Browsing Fees: A New Retail Strategy or the End of Bricks-and-Mortar?
Georgina Fatseas-Sano, owner of Celiac Supplies, a specialty food store offering gluten- and wheat-free products in Brisbane, Australia, had had enough.
Earlier this year, she posted a sign in her store window that has since generated a storm of controversy worldwide:
“As of the first of February, this store will be charging people a $5 fee per person for ‘just looking.’ The $5 fee will be deducted when goods are purchased. Why has this come about? There has been high volume of people who use this store as a reference and then purchase elsewhere. These people are unaware our prices are almost the same as the other stores, plus we have products simply not available anywhere else.”
In an interview with the Associated Press, Fatseas-Sano bluntly described why she took this drastic action: “I’ve had a gut full of working and not getting paid … I can tell straight away who are the rat bags who are going to come in here and pick my brain and disappear.”
As outlandish as charging a “browsing fee” may sound, Celiac Supplies isn’t the first retailer to adopt the strategy. Popular warehouse stores Costco and Sam’s Club charge customers an annual membership fee just to come inside. Years ago, when the iPhone was first unveiled, Apple stores charged admission as part of its crowd-control strategy.
It’s all a reaction to “showrooming” — the practice of customers who enter a bricks-and-mortar establishment, try out a product, and then leave to purchase the same item online. It’s a problem that contributed, for example, to the demise of Borders bookstores. Its former competitor Barnes & Noble estimates that 40 percent of customers come to its retail outlets to look at new books before making an online purchase instead.
The reaction to the Australian specialty food shop’s policy has been swift and furious. Matt Brownell, retail reporter for DailyFinance.com, noted, “… if this store is actually charging people just for walking in the door, it has to be the most misguided strategy we’ve seen for dealing with showrooming ... It’s inevitably going to turn off a lot of potential customers who had no intention of showrooming, but aren’t about to step into a store that forces them to pay an entrance fee if they don’t find anything they like.”
Another commentator had an even harsher take on this approach: “It’s really incredible how many bad strategies legacy companies come up with in trying to compete with the internet. … Rather than showing ways to add more value to the customer experience so they want to come in, they’re taking away value and giving customers reasons to never go in in the first place. That’s a stunningly short-sighted way of running a business.”
When Victoria Barnsley, CEO of publishing house HarperCollins UK, suggested that asking customers to pay for browsing physical books is “not that insane,” a former bookstore owner imagined a carnival barker in front of the store yelling, “See the bearded lady turning pages! See the world’s tallest man with two-covered tomes!”
Although there’s no turning back the clock to the time when customers bought all their merchandise in a bricks-and-mortar setting, retailers have ways to combat the showrooming impulse:
- Provide exceptional service. In a recent survey on showrooming, 75 percent of online shoppers expressed dissatisfaction with retail salespeople. The answer is meeting shoppers’ needs for “an empathetic, informed retail professional” who provides excellent customer service.
- Offer a price-matching guarantee. If, as Celiac Supplies’ attention-grabbing store-window sign proclaims, “our prices are almost the same as the other stores,” then consider offering a price-matching guarantee or genuinely competitive pricing. As the authors of a study by the marketing firm Vibes state: “If you offer price matching, your associates should be trained to observe ‘showrooming’ behavior and approach customers proactively with offers and information to help close the sale.”
- Use apps to engage shoppers. Some bricks-and-mortar stores offer free downloads to customers who purchase from them. Target, for example, has launched various mobile shopping apps that encourage in-store browsing and buying.
Customers who look but don’t buy will never change their behavior because of a strongly worded sign in a store window. Showrooming is simply part of the retail equation. Your goal as a retailer should be to make the in-store experience as pleasant and rewarding as possible, so that shoppers have a reason to look up from their smartphones and browse away.
Lee Polevoi is an award-winning business writer specializing in the challenges and opportunities facing small business. He is former Senior Writer at Vistage International, a global membership organization of CEOs.