online customers to visit showrooms, as these customers may be more willing to wait for their products to arrive.
Longer delivery time
The study also reveals that when delivery time is longer, customers are more likely to opt for warehouse pick-up if that option is available, especially when they’re eager to receive the product. Showrooms, however, mitigate this effect.
Companies that have successfully adopted this approach include men’s clothing brand Bonobos, eyeglass retailer Warby Parker, and jeweler Blue Nile. They initially started online but have recently opened showrooms where customers can physically see their products.
It’s worth noting that the researchers couldn’t track customer behavior across different channels, such as when someone visits a showroom first and then places an online order.
