Bundling strategies for brick-and-mortar retailers: countering showrooming with consumer heterogeneity

Purpose This study examines how brick-and-mortar (BM) retailers can use product bundling strategies to mitigate showrooming, wherein consumers browse offline but purchase online. It aims to determine whether bundling focal products with tie-in items can enhance the attractiveness of in-store purchases and improve BM retailers' profit under consumer heterogeneity. Design/methodology/approach We develop a game-theoretic model involving a BM retailer, an e-tailer and an upstream supplier, accounting for endogenous pricing and consumer heterogeneity in product valuations and shopping costs. Equilibrium analysis, agent-based modeling and computational experiments are used to compare two strategies: selling items individually versus as a bundle. Findings Bundling can reduce showrooming but may unexpectedly benefit the e-tailer under certain conditions. BM retailers are advised to adopt bundling when in-store service costs are high or product valuations are low. Selling products individually is more advantageous when consumer valuations of the focal product vary significantly, whereas bundling is more effective when valuations of the tie-in product are highly heterogeneous or when there is high heterogeneity in offline shopping costs. Originality/value This study extends the literature by integrating consumer heterogeneity into the analysis of bundling as a countermeasure to showrooming, which is a dimension underexplored in prior bundling research. Unlike existing studies that treat bundling as a pricing tool, we model it as a strategic differentiation mechanism that alters consumers' cross-channel comparison process. Methodologically, we combine game-theoretic equilibrium analysis with agent-based simulations to capture complex consumer behaviors beyond closed-form solutions.