Target fights Amazon showrooming with plea for special product lines

The rise of smartphones has created an unexpected headache for traditional retailers. A growing number of consumers are using stores as showrooms -- going in to evaluate products in person, while simultaneously using their phones to shop online for cheaper prices. The issue came to a head late last year when Amazon offered consumers 5% off purchases (up to $5) if they used the price check app while shopping in a physical store. The move touched off a furor of complaints as physical retailers lashed out at what they correctly perceived as an attempt to take advantage of their stores while paying customers not to shop there.

Target's goal is to create new brands that can only be found in its own stores, thus giving customers more incentive to shop there. The company sent a letter out to a number of major suppliers and manufacturers asking for their aid, and noted "What we aren't willing to do is let online-only retailers use our brick-and-mortar stores as a showroom for their products and undercut our prices without making investments, as we do, to proudly display your brands." It was signed by Target CEO Gregg Steinhafel and Kathee Tesija, executive vice president of marketing.

It's unclear how much Target can do to shift consumer buying trends. The store's unofficial logo might as well be, "Hey, we're better than Wal-Mart." To be fair, that can make a difference -- the 100% cotton t-shirts sold at Target actually are 100% cotton, as opposed to being a 50/50 blend of cotton and the shattered dreams of Chinese migrant workers. Target also has a long history of working with other companies to create brand-specific products for its own stores -- but it's not a retailer where customers typically flock look for hot trends or unique upscale purchases.

Showrooming is a problem for other retailers besides Target; companies like Best Buy have seen their sales growth crater thanks to the phenomenon. Holiday sales at brick-and-mortar stores grew just 4.1% this year, while online retailing was up 15%. At the same time, Target's frustration with Amazon is understandable -- the online giant pays no sales tax, while brick-and-mortars do. There are fixed costs associated with running a physical store that online outlets don't incur, but there's a fine line between allowing alternatives to flourish and giving those outlets free reign to prey on the established businesses.