Posted in Marketing & Strategy Articles, Total Reads: 1195
, Published on 22 November 2012
Recently I came across a friend at a book store in Pune. I asked him if he visits the store frequently. He told me that he loves visiting this store for browsing through new books. I asked him if he only browses or also buys books here. His prompt response was that he general buys books from Flipkart or Indiaplaza, wherever the discount is the best. His response led me to wonder if it is fair on his part to visit this store merely to browse books, when he knows he is not going to buy them here.
Any rational person would be tempted to go to a store where he gets the best offering both in terms of price and service. However, in recent years, customers have started visiting physical stores (intentionally or on impulse) only to try out and finalize the product and later buy it online at a discount price. They use the resources like AC, ambiance, attendant and the inventory, only to then deprive the store owner of a sale.
Have Brick and Mortar stores become mere display showrooms? Are the customers fair when they visit a brick and mortar (B&M) store when they know that they are going to ultimately buy the stuff online? Well, fairness is a subjective topic and we don’t know the reason behind this behaviour of consumers. So, we further explored this question from three perspectives:
B&M bookstore owner
We interviewed the owner of a large bookstore retail franchise, who manages 16 bookstores across Maharashtra. He confirmed that the online stores are starting to eat into the market share which his stores used to command earlier. But on our query about consumers’ use of his store as just a browsing gallery, he was quick to mention that he welcomes customers even if they visit only to browse. He elaborated – “Even in the world before the Flipkarts and the Infibeams, we encouraged consumers to come and sit here the whole day, read any books they liked. Browsing in our store and then buying online is still better than customers not coming to the store at all. If a customer visits us, she would usually end up buying something or the other. If she stops coming because she wants to buy online then we have definitely lost her.” The owner said that physical bookstores are all about creating impulses for customers to buy, and for this they need customers to visit the store. He did feel that with the advent of online retailers, now retailers with physical stores will have to probably modify their offerings and services if they want to co-exist – he thought those changes will just come naturally as part of evolution.
Next, we discussed this topic with academicians from one of the top business schools in India. One of the faculty members said, “There have been many studies on consumer behaviour and morality. It is observed that humans generally do what is fair but in this case it is interesting to see why somebody would behave differently.” In fact he reverse engineered the questions as “Are businesses fair, ever? There has always been information asymmetry in the market. Retailers set a price but the customers never know what the margins are! Today the ball is in the consumer’s court.” The experts were unanimous in their view that this behaviour is completely acceptable and there is nothing wrong in it. Another faculty member said “There is no implicit contract between the customer and the store owner. Customer is not bound to buy anything from the store, so why should the customers feel bad about anything?” “All is fair in love, war and business. Businesses employ tricks to lure customers into buying things that they didn’t want, and customers would also do anything to get the best offering one can get.”
Finally, to complete the 360 degree view, we conducted a survey of book readers in the age group of 20 to 60. Half of the people were surveyed in a B&M bookstore and the other half were surveyed online. All survey participants have purchased at least one book online and one book from a B&M store in the last one year. Our findings:
Most of those who returned without buying were those who felt that it is not very important to touch and feel a book before buying it.
One of the major revelations from this survey is that a significant number of people feel it is important to touch and feel a book before buying it. Books can be considered to be a very impersonal item. For personal items like clothes, musical instruments, cosmetics etc. the need to try them out will be even stronger. As long as there is this need, physical stores will need to be present in some form or the other. Maybe in future, stores will start charging entry fees which gets waived only if a purchase beyond certain amount is made. Maybe, as online shopping becomes more wide-spread, people will grow past their urge to touch the product before buying and physical stores will need to device other ways of attracting people. On the question of whether the customers are fair or not, which started this entire discussion – we conclude that customers are right! They are always right, isn’t it?
This article has been authored by Kunal Gupta and Kushal Bagadiya from NMIMS.
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