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
Feb 18, 2013 5:04PM
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I thought "showrooming" went like this: (1) go to store & find item you like, (2) go online and find item for less money and (3) then buy item online.

 

BB's policy would only help if you're willing to go back to the store. I guess that works if you're in a hurry for the item, or can't get around the shipping charges, but I'm not so sure.

Feb 18, 2013 5:03PM
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Best Buy is a great store. Service and employees really try and help. Sure you can have a problem with them, just like any place else. But they are there to solve it for you. That is all you can ask. People that complain about them usually have something to do with creating the problem they have.
Feb 18, 2013 5:02PM
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Best Buy is okay if you know what you are looking for and you have some technical competence, and if you need the item right now.  If you are like me, a bit of a tech dope, it's not such a great experience.  They seem to hire a lot of very young people who don't know a whole lot more than I do about the merchandise.  Not really sure how they continue to stay in business.
Feb 18, 2013 5:00PM
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Hard to see how Best Buy can win this battle. 

Most brick and mortar stores charge tax on purchases that online vendors do not. Since such taxes run from about 7% to more than 10%, how can Best Buy price match?  This is especially true when competing against Amazon Prime that does not even charge the customer for shipping and handling. 

If  a customer could use a smart phone to price match and Best Buy would meet the "net" cost to on the spot, many would purchase from them. But that is not likely to happen.
Feb 18, 2013 4:58PM
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Bad Buy, still won't match the added sales tax they put on the matched price.
Feb 18, 2013 4:57PM
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The reason Best Buy is the biggest victim of showrooming is due to their marking their prices so much higher than every other store that sells electronics. A couple of weeks ago I wanted to buy a set a gaming headphones with a mic attached. I saw the price on Amazon, then I found a local discount electronics store (Brandsmart USA) who actually sold the headphones for less than it would have cost on Amazon after S&H. If Best Buy would simply price reasonably, they wouldn't be in the trouble they're in.
Feb 18, 2013 4:57PM
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 They will price match but sadly will only do for things in ads...not actual prices.. Maybe now they could actually hire KNOWLEDGEABLE and helpful staff instead of jerks in blue shirts who dont know **** and just try to sell something they know ABSOLUTELY JACK ****ING **** ABOUT!
Feb 18, 2013 4:56PM
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Can't save on taxes here, our lawmakers require online purchases to collect sales taxes. That playing field is leveled. Not that impressed with Amazon, I like to pick it up and see just how cheaply it's made before I pay for it too. Online is not always the correct answer either. Don't even think about using Craigslist without some kind of well armed back up to secure the meeting place.  
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So the brilliant idea is that even with a store front Best Buy can do a successful price war, since the IMMEDIATE reaction from the ether stores is going to be drop the price again?

This is how the game is played. If you endanger someone else's marketplace position, it is tantamount to a declaration of war, it has to be that way or it is surrender.
Feb 18, 2013 4:54PM
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I don't what the price is I will not buy from best buy there service suck.
Feb 18, 2013 4:53PM
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ALL bricks-and-mortar stores should have been matching or BEATING the online prices, from the beginning of the Internets.  Management is slow on the uptake.  It is the business' OWN fault when they go become bankrupt due to lack of proactive management.

I always buy from the neighborhood stores.   I'm doing my part to keep my neighbors employed and my city financially viable by buying in my own city.  It feels very good to buy local, and it also is reassuring that we do have local stores that sell what we want and need.

The people at our local Best Buy are VERY good; all the geeks are knowledgeable and approachable.  I ALWAYS walk out of the store with either an item that does what I need it to do OR an answer of where else to go get the correct product.

Support your local economy by buying local, my fellows.
Feb 18, 2013 4:51PM
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Best Buy wake up your customer service stinks. I used to have an account with you guys for my business until i ordered something and never got it and could not get any help from any one thats when i canceled it for good!
Feb 18, 2013 4:49PM
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They're just now realizing that?  What the heck does "Best Buy" mean?  That it's the best buy and best price... Actually Best Lie has grown to be the worst company due to lousy customer service, higher prices that just about anyone, and their return policy is horrible.  I gave up on that stupid chain a long time ago.
Feb 18, 2013 4:48PM
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Best Buy....it's like going through TSA to get in and out of there. Their policy seems to be to treat you like a suspect instead of a customer. My computer problems have never been fixed by the Geek Squad and each time it was recommended I buy a new computer instead. I did get a new one....from Office Depot for the same price I would have paid on Amazon and they are actually nice to you at Office Depot.
Feb 18, 2013 4:48PM
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I've never had problems with the service at the store we frequent, but their inventory sometimes is very poor, and don't buy their warranty on almost anything.
Feb 18, 2013 4:45PM
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Bought an entertainment system from BB before Christmas. Did some research, talked with BB sales rep, learned more, did more research, placed order, had cold feet so called before delivery with more questions, BB rep (different one) was very patient in reviewing order and going over each component again. Installers were great too. Still checking prices and haven't found any better than we got from BB. And love our new 55" Smart TV!
Feb 18, 2013 4:44PM
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So in the first paragraph it mentions smartphones as a main cog for showrooming, but the Best Buy exceptions are to..."mobile phone devices and plans"...nice
Feb 18, 2013 4:43PM
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There is a best buy in Quakertown PA. I think there help is terrific..With this new policy give them 4-5 months to see if they can stop the bleeding. They need to get rid of the household appliances & get into RC, robotics & all heli types.
Feb 18, 2013 4:37PM
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 This is what happens when everybody wants a cheaper price. People complain all the time about service but then they don't want to pay for it. I used to work for Circuit and Best Buy. I worked for Circuit when the salespeople were paid on commission. The sales people  knew their product and made alot of money so there was no turn over. After a while the greedy people at the top didn't want to take a pay cut so they got rid of  the commission sales staff and that ended up costing them in the long run. It turned them into a Walmart type store. No one knew anything so all you could offer was a cheap price. But you can't beat Walmart and the internet at that game. So just like CC if Best Buy can only offer price then why should I shop there. Now for the past 9 years I have worked at a high end appliance / electronic store. We have some of the showrooming  problems but we let out customers know up front what makes us different. We service with our own people, all salespeople have at least 5 years with us, we know what we are talking about, and we will match a price if they can match our service. (Sometimes we will match if it makes sense.) 
Feb 18, 2013 4:37PM
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OK, now they have competitive pricing, how about hiring people not only with some knowledge BUT a personality. I have never met sales people who every time you say something to them that you are bothering them or taking from their me time..
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