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


322Comments
Apr 17, 2013 12:36PM
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Can't beat 'em join 'em...Best Buy should set-up a huge distribution warehouse and sell their products on-line too.
Feb 19, 2013 3:29PM
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I've never had a problem with Best Buy!  I've bought TV's, Cameras, laptops and miscelaneous items and never had a single issue.
Feb 19, 2013 3:11PM
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Best Buy should make a big stink about Amazon's new policy of shipping with fly-by-night outfits.  I have heard a lot of stories already.  Who wants packages delivered by some stranger in sweats and driving a personal vehicle?  They should stick with UPS and USPS.

 

Beware of offers of "free shipping" because it is likely some itty bitty delivery outfits working out of their garages.

 

I don't even like Fed Ex, cause their delivery vans are independent owners and operators who sometimes will let things back up on their trucks until it is worth it to drive in your direction.

 

We can't even select with online retailers which company we want to use, we have to accept whomever they have contracts with.  Best Buy could do some good advertising about the shipping issue.

Feb 19, 2013 2:53PM
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Best buy wants to be a player in retail but shopping there is a nightmare.

 

Typical big box.. Always crying about internet sales but has it's own site.. lol

 

Feb 19, 2013 2:52PM
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Best Buy is going to lose this battle unless it adapts to the current trend... instead of trying to combat against the "showrooming" factor, why not embrace it?  Arrange the store in such a way to enhance the customer experience by allowing the various manufacturers (Panasonic, Sony, LG, etc) to lease space within Best Buy to display themselves individually, creating multiple stores-within-a-store.  This will allow each major brand to highlight select products AND provide their own specialized customer service catered to their products.  Best Buy could even provide digital displays and touch-screen kiosks allowing customers to compare features of various products, read customer reviews, and even view competitor's prices.  The store itself becomes a virtual showroom - a hybrid between a retail store and a catalogue.  In order for this concept to be successful, it has to provide an interactive experience to the customer that couldn't be attained by shopping from your home computer.
Feb 19, 2013 2:48PM
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I would not buy at this retailer unless it was the last place on earth.
The last phone experience I  had with them was horrendous. 
Bye bye...z.
Feb 19, 2013 2:25PM
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Lousy service and employees that don't know squat about the products is the reason I don't go into BB any longer.  Anyone with half a brain and an iota of knowledge was apparently paid too much and was sacked for someone with fresh pimples and no working knowledge of anything.  In other words, they traded the geeks for pre-geeks.
Feb 19, 2013 2:07PM
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I'm all for putting a stop to companies like Amazon.  Sure the prices are better, but is it worth the long term cost? Watching stores go out of business, and more and more people (mostly 18-25 in college) lose the jobs that are allowing them to pay for college has put me in a perpetually depressed mood.  We're losing too much trying to keep money in our pockets.

 

Don't get me wrong, I'm all for saving money, but not when it puts large employers out of business. The prices are higher at box stores to cover overhead, part of which is employees.  The business isn't in business for you, it makes a profit. 

 

Amazon should be required to hire every employee laid off due to their undercuts.  Don't agree with me?  They should get educations and get real jobs?  Sure, except that there are too many people getting degrees and not enough slots to fill. 

 

Imagine, Best buy probably employs a team of Accountants and lawyers, full time.  If they go down, it's not just the cashiers that suffer.  There are people at the top with an education.  Then these people have to find jobs in already competitive markets. 

 

The best thing we can do is to spend the extra amount and keep stores open.  We can't all be Doctors, Lawyers, Teachers, Accountants. We need jobs, and jobs come from consumerism.  It isn't Corporate greed, businesses are around to make money.  It's sinking due to rising material costs, labor costs and the ease of online purchases. 

 

I don't go into a store unless I intend to purchase an item, from the store I'm in (unless I'm meeting or going with someone, also with such intent.)

Feb 19, 2013 1:48PM
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Best Buy was the best education I've had on buying computers. By the time I left they had sold me a printer that was not compatible with the computer which did not have the portals for some devices I needed and a modem that was too slow for the existing and only service in the area, plus their one year guarantee on a hard drive which is supposed to be renewed each year, plus their store service and geek squad and company tech service which I tried twice each before finding how useless and rude they were prompting me to get an outside service, Iyogi which sold me more useless stuff until after a year I told them that for the price I've paid so far I could have bought two computers and kept one for a spare in case the other broke down. I'm glad I brought along my daughter in law who is an expert on these things if I wanted an Apple, which I didn't but still convinced the village idiot into buying all the support crap. After this breaks down I do know what to do. I will shop at best buy and buy on line and want to see if I can get their equipment on display to look up the site and see how long it will take for them to stop me with a goal of printing up a copy of the machine I want at the least price below theirs. If that seems like a bad thing call them, see if you can get a human on the phone.
Feb 19, 2013 1:25PM
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I cannot argue with uninformed sales help in a store just trying to make a buck at the customer's expense. Clearly Best Buy has some problems that go beyond simply the brick and mortar issue. Stores like Sears however, that have had a fine reputation for customer service and value, suffer from this situation.

 

Over my career, I worked for some retailers that were terrible at protecting the customer and some that were truly magnificent. One company I worked for offered a five year warranty on the construction and materials of everything they sold regardless of the manufacturer's warranty. This warranty protected quite a few customers over the years and was a great selling point.

 

Okay so customer recommendations are helpful in the decision making process....  ....If you are buying a piece of electronics. How about a mattress? What about other things involving personal taste and predilections? One person's joy is another's heartache. When the stores are gone, others willing to take the leap first and recommend THEIR decision will be making up your mind. 

Feb 19, 2013 11:04AM
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Brick and mortar showrooms are so important that that even Google is following Apple and opening their own showrooms.  Also, the manufacture should cover part of the cost. I feel better buying something online that I already had in my hands.
Feb 19, 2013 8:08AM
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If the consumer in this country continues down the path of the cheapest price at all costs, then we will continue to see The Wal-Mart scenario play itself out ad infinitum. We have seen the closing of our local businesses; auto parts where the employees and owners were "gear heads" and really knew what they were talking about, camera stores where you could go in and compare hands on the equipment you were interested in and then get personal instruction on how to use this new equipment. Yes, this has to be considered a value added service for which we paid a small differential of price (if we shopped around). It was a more pleasurable buying experience and one that enabled me to become somewhat knowledgeable if not professional in the afore mentioned areas. The decline in customer service we are now experiencing is progressive in response to the warped sense of the retail consumer today. Expecting the very cheapest pricing, the most knowledgeable sales people with local availability in a hands on purchasing experience. As you move your support away from the local or even big box retailers, they simply have to adjust their operational model to include reduced staff, less knowledgeable people and reduced inventories. If you see it at Best Buy, you will see it throughout the markets. Reduced sales tax revenue for your city will eventually cost you more as you’ll have increased property tax and/or reduced services.

And as we continue to shutter these retailers, perhaps your local economy will find some miracle way to survive. Perhaps supporting (not just Best Buy) brick and mortar businesses will enable the improvement of their services.

 

                                                

Feb 19, 2013 7:44AM
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I think Amazon just won the retail battle by attrition.  Best Buy entered into Amazon's game, the huge financial difference is Amazon will never have the overhead costs Best Buy will still have while attempting to play Amazon's game.  Amazon knows that, they simply have to wait.  Really makes me wonder if Best Buys management & board are even remotely cognizant of their predicament?  It reminds me of Sears & Walmart. 
Feb 19, 2013 7:17AM
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The real question is ...Where is Amazon buying from? Why wouldn't Best Buy exert pressure on their suppliers rather than their stockholders?  Consumers aren't always just interested in price, although that is the most eye-catching piece of an Ad.

 Retailers need to emphasize what they can offer a consumer that Amazon can't, such as identity, service, personality, and immediacy. Stress "intangibles" rather than "internet".

 

 Consumers aren't cattle, they are individuals with needs and wants - Brick and Mortar entities have a place in future retail if and when they decide to take a stand and tout what they can do for a consumer that a 15.6" display can't.

 

Feb 19, 2013 3:08AM
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BB has it wrong.  It's not just about the bottom line.  Nobody wants merely the cheapest price. We consumers want. To find the best product that suits our needs.  I go online to compare products...features & benefits.  No 1 retailer can fill my needs.  And that is where amazon excels.  I can search different products then read the evaluations.  That leads me to my final decision.  Never has a retail salesman ever taken the time to guide me through that kind of fine tuning in my search. They seem to want to hurry up and sell me something.  
I don't showroom...I take more time in my comparison shopping, but I feel I always get the perfect product for me.
Salesmanship is dead.  Customer service is as well.  But, online, I am king, I take my time, fine tune my search, and I get the best deal.
Amazon has excellent customer service as well!
Wake up retailers... Online buying IS the best.
Feb 19, 2013 2:33AM
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If you are clueless about Best Buy,which isn't,here's a HUGE clue as to how overpriced their stuff truly is. If they have room to come down in price for price-matching...'nuff said.

When I even bother to go into this store,it's at least good for a hearty laugh. Nothing more than that though.

Their s**t is wayyy overpriced,sold to you by an overworked,underpaid geek who talks a bunch of technical jargon which they don't even understand. They just know the technical jargon,and consumers don't know any better.

Geek Squad? Installation alone isn't as difficult as people may think,but noone wants to be bothered to figure out things for themselves. Pay someone excessive $ to do some very simple tasks for them. "Just install it,and gimme' my stuff."

Feb 19, 2013 2:06AM
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My last two times at Best Buy have been a joke. Poor service and they don't let you get a real feel for the merchandise. Don't think I'll be back any time soon.
Feb 19, 2013 1:26AM
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The end of brick and mortar folks. What we need is less retail outlets. No,walmarts, targets, best buys. I'd be ok with department stores like Sears if they could get their stuff together. We don't need massive electronic outlets. i think Best Buy is going to see its day. It's called progress.
Feb 19, 2013 12:20AM
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I will never shop BestBuy again.  I bought an HDMI cable before leaving town on a business trip and 1 mos 4 days later I go to return it because I found that I already had one and was turned away.  No offer of store credit.  A simple denial... and informed by the manager that she has no power to overide the policy. I hate to say it, but a $25 cable will send me elsewhere to do my shopping for now on.  Their service is deplorable and everyone working in our store is more interested in talking about their weekend plans than helping their customers.  A new generation of store has to be in the wings to fill the vacuum that this poor business will leave in it's wake. 
Feb 18, 2013 10:33PM
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Today, I don’t give a crap since Best Buy lies to customers to get them to buy items or services at prices beyond what they really cost. The inflate the prices, increase the value of just about every product they sell then try to get the customer to buy more for what! I filed complaints against them and they just threw the complaint in the trash because they to date never responded ever…I purchased a hotspot from them but before I did I/We asked if this hotspot (serviced by/though Sprint who are also liars and crooks) if it would work in a number of zip codes and yes we gave them a list of zip codes. Their agent(s) took the list and looked them all up online and then told us to our faces that every zip code on our list would provide all the services like data, internet and the check my cellphone as well. It’s bad enough we ask the right questions and provided them with our needs and they lied to our face just to get us to sign a contract with service and purchase the device (hotspot)_We wait for our travel then try out the hotspot and cellphone in some of the areas we listed prior to purchasing and they didn’t work in any area we placed on the zip code list…I then gave them time to fix the problems but they say now that the areas in the beginning never worked and the agent who sold the items should have told us this. Well after 7 months of fighting I stopped paying the bill. I had already paid at least a year or more for the devices that didn’t work where we wanted to use them in and they expect us to keep paying for the device and services that didn’t work. I have filed complaints with FCC, BBB, Best Buy and more I decided never to purchase another item from Best Buy until they make good on the products and services we have already paid for but didn’t get.

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