Shifting from big boxes that stock virtually everything to showrooms and concept stores that have virtually no products available—that appears to be the path pursued by several notable retailers as they continue to seek ways to attract shoppers to their stores. Rather than giving customers a dizzying array of products that they can select from racks and shelves, these retailers instead encourage them to preselect some items and engage in an interpersonal shopping experience when they seek to add to their wardrobes.

At a Nordstrom Local store in Los Angeles for example, a few specialist employees offer luxury services, such as manicures and glasses of wine. But they also sit down with shoppers with tablet devices to browse the clothing options available through Nordstrom. The 3000-square-foot concept store is located just a few miles away from a 122,000-square-foot department store, so once the customer identifies a few interesting options, they can be delivered rapidly for the shopper to try them on and purchase.

With this experimental approach—and the Los Angeles store is the only Nordstrom Local to open thus far—Nordstrom is reflecting the idea that appealing to modern shoppers requires giving them an enjoyable, extended experience, not just the instant gratification of grabbing a new outfit. This idea is supported by the success of other showrooms opened by predominantly online retailers such as Rent the Runway or Warby Parker. By giving their customers a means to interact with, feel, and assess their products in person, the showrooms run by these retailers have increased overall revenues considerably.

Beyond their sales benefits, the showrooms also offer other positive outcomes for retailers. For example, inventory costs are lower, as are merchandise theft rates, because these locations simply don’t stock that much inventory. Employees work closely with each shopper, which not only reduces the risk of theft but also enhances their job satisfaction. In conventional, large retail settings, store employees spend much of their day performing routine, relatively boring tasks like folding clothing. In showrooms, they instead function as retail experts, creating a more interesting and diverse stylist-type role for these sales personnel.

However, the showrooms are not without challenges. They are unlikely to be effective for more commodity-type products, like socks or underwear. For some consumers, the high level of employee attention might be alienating too; many shoppers just like to browse at their own pace, without intervention by a sales clerk.

Accordingly, some other experiments with showroom approaches have proved less successful. For example, Macy’s tried a small store format with limited inventory displayed on mannequins. When customers identified something they wanted to try on, a delivery system would send the items through chutes into dressing rooms. But the project ended after just about a year. Walmart has indicated that it has no plans to open its own showrooms, though it purchased Bonobos, which already maintains about 50 showrooms for its line of men’s clothing.

The difference thus might be the type of merchandise that each store sells. For consumers seeking an enjoyable experience, showrooms might hold great appeal. For those who instead just want to grab a pair of jeans, they might be more than desired.

Discussion Questions: 

1. Why are some stores, like Nordstrom’s, opening showrooms?
2. How do these showrooms differ from traditional stores?
3. How do you expect the key financial ratios discussed in Chapter 6 to be similar/different for showrooms versus traditional stores?

Source: Tiffany Hsu, The New York Times, November 17, 2017