Best Buy launches risky price-matching plan
The struggling chain can't hide from its larger, nimbler rivals.
The company has seen same-store sales fall in eight out of the past 10 quarters, a trend that is not sustainable. Many consumers, including this one, go to Best Buy to check out gadgets and gizmos that they will buy from a rival website at a much lower price. The practice has been dubbed -- grammarians, avert your eyes -- "showrooming." This happens at other chains, such as Wal-Mart (WMT), though it's more of an issue in sales of bigger-ticket items.
Founder Richard Schulze wants to take the chain private, and it's unclear whether he is keen on the price-matching idea. Crafting a price-matching policy will be tricky because it will cost Best Buy lots of money. Some goods will be excluded, though it's unclear which ones. Moreover, it could backfire easily.
Fewer consumers may go to Best Buy if they know its prices are no better than what they can get online. The bigger problem, however, is that Amazon can easily lower prices even further because it does not have the overhead of large numbers of stores. Best Buy will have difficulty maintaining its profit margins.
Investors are demanding a better performance from the company, given that its shares have slumped nearly 25% this year. Consumers are feeling better about their financial futures as the real-estate market rebounds and unemployment drops. The question is whether they will spend their hard-earned cash at Best Buy.
Jonathan Berr is long Wal-Mart. Follow him on Twitter@jdberr.
I dig Best Buy. America lets keep their lights on. Screw them home body's that buy everything on line. Best Buy is a great store. I've purchased all my electronics at B B. I will continue to do so.
This is great news. I saw this coming last week though. Went in to get the new Avengers Bluray which I had preordered. I had just checked on Amazon to see how much they were selling it for and saw the extended 5 disc set for $19.99. I went into bestbuy and asked at the counter if they would price match. Sure enough, there was zero problem. Was told then that they will price match anything Amazon sells. So not only did I get the price match and the metal storage case that bestbuy gave for preorders but I got to walk out, pop it into my bluray player and watch the movie that evening without waiting 3-5 days for Amazon to deliver it. Didnt have to worry about a broken case (as I've gotten from Amazon on occasion) a scratched disc or anything. Fantastic news. Always have and always will like Bestbuy.
prices are high, the company itself seems to have the opinion they are the only retailer in the field which has turned a lot
of customers off.
I live near the Tenleytown Best Buy in DC.
I bought a computer there, rather than showrooming it, because they're in my neighborhood - I did them a solid because I want to foster a positive relationship with them. 15 months later, the keyboard stopped working for no reason. I brought it back to them looking for them to fix it. They said no, and I haven't been back since.
BB's only competitive advantage is the opportunity to form a relationship with their customer, and they've made it a confrontational relationship.
It's 100% certain that BB will fail. I get boxes from Amazon twice per week. I do all of my retail shopping online. My wife and I buy a new electronics item at least twice per year - all of which are available from BB. I'm right in their target demographic, in the same neighborhood, and I won't go back - they blew the layup.
If anyone from BB is reading this, don't bother reaching out to make it up to me - I don't need you - you need me.
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The category is seeing less enthusiasm from investors than any other.
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