Smartphones have changed the way we socialize, travel, check the weather and how we get news. They have also changed how we shop. Showrooming is a trend in shopper behavior in which customers visit a brick-and-mortar retail location and decide what item to buy, but instead of buying that item in-store, they use their mobile device to find a better price – and ultimately purchase online. Physical stores have advantages, among them is the instant gratification of having the purchased product in hand. However, online retailers tend to have a price advantage. With less overhead, they can undercut brick-and-mortar stores, often by a wide margin. GroupM Next and Catalyst, the leader in search marketing innovation, teamed up to conduct research in order to provide brands with an understanding of consumer behaviour as it relates to showrooming in Canada. The question this research attempts to answer is, how much of a discount will compel a customer to make an online purchase? All else equal, consumers would prefer to have an item now, rather than later, so how much of a discount will it take for someone to leave the store and wait for shipping? How many leave for 5% off? What about 10%? How many shoppers will walk for merely pennies?

1. March 2013
Authors:
J. Patrick Monteleone, Ph.D., Director, Research
Jesse Wolfersberger, Director, Consumer Insights
Retail Showrooming In Canada:
Winning The Consumer & The Price
Of Keeping Buyers In-Store
TOGETHER WITH

2. Retail showrooming in Canada: Keeping buyers in-store
Smartphones have changed the way we socialize, travel, check the weather and how we get news.
They have also changed how we shop. Showrooming is a trend in shopper behaviour in which
customers visit a brick-and-mortar retail location and decide what item to buy, but instead of buying
that item in-store, they use their mobile device to find a better price – and ultimately purchase online.
Physical stores have advantages, among them is the instant gratification of having the purchased
product in hand. However, online retailers tend to have a price advantage. With less overhead, they
can undercut brick-and-mortar stores, often by a wide margin.
GroupM Next and Catalyst, the leader in search marketing innovation, teamed up to conduct
research in order to provide brands with an understanding of consumer behaviour as it relates
to showrooming in Canada. The question this research attempts to answer is, how much of a
discount will compel a customer to make an online purchase? All else equal, consumers would
prefer to have an item now, rather than later, so how much of a discount will it take for someone
to leave the store and wait for shipping? How many leave for 5% off? What about 10%? How many
shoppers will walk for merely pennies?
This research also aims to find out if all showroomers are the same, and what demographic
and behavioural flags identify a shopper who is likely to leave the store to buy online. A deeper
understanding of consumer behaviour in Canada will emerge so that retailers can address the
behaviour proactively.
In Fall 2012, GroupM Next conducted a similar study about showrooming based on consumer
behaviour in the United States. The important differences between these two studies are:
» Five of nine products featured were changed, with four retained for comparison.
» Three additional products were added to test and increase our understanding of consumer
choice dynamics.
» Additional testing was incorporated to better understand the roles that product shipping time,
being in-market for a product, presence of children and public transportation use all play in
consumer choice.
Key insights from the research, including differentiations between Canadian and American
consumers, are:
» Twenty percent of Canadian consumers prefer to remain in-store and purchase, compared to
10% of Americans.
» A majority of Canadians will leave a store and buy online if offered a $15 discount. The same
percentage of Americans will leave a store if offered a $5 discount.
1
Retail Showrooming In Canada:
Winning The Consumer & The Price
Of Keeping Buyers In-Store
March 2013

3. 2
» Among Canadian consumers, factors in a consumer’s purchase decision when faced with
showrooming, in the order of importance from highest to lowest, are: discount, shipping time
and familiarity with the retailer.
» When two-week shipping is the only option available, 5% more consumers will buy in-store,
compared to one-week shipping.
» Among Canadian consumers, being in-market, the presence of children and the use of public
transportation play no role in consumers’ likelihood of remaining in-store to buy.
Survey results
GroupM Next surveyed 2,000 Canadian shoppers, asking about 12 products across multiple retail
categories and at different price points. Respondents were given a hypothetical showrooming
scenario in which they could purchase a given product and own it immediately, or they could take
a discounted price, leave the store and have the product shipped.
The results show that, while
customers would rather have
the product immediately,
a small price difference is
enough to entice them to leave
the store and buy online.
When the online price is
just 2.5% lower than the in-
store price, 74% of Canadian
shoppers say they would stay
and buy in-store. When the
discount increases to 5% off,
63% of customers say they
would stay in-store. At a 20%
discount level, only a small number of shoppers (27%) will stay in-store. It is interesting to note that
throughout the study, when it comes to showrooming, there proves to be no meaningful difference
in preference or behaviour between English- or French-speaking consumers.
Of the products featured in the survey, Canadian consumers considered purchasing headphones
differently than the other products (the topmost point at each discount level in Figure A). While
Retail Showrooming In Canada:
Winning The Consumer & The Price
Of Keeping Buyers In-Store
March 2013
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
%PurchasingIn-Store
0% 5% 10% 15% 20%
Discount Offered Online (%)
Impact Online Discounts Have On
In-Store Purchases (Canada)
Source: Retail Showrooming in Canada: Winning The Consumer & The Price Of Keeping
Buyers In-Store; Catalyst/GroupM Next, 2013
%ofShoppersStayingIn-Store
$0 $50 $100 $150 $200 $250
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Impact Online Cost Savings Have On
In-Store Purchases (Canada)
Figure A
Figure B

4. 3
there was nothing present in the language of the question asked to suggest it, respondents showed
an implied urgency with headphones. It took a larger discount for shoppers to leave the store
when buying headphones than any other product. Interestingly, U.S. consumers revealed similar
behaviour as determined in our research of the U.S. marketplace. Among Canadian consumers, the
research reveals the second most likely product to have implied urgency is a set of tires. The least
likely product to have a sense of urgency is a laptop computer.
A similar story emerges when looking
at the data by dollar amount. If the
price difference between in-store and
online is close, shoppers prefer not
to wait for delivery. However, if the
difference is more than $15, a majority
of customers say they would leave.
In comparison, our research showed
that $5 is the tipping point among U.S.
consumers.
When consumers make choices,
decisions are not usually made
based on a single factor. In this study,
consumers were asked to choose
between buying in-store and online.
The questions featured varying combinations which included factors such as discounts, three
shipping options and familiarity/unfamiliarity with the online retailer. When deciding to purchase,
a discount factors for nearly 50% of the decision, while 25% is based on shipping, and 25% is
based on familiarity with the retailer. With shipping in particular, when two-week shipping is offered
(across all the products), brick-and-mortar retailers gain 5% more consumers willing to stay in-
store and purchase.
We do note that the nature of this survey potentially inflates the price sensitivity of shoppers,
as respondents were asked about products for which they may not necessarily be in the market.
Therefore, responders may report more price sensitivity than in a real-world situation. Additionally,
this was an online study, so in order to participate, all respondents must have some level of Internet
acumen. Therefore, there likely exists a percentage of offline-only shoppers who were not included
and, logically, that group is unlikely to showroom.
Retail Showrooming In Canada:
Winning The Consumer & The Price
Of Keeping Buyers In-Store
March 2013
60%
50%
40%
30%
20%
10%
0%
%PurchasingI
0% 5% 10% 15% 20%
Discount Offered Online (%)
Source: Retail Showrooming in Canada: Winning The Consumer & The Price Of Keeping
Buyers In-Store; Catalyst/GroupM Next, 2013
Source: Retail Showrooming in Canada: Winning The Consumer & The Price Of
Keeping Buyers In-Store; Catalyst/GroupM Next, 2013
Discount Offered Online ($)
%ofShoppersStayingIn-Store
$0 $50 $100 $150 $200 $250
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Impact Online Cost Savings Have On
In-Store Purchases (Canada)
Figure B

5. 4
What can retailers do?
Showrooming is a growing threat to brick-and-mortar retailers that don’t adapt to this increasing
consumer behaviour. However, it also creates opportunities both in-store and online for brands.
It is likely to become increasingly prevalent as more Canadians take to smartphones and become
comfortable purchasing online.
There are two ways to prevent showrooming – disrupt shoppers from using their mobile devices,
or be price competitive once they do. This research identifies that, if a brick-and-mortar store can
stay within 10% of the online price, about half of potential showroomers will choose to stay and
complete their purchases in the store.
Apple is an example of a brand that demonstrates how pricing can curtail showrooming. An iPod is
the same price across Apple stores, Best Buys, Apple.com and Amazon.com. The Apple business
model is difficult for many brands to imitate, but remains the prime example of successful pricing
in the smartphone society.
Pricing is a significant way to combat showrooming, but it is not the only strategy. Using a
logistic regression model to evaluate the customer’s decision to purchase in-store or buy online,
it becomes possible to find the shopper characteristics explaining a purchase decision. GroupM
Next completed such a model which revealed that consumers who are more apt to be showroomers
are more likely to be married, make online purchases frequently, are younger, and generally more
educated. When those variables are considered together, the resulting profile describes a person
who cares almost exclusively about price. When considering targeting, marketers should be wary
of driving that group of consumers into stores, as they are likely to showroom and leave. Instead,
brands have the opportunity to drive that group to their e-commerce site or other digital property
to make purchases.
There are a number of Canadian consumers – about 20% – who choose to complete the purchase
in-store, regardless of the discount offered. This is encouraging for retailers, as a core customer
base exists who appear unlikely to showroom. The key for marketers is to identify the next 10%
– the group of customers that are sensitive to price, but can be more easily swayed to purchase
in-store. Using the model, the group of “marginal showroomers” has the following characteristics:
Retail Showrooming In Canada:
Winning The Consumer & The Price
Of Keeping Buyers In-Store
March 2013

6. 5
Retail Showrooming In Canada:
Winning The Consumer & The Price
Of Keeping Buyers In-Store
March 2013
» Slightly more likely to be female
» Average age of 58
» Median income of $50,000 annually
» 50% have some college education or higher
» 53% make online purchases once per month
Marketers looking to respond to showrooming could target this profile in order to attract shoppers
who are more likely to stay and buy in the store.
Finally, showroomers exhibit behavioural cues. The model identified customers who compare prices
in-store are more likely to showroom and leave. It shows that shoppers who are price shopping in
the store are one step away from pulling out a mobile device and checking online prices. Using this
information, retailers can train associates to watch for this behaviour and intervene at key decision-
making moments.Additionally, the model revealed that sales associates can be influential. Canadian
customers who interact with an associate are more likely to stay and purchase in-store. Conversely,
customers who price-check using their mobile device are less likely to stay. These two behaviours
cancel each other out. By engaging the shopper, the associate disrupts the mobile behaviour and
increases the chance of the customer staying in-store and buying a product.
Several retailers have taken action to turn showrooming into opportunity. Future Shop, Canada’s
largest consumer electronics retailer, provides easy access to locations, reviews and prices on its
mobile application, encouraging showrooming in a controlled way. Future Shop also has a robust
price-matching policy that beats competitors’ prices by 10%. Loblaw’s, Real Canadian Superstore
and Home Depot all price match competitors’ flyers and promotional discounts. Retailer Target
offers exclusive in-store items, and, as it enters Canada in 2013, may extend its aggressive price-
matching policy beyond the holiday season.
With the right pricing, in-store strategy, digital presence and engagement with the consumer at the
touch points where they shop, brick-and-mortar retailers can compete in the smartphone era.
Methodology
GroupM Next and Catalyst, in conjunction with Global Market Insight (GMI), surveyed 2,000 Canadian shoppers, asking
about 12 products in multiple retail categories at varying price points, with different shipping times. Shoppers surveyed
were given hypothetical purchase decision scenarios in which they could purchase a given product and own it immediately,
or they could take a discounted price, leave the store and have the product shipped with varying shipping times.

7. GroupM Next is the forward-looking, innovation unit of GroupM, the world’s largest global media investment management group
that is the parent company to WPP media service agencies Maxus, MEC, MediaCom and Mindshare, as well as Catalyst and
Xaxis. Together with GroupM agencies, GroupM Next focuses on the curation and application of insight-focused solutions across
online, social, mobile and addressable channels. Through thought leadership, technology, research and education, GroupM Next
delivers data-driven, actionable insights and a clear path to action to help GroupM agencies and their clients harness the right
opportunities made possible in the digital technology and new media industry environments with speed and relevance. Access
our work and discover our perspective at www.groupmnext.com.
Contact us with questions or comments: cindy.spellman@groupm.com
GroupM Next
111 Westport Plaza
Suite 350
Saint Louis, MO 63146
www.groupmnext.comA WPP Company