In these tough economic times, many stores are resorting to sales or promotions just to get customers through the doors. Not one Australian company, however. Celiac Supplies, a gluten-free specialty food store in Brisbane, may be chasing customers away with its recent policy in which customers are forced to pay $5 AUD (about $5.20 USD) for simply browsing.
The store’s policy was set forth in a notice posted to the front door of the store by owner Georgina Fatseas-Sano that quickly went viral when a Reddit user shared a picture of it (pictured below). The policy is rather simple; upon entering, customers must fork over the $5 AUD fee which will later be deducted from any purchases they choose to make. Those customers who enter the store only to examine the products without purchasing anything then forfeit their $5 upon exiting the store.
As owner Georgina Fatseas-Sano describes, the policy was created to curb the practice of “showrooming”, a fairly new term for when customers examine a product in-store only to later compare prices and purchase it online. Fatseas-Sano explained that, on average, about 60 customers per week would examine the products, ask the employees questions, and then leave to purchase them online. This practice resulted not only in lost business, but many wasted hours spent giving advice to customers who had no intention of purchasing their products. As Fatseas-Sano notes, “I’m not here to dispense a charity service for [my competitors] to make more money.”
The story of Celiac Supplies and its showrooming woes ties in nicely to our recent class discussion about disintermediation, the tactic popularized by Dell of cutting out the “middle man” and selling directly to customers online. It’s hard to deny the many advantages of disintermediation. Through purchasing directly from manufacturers over the Internet rather than in retail stores, customers reap the benefits of bypassing retailer price mark-ups, comparing prices, customizing products as they please, and never having to worry about product availability. The producers, too, benefit as a result of disintermediation. Not only can they better control inventory by building products only as needed, but they can also boost their sales by offering lower prices free of the mark-ups added by retailers.
With both producers and consumers benefitting from disintermediation, it’s easy to turn a blind eye to the plight of the middle man. Middle man retailers all around the globe are left to suffer the same unwanted consequences of disintermediation faced by Celiac Supplies. Customers take part in showrooming, sales are lost, inventory accumulates, and valuable time is wasted giving insight and advice to customers who will simply take their business online later. And that’s where the double-edged sword analogy manifests itself once again. While producers and consumers reap the benefits of disintermediation, retailers are struggling to survive.
Looking ahead, we’re left to wonder just how middle man retailers will continue to respond to the growing threat of disintermediation. Luckily, it doesn’t seem that all retailers will take actions as radical as those of Celiac Supplies. For example, we look to Bonobos, a clothing company known for its line of colorful, form-fitting, and youthful pants. In its own retail stores, Bonobos has shifted its focus from sales to service; the company opts out of selling its products in-store and instead uses the stores as locations for customers to try on products and get their questions answered by employees before eventually ordering online (see picture below) Another example comes from big box retailer Best Buy. Best Buy recently extended its Christmas shopping season price-matching guarantee in an effort to curb showrooming. These examples from Bonobos and Best Buy serve to give us hope that the middle men can survive and adapt to the changing nature of how shopping is done in our disintermediation-dominated society in ways other than charging customers for just looking.