Best Buy tired of being a showroom
The electronics chain hopes some mobile trickery will get customers to the store to actually buy something.
It's not consumers' fault that their smartphones know more about the items on Best Buy's (BBY) shelves than the blue-shirted folks selling them. It's when consumers use their devices to buy those items for less online that Best Buy has its perfect scapegoats.
"Showrooming" says so much about where we're at as a retail culture. Consumers haven't grown so lazy that they're completely unwilling to go to a store, but they've grown so accustomed to online pricing that they're no longer willing to pay extra for store amenities like leases, lighting, security and a workforce of not-so-knowledgeable folks in uniform. For Best Buy, it's a conundrum that's costing the company millions.
According to AdAge, Best Buy is partnering with Nashville startup edo Interactive to monitor customers' credit card spending and send them online deals they can access using the same cards. Just accept the deal on your computer or mobile phone, swipe your card at the store, take your item and go. It keeps folks in the store, and Best Buy is hoping it will stop them from showrooming and get them to take something home for once.
Good luck with that. Market research firm NPD Group found that 15% to 20% of consumers showroomed stand mixers, electric knives, sewing machines, floor cleaners, power tools and other items in 2011. IDC Retail insights estimates that 48 million U.S. shoppers will showroom items this holiday season, up from 20.5 million in 2011. The group estimates showrooming could influence as much as $1.7 billion in purchases this holiday.
A survey released by CouponCabin in October found that 40% of smartphone or tablet owners used their devices in a store to compare prices. Of those, 97% of those people bought the products online for less.
This isn't really news to Best Buy, which closed stores this year and saw same-store sales fall 4.3% last quarter. That led to a net loss of $10 million on the quarter and led new Best Buy chief executive Hubert Joly to take drastic steps like vowing to match prices from online retailers like Amazon (AMZN), NewEgg and others through Dec. 27.
Competitors have taken notice, as Target (TGT) launched a similar price-matching policy that is in effect only until Dec. 16 and began allowing customers to scan items from its store and buy them cheaper on its own website. Wal-Mart (WMT), meanwhile, is testing single-day shipping to take on Amazon Prime. It's an uphill battle for the brick-and-mortar retailers, as the National Retail Federation says 51.8% of consumers plan to do their holiday shopping online this year. That's the first time more than half of shoppers have committed to buying gifts online, and many of them are going to be in the very stores they're shunning to check out the merchandise.
Best Buy can try to trick them into leaving with something they'd like, but years of pushy and oblivious salespeople, unnecessary money-grabbing computer "optimization" by the Geek Squad and remarkably lower online pricing have conditioned consumers in a way gimmick offers never could. When Best Buy offered no service to speak of, it made price the all-important factor the company's name suggests. When those prices aren't low enough to make up for Best Buy's myriad shortcomings, customers accustomed to ignoring staffers and leaving empty handed will have no problem dropping by Best Buy's costly showrooms just to take a few measurements.
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Dont let the door smack you on the **** on the way out.
Brick and mortar are costly. Building, real estate taxes, electric, and people to sell, drive up costs. Today most people know what they want and can have it shipped sales tax free right to their door. That is a hard business model to compete against selling COMMODITY items.
All brick and mortar stores will face this transformation.
This has nothing to do about unions. Best Buys sales are down because they offer special online deals and not in-store, and they do not price match other sites online, and now complains folks don't buy in store.tions screw you out of.
It is amazing how you close-minded right-wingers want to blame unions for everything corporations screw you out of while taking advantage of and enjoying all the good things they provided for you.
I generally prefer to "showroom" on-line and buy at the store. I want to see and "finger" what I'm buying, not to mention the convenience of having what I'm buying today and not having to hang out at home to take delivery when UPS/FedEx/USPS shows up whenever on whatever day, which is almost as bad as waiting for the cable-guy. I don't mind paying a little extra for these conveniences.
My local Best Buy has always price-matched at least their own on-line prices, so I have no complaints there. On the other hand, I was a little put out when I bought my last TV and Blu-Ray player from them...which were on-sale, for prices that was the same or better than on-line, and the sales tax was less than the shipping would have been from an on-line purchase. However, the sales guy slipped in an HDMI cable that I didn't ask for ($99.99) and didn't realize was there until I got home. (No, I wasn't paying attention when I signed for the credit card purchase, my bad.) When I discovered it, I went on-line, bought 2 HDMI cables from NewEgg for less than $10 each and took the one I had, unopened, back to the store. Best Buy took it back and refunded my credit card with no questions asked. A Best Buy horror story? No. In retrospect, kind of funny. I still do business with them.
Regarding the HDMI cable, it is worth noting that I knew the cheapest one Walmart had was about $25 and was not the HDMI 4 (3-D capable) cable I needed. When the difference between in-store and on-line prices show this kind of disparity, I go on-line every time.
Best Buy is on its way out. Not to sound like a cranky old codger, but Im not a huge fan of their ads telling Santa to watch his back either. They feature some portly housewives playing tricks on Santa, basically insinuating that Thanks to Best Buy, Santas help is no longer needed.
That and the horrendous customer service coupled with MSRP's when its all widely available online, I give them three years.
Good riddance to bad rubbish.
Sears in my area had 20 of the TVS with 1000 people in Line come on be smart give up your Thanksgiving for a crappy 500 dollar tv for 300.00
I have better things to do on Thanksgiving.
If people stopped wishing for something for nothing the stores would not run the ads..
You cannot expect the stores Best Buy Srears etc to give away Millions of TVS at huge losses...
if they do it will soon be on line only. the TV is crappy anyway.
Spend 500 get a nice Plasma.
If I'm going to pay a retail markup, I expect something for it. Service, selection, product knowledge, something. Otherwise, I'll buy online. Researching a product or even a whole industry is pretty easy now.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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