As Amazon assumed the retail throne, the consequences of this new style of shopping could not be readily measured. In particular, the negative aspects of a shopping platform with hundreds of thousands of items that can be experienced only after the item is purchased. This does not seem to be a dire consequence of the digital revolution, but to high-end retailers in particular, this is a huge issue that is affecting their high-end fashion businesses gravely. Additionally, this is not a consequence of simple business competition, but a huge shift in the manner in which shoppers choose the items that they purchase and the place at which they purchase them.
The old high-end retail customer conversion and retention model consisted of obtaining a high-end customer and assuming brand or customer loyalty from these high end shoppers by offering a product at an exclusively high price and then by delivering the purchaser of this high end item, a very high quality product. The customer receives the positive customer experience through purchasing the item in a high-end store situation and then by experiencing the high quality product after purchase.
However, today’s shoppers that have transitioned to shopping online enjoy the cheaper online prices, but still crave the positive customer experience before the purchase. In order to receive this positive customer experience and test the items, these shoppers go to stores, but return to their online store to buy the item at a much cheaper price point. This new customer behavior is now known as showrooming, and stores suffering from this issue point to a steep downturn in their businesses instead of the upturn that the digital revolution has delivered to most existing business sectors. The fashion sector is suffering often more than other industries and are on the front lines of an industry push back they term the war on Amazon. Some businesses have responded to the showrooming shift with a tactic called reverse-showrooming.
Companies utilizing various forms of this technique are thriving in the fashion space unlike other more adversely affected fashion companies and brands. Fabletics is a pioneering start up fashion endeavor founded by famous actress Kate Hudson. Hudson and her team utilize the shift in consumer behavior by allowing potential customers to obtain a subscription that gives them access to their high end products at a price comparable to cheaper online retail pricing. By doing this, customers can purchase their products on multiple platforms including in person at their brick and mortar stores. A whopping 25 percent of potential customers that enter their stores are converted to loyal customers, and an additional fifty percent online. This seventy five percent conversion rate has seen their company grow exponentially to over 5,000 percent since its founding three years ago.