Best Buy declares war on showrooming

Next month, the big-box retailer will start matching competitors' prices, including those of Amazon, which is the trend's biggest beneficiary.

By Aimee Picchi Feb 18, 2013 1:37PM

 Credit: © BRENDAN MCDERMID/Newscom/RTR
People walk past a Best Buy store in New York in August 2012For brick-and-mortar retailers, showrooming is an existential threat. It saps their life away when customers visit a physical store to look at products such as smartphones, but then buy online to get a better deal. 


But now, Best Buy (BBY) says it has a solution to the problem: It's enacting a permanent policy to match the price offered by all local retailers and 19 online competitors. “They don’t want to lose more market share to online retailers,” University of Michigan business and law professor Erik Gordon told Bloomberg. The policy will go into effect on March 3 and includes price-matching against Amazon.com (AMZN), the biggest beneficiary of showrooming.


Best Buy has little choice. It's the top victim of the behavior, according to a December poll from market research firm Harris Interactive. 


Among the consumers who said they showroom, Best Buy was their biggest resource, with 24% saying they stop at the big-box tech retailer to check out its merchandise before buying elsewhere. Wal-Mart (WMT) was the No. 2 resource, with 22% of showrooming consumers checking out products at its stores that purchase online.


The big winner is Amazon, with more than half of showrooming customers opting to buy from the online retailer after visiting a bricks-and-mortar store, the study found. 


Best Buy's new price guarantee has a few catches, however: A customer has to ask the retailer to match a price. It's also limited to one match per identical item, and it doesn't include contract mobile-phone devices and plans.


The new policy follows Best Buy's temporary price-matching policy over the holidays. That helped the retailer exceed analysts' expectations when it reported holiday sales that were unchanged from a year ago, Bloomberg notes. 


Nevertheless, the new policy could deliver a new set of challenges, especially if it proves popular with consumers. That's because lower retail prices could eat into Best Buy's margins, forcing the company to cut costs and protect profits.


More on moneyNOW


323Comments
Feb 18, 2013 3:23PM
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Still won't make up for Best Buy's lousy service.
Feb 18, 2013 3:27PM
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It still won't save them. Their terrible customer service will still drive everyone away!
Feb 18, 2013 3:39PM
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What will Amazon do if the brick and mortar stores like Best Buy, Barnes and Noble, etc. go out of business? Where will these "showroomers" go to see the products they're thinking of buying? Frankly, I rarely buy anything sight unseen. Seems to me it would be a pain in the neck to buy from Amazon and, if I'm unhappy with the product, have to return it, repackaging it and making a trip to the post office. Give me a store I can deal with personally. If there's a problem with a laptop I buy from Best Buy, I'll go back to the nearby store and deal with it there. If there's a book I want to read, I want to take it home now and curl up with it now because I'm excited about reading it now, not a couple days later. Modern technology is great, as far as it goes, but our dependence on it and its fallout have cheapened our way of life. Another step toward mediocrity.
Feb 18, 2013 3:29PM
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I'll believe it when I see it.  My experience is that these retailers usually carry a model number unique to their chain - so you'd be showrooming and extremely comparable unit in store versus online, but may not technically have the exact same model number.  Best I can tell that is only done to hamper comparison shopping and will be a major reason why this policy doesn't do much to change anything.
Feb 18, 2013 3:51PM
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I do more "showrooming" on the internet, visiting different retailers to find the best bargain and then going into the store to buy.  I also use the internet to read reviews of products from real-life users before buying, again, in a real store. 

Call me old fashioned, but I like the immediate gratification of buying something and having it immediately in-hand to enjoy.  I've purchased from BB for that very reason. My computer... upgraded keyboard, cell phone, a microwave, a camera, and a stereo.  I purchased these items at BB because they were good products at good prices.  I've also purchased BB-type items from Target, WalMart, and Sears.  I can't say that their salespeople are any better or worse than at all the other stores.  I don't get people who gripe about the quality of the sales staff but then buy off the internet where there is no sales staff. 

Maybe BB's model has seen it's time and it needs to do something else.  This is a great start.  Maybe look at your departments and weed out the less than stellar ones.  I see people browsing the music/video/software section, but I rarely see anyone buying.  The audio section also seems to get little action.  Why not focus on TVs and such, cameras, appliances, and phones.  And kill the small appliances... I can always find the same or better pricing at any other store.  Focus, BB, focus. 

And train your staff on the floor to be experts in 2-3 areas rather than so-so in one.  Develop some online training modules and ensure that your staff has ample time to train, say, 30 minutes of each shift until a solid base of knowledge is acquired.  Employees with real knowledge who are able to advise buyers, along with your new pricing model, with knock that pants off of internet stores.
Feb 18, 2013 3:20PM
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Price matching? Great! Whatever brings the price down from BB's overpriced merch!
Feb 18, 2013 3:35PM
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Remember Circuit City -those jerks didn't pay attention to what was happening to the market. Same as  those goobers at Blockbuster.
Feb 18, 2013 3:37PM
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The unintended consequences of this could be interesting.  As more companies race to the bottom with price because of price transparency then costs have to change, this will mean pay and benefits.  It is already happened in many industries, where did the middleclass go?  Now you know.
Feb 18, 2013 3:37PM
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"Lower retail prices could eat into Best Buy's margins"

Not as much as no sale at all.

Feb 18, 2013 3:54PM
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It’s a curious dilemma. I can understand people wanting to get the best price. On the other hand, I would never pay $2000+ for flat screen TV, computer, or anything online sight unseen. I want to touch, feel, and see it for real before I lay out that kind of money.

 

I think Best Buy should lean on the manufacturers rather than their customers to recover the cost of show-rooming. I’m sure the manufacturers can appreciate that if nobody did it, customers won’t buy anything unless their friend already has one.

  

Feb 18, 2013 3:34PM
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I have been there and done that. However I have tried to get both Best Buy and Wal-Mart to match before I purchased on line with no success. This is a good move on their part. I would prefer spending locally when I can but with limited liquid funds I spend them wisely.
Feb 18, 2013 3:36PM
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And won't even the playing field on sales tax.  When will the IRS make this a fair market?  Why would anyone buy a big ticket item and pay from 7%-10% sales tax when they can buy on Amazon with free shipping and no tax?
Feb 18, 2013 3:44PM
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Oh, yes, I forgot to mention that I recently had an issue with my laptop, which I bought three years ago from Best Buy. I took it in to the Geek Squad, fully expecting to pay a hefty repair price. The cost: Zero. That's right, it cost me nothing because we were able to clear up the problem in a short time. Good customer service is the best PR in the world. Can Amazon do that?
Feb 18, 2013 3:25PM
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If they dont do it they will go out of business, period!
Feb 18, 2013 3:35PM
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You have to ASK for a price match?!? No thanks. I'll keep sending my money to Amazon, since I save 3% with my Amazon card and another 8% on sales tax. I don't mind waiting a few days for 11% off.

Bye Bye Best Buy.

Feb 18, 2013 3:33PM
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Why would one want to go to Best Buy to match a price that you already have. Seems it just takes more effort. If Best Buy really wants to be competitive, then they should offer at a price lower. That would make it worthwhile to switch to Best Buy.
Feb 18, 2013 3:20PM
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Boy the internet sure has created a lot of jobs.

Feb 18, 2013 3:41PM
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Propaganda604 is dead on - This is not to mention the rude and knowledge lacking sales people they have and their arrogant mgr's.  I stopped buying from them about 4 years ago.  Don't even miss them :)
Feb 18, 2013 3:29PM
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What else can they do?  They have to do something.  I think the better idea would be for best buy to become a completely online store like amazon.  The only Best Buy anywhere near me still takes time to get there, not to mention the high price of gas, so I usually buy online.  Back in the old days people used to shop from Sears catalogs and the purchased items were delivered.  Shopping online is pretty much the same as Sears used to be except there are no catalogs at home - just go online and order plus it's easy to compare similar items right online.
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