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Next Great Digital Experience Adds Reality as Channel

The Internet dealt a staggering blow to business-as-usual. The digital disruption of connecting buyers and sellers through the World Wide Web changed everything, posing a serious threat to the brick-and-mortar retailer. But that was only the beginning.

While digital has been so successful in the early rounds of this battle due to lower pricing, convenience is now the high ground to be taken and has pulled the physical retailers back into the picture.

Reality, as it turns out, is the next digital channel.

One of the early signs of the inter-reliance of digital and physical retailing was “showrooming.” Showrooming occurs when the consumer uses the brick-and-mortar store as a showroom to check out the merchandise. The consumer then finds the cheapest price online for the item – often right in the store, using a smartphone -- and purchases from the digital retailer. This of course left the physical retailer providing an important service for their online competitor, and often losing out on the sale.

There are soft versions of this as well. My wife, for example, browses books in Barnes and Noble. She scans the barcodes of the ones she’s interested in with her iPhone and virtually “collects” the titles. Once she’s ready for the next read, she buys one from this list to read on the Kindle app on her iPad. So this is a kind of “delayed showrooming.”

Of course, sometimes it works the other way. I, for example, often check out a new lens or other piece of photo gear online for my Nikon, reading CNET and other reviews to find the best fit for my needs. Though I’ll often purchase through an online retailer, I sometimes will head to a physical retailer simply because I don’t want to wait for delivery. So maybe this is “reverse showrooming.”

As retailers of both persuasions—digital and physical—have realized a new form of buying was taking shape, we’ve watched as online delivery times got shorter, and delivery costs have dropped, to make purchasing online more convenient and instantly gratifying.

This competition of online vs. physical retailer has had a number of recent manifestations. Amazon recently introduced Amazon Locker, for example, which allows you to order online and, in select locations, pick up the merchandise in a physical locker located nearby, sometimes in a Staples or 7-Eleven.

Google is getting into the game, of course, trying out Google Shopping Express as a new pilot in San Francisco. In this case, you go online and order from stores such as Target, Whole Foods, Walgreens, Toys ‘R’ Us and a number of others and receive delivery the same day. This is the physical retailer joining forces with Google to combat the juggernaut of Amazon.

According to the location analytics firm Placed, Best Buy and Target, though significantly impacted by showrooming, were not as seriously affected as some other brands, including Bed Bath & Beyond, PetSmart and Toys ‘R’ Us.

Ebay, of course, had to get into the fray and has started “Click & Collect,” debuting the service in the United Kingdom because polling showed that UK shoppers were more likely than US shoppers to take advantage of in-store pickup. The consumer can order from one of at least 50 retailers, and then pickup the merchandise in one of 150 different Argos stores. According to the Guardian, this is to be followed in 2014 by eBay Now, a pilot one-hour delivery service beginning in London.

So we’ll continue to see armies amass on either side of this battle to merge digital and physical retailing to maximize best price and convenience. What this evolution has revealed, however, is that physical retailing has an important role to play in the shopping experience. As we’ve seen, whether at the Apple Store or a car dealership, physically experiencing a product is an important aspect of our buying process. So we’ll continue to see a collection of strange bedfellows create uneasy alliances to remain relevant. Only time will tell if reality becomes digital, or digital become reality.

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