Showrooming vs. Retail Warehousing
As the saying goes, ‘what’s old is new again’. Only this time robots and hand-held computers (aka smartphones) are involved.
I was having a conversation recently with a colleague about the retail industry and I made the point that all retail stores are warehouses, only some are prettier than others.
Walk into the average Macy’s or other department store and you’ll see piles of inventory out on display in the store, of every size (from small to XXXL) and variety (white, black, brown, etc.) with even more in the back. All of this inventory has been tagged for individual sale and is there every day, just in case the person who wants that size, color, style, whatever, walks into the store ready to take it home today.
Contrast this with Argos in the UK or the now-defunct Best and Service Merchandise in the United States whose business model was to have only certain items out on display in the retail store, with the rest of the inventory in the back ready to be picked (much like an eCommerce environment) once the product(s) were ordered.
Apple Stores are a hybrid between the two. Accessories are out on the floor boxed for individual sale, while iMac and iBook computers, iPad tablets, and iPod mp3 players are all out of the box and display in droves for customers to try out and hopefully purchase. Then if they do, the box appears from the warehouse in the back.
But there is a new wave of entrepreneurs trying to bring back the catalog retailing business model into the modern age. Version 1 was standard eCommerce where the catalog was available online instead of in the store and no physical retail stores had to be maintained, leading to a financial advantage for online retailers like Amazon. But eCommerce has a weakness, and that is in product categories need to know how something fits or feels or otherwise fits their style or life.
This has led to the rise of what physical retailers rail against, the concept of showrooming. If you’re not familiar with what showrooming is, it is the pattern of behavior where potential customers come into a physical retail store, explore the product, try it on if necessary, and then leave the store and buy the product online from a competitor like Amazon.
Some entrepreneurs are beginning to recognize the collision of some of the mobile technologies that underlie the showrooming trend together with automated robotic picking technologies and the recognition of inefficiencies in the traditional retail warehousing model.
One example is a Seattle area entrepreneur who left Amazon to launch a business called Hointer that while they are talking about how they are revolutionizing the premium jean shopping experience for men, their real strategy is to use their store as a rapid prototyping and testing environment to develop a technology platform supporting the browsing, trying, and checkout process that they hope to sell to a number of different retailers all around the world. From what I can gather, it works as follows:
- Download the Hointer mobile app
- Use the mobile app to select the jeans and the sizes that you want to try on
- When submitted, a robotic picking system delivers the selected jeans to a dressing room
- The customer tries on the jeans
- If the customer wants to purchase any of the jeans they can swipe a credit card in the dressing room an check out
Their modernization of the catalog showroom business model is predicated on reducing the square footage and personnel required to operate a store, thus increasing (hopefully) the dollars per square foot ratio that most retailers use as their success metric. One side benefit of the approach is that salespeople will be able to spend less time folding clothes and more time helping customers. Imagine that.
Will this robotic retailing concept catch on with more than utilitarian shoppers?
Image Credits: Daily UW, Hointer
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Braden Kelley is a popular innovation speaker, embeds innovation across the organization with innovation training, and builds B2B pull marketing strategies that drive increased revenue, visibility and inbound sales leads. He is currently advising an early-stage fashion startup making jewelry for your hair and is the author of Stoking Your Innovation Bonfire from John Wiley & Sons. He tweets from @innovate.