Retail Showrooming in Economics

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Why Retailing Have Stopped Freaking Out About Showrooming By Brad Tuttle Business Time (Business & Money) In the last decade, the cell phone industry has become a huge market among consumers of all ages. With many features such as internet, it’s like having a mini computer in the palm of your hand. This article talks about a growing practice of consumers called “showrooming”. This is when a shopper uses their phone to compare prices on internet based companies on products offered in well-known stores like Target or Best Buy. Some phones even have the capability through the use of an app to scan the barcode of the product to get prices of items offered through the web-based companies like Amazon.com or Ebay.com. They can compare the prices of the product sold by the competition and wind up buying it from Amazon.com. It is not illegal to showroom and it is becoming an opportunity for retailers in direct competition. Some retail companies have even taken a bold approach and offered in-store wi-fi to their shoppers. The advantage they bank on is their competitive prices and better customer service against their internet competition. One notable report stated that the practice of showrooming will be less of a concern this year in part because retail companies have gotten much better at allowing customers to price shop on their phones while they browse in their stores. This article can be related to several concepts in the Economics textbook. What caught my eye was in transaction costs. This is defined as the costs of time and information required to carry out market exchange. In this article, the practice of showrooming takes time because the consumer utilizes the internet to compare prices of a product from other competitor stores and web-based retailers. The information they acquire as far as the item’s specifications, price, availability, is what helps the

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