Big Data Fueled Targeting Gives Best Buy Weapon Against Showrooming

The advent of Big Data and the accompanying ability to slice consumers into ever-more-specific groups provides retailers such as Best Buy with powerful weapons against showrooming, according to Alexander Muse, co-founder and CEO of ShopSavvy. Muse delivered the closing keynote address at last week's RIS News Cross-Channel Retail Executive Summit in San Antonio, TX, "The Future of Retail: Retail Without Boundaries."

ShopSavvy, a mobile app with 40 million users that adds about one million net new users per month, is gathering the kind of highly specific data that allows retailers to "communicate with consumers at the point of intent in retail," said Muse. ShopSavvy provides price comparison data to users but also gathers data about them in the process.

When users scan products in retail stores, ShopSavvy can track "the store you're in; what you scanned, and can match it with who you are, where you live, your credit score and other demographic information," said Muse. "We've built Hadoop clusters that allow us to start targeting customers in unique ways. Retailers can target just Hispanic customers; people who shop only within one mile of their homes; people who have just moved, or people who have lived in their home for five years; college graduates only – and people who shop in your competitors' stores."

ShopSavvy works with a number of retailers, including Best Buy, to help them use showrooming to their own advantage. "An individual Best Buy store wants to know how many other stores sell the same products as they do, which is about 1,200 other Best Buy stores and 43,000 other stores. With ShopSavvy, they can talk to consumers in those other stores and turn them into showrooms, targeting customers there with online or store purchases or offering accessories, warranties, or other value-added services."

For customers in a particular store who find an item Best Buy sells for a lower price at Walmart, the retailer can take action to save the sale. "When Best Buy knows that you [the customer] know, they can say they'll match the competitor's price and that their Geek Squad will install the item for free," said Muse. "They recognize that you're a smart shopper and so they use the information that you have smartly."

And while many retailers are worried about showrooming's overall negative implications, Muse has a different view. "The more forward-thinking retailers are building showrooms – that's essentially what the Apple stores are," he said, although he admitted that Apple's oversized profit margins allow it to employ the large numbers of salespeople that make the Apple store experience so unique.

He also cited Bonobos, a formerly online-only men's apparel retailer that will now operate within Nordstrom stores. Their Guideshops are actual showrooms, featuring one of each item but no stock for sale. Shoppers need to make an appointment to visit the stores but they can bring friends, and the stores have couches, beer on tap and football games showing on the TV.

"If showrooming is so bad, why are the hottest online companies so anxious to build stores and get in front of people?" asked Muse.

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