Best Buy’s Showrooming Counterattack: We’ll Match Amazon Prices

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Target and Walmart are among the major brick-and-mortar retailers actively battling back against “showrooming”—when a consumer inspects merchandise in a physical store and later purchases it online (usually at Amazon) for less money. But arguably no store has more to lose from showrooming than Best Buy. The struggling electronics retailer is now doing something about it, and the move may prove to be a turning point in the online-vs.-brick-and-mortar war that’s heating up just in time for the holidays.

Over the years, consumers have demonstrated increased comfort—a preference, even—when it comes to purchasing electronics online. Analysts say that the trend will only continue: Forecasts call for foot traffic to decrease at electronics stores over the upcoming holiday season.

While we periodically hear about the impending death of the big-box store model, the theory seems more likely to come true sooner than later for large electronics-focused retailers such as Best Buy. One way Best Buy has been trying to win shoppers back is with a price-matching guarantee.

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As TIME recently pointed out, however, price-matching policies generally exclude online pricing from Amazon or any other website. Such policies give consumers no incentive to stop showrooming. But it looks like these policies are changing, at least for one retailer.

When Best Buy originally announced its policy for the 2012 holidays, it still stipulated that the retailer “does not match the prices of Internet-only retailers or the website prices of our local retail competitors’ stores.” Now, however, the Wall Street Journal reported on Friday that the electronics retailer is “planning to match the prices of Internet competitors such as Amazon.com Inc. this holiday season, even as it plays down its concerns over shoppers browsing gadgets in stores only to buy them for less online.”

Later on, the WSJ noted that there were some catches to the price-matching guarantee, including: Prices from the Sunday before Thanksgiving through Cyber Monday (often, the most aggressive period for discounting) would not be matched; only the prices of 20 specified online retailers (including Amazon, but not small or obscure sellers) would be matched; and Best Buy staffers have the leeway to decide against matching prices if the store decides that’s in its best interest.

Consumers should know that Best Buy will only match prices if the shopper asks and points out a better price from a competitor. And how many shoppers do so? We don’t really know. Nor do we know how many shoppers engage in showrooming. Studies have shown that the percentage of shoppers who shop in person and then buy from an online competitor is very small, and that the presence of a smartphone in a shopper’s hand can actually increase in-store sales. But there’s also no denying that stores like Best Buy are losing sales because shoppers find the items they want for cheaper prices online.

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“Best Buy certainly needed to try something aggressive given the ‘showrooming’ phenomenon they were already seeing,” Jonathan Marek, senior vice president at Applied Predictive Technologies, said via e-mail. Even as many brick-and-mortar retailers try to play down the threat of showrooming, “The problem is: Even a small loss of shoppers, say 5% per year, on a steady basis spells rapid doom for a retailer with a high cost base of stores.”

Will other retailers, such as Walmart, match Best Buy’s price-matching guarantee? Well, Walmart isn’t one to shy away from retail showdowns of any sort. See: pricing wars on books and toys from previous holiday seasons, as well as battles for the best layaway deal right now.

Still, retailers have been hesitant to price-match with Amazon. “The web is a dynamic pricing engine, especially Amazon,” Forrester Research analyst Sucharita Mulpuru has said. “To match the price of an item during one hour yesterday isn’t the same as matching Walmart’s circular for a price they’re committed to for this week.”

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Marek says that instead of matching e-retailer pricing on every single item, Walmart is focusing on a “best showroom” approach, “which makes sense since they can boost their online offerings plus sell a lot of other stuff to customers who come in to browse electronics.” The problem, from Best Buy’s perspective—and the main reason why it has more need than other retailers to match Amazon’s prices—is this: “Best Buy doesn’t have the other stuff to sell.”

Brad Tuttle is a reporter at TIME. Find him on Twitter at @bradrtuttle. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.

8 comments
walstir
walstir

When you buy, you want to listen to speakers, taste the coffee that the machine makes, test the electric shaver, etc.  For many products, just looking at them in a showroom does not add much to the buying experience.  Sometimes you cannot even look because they don't want to open the box.

Bill Matthies
Bill Matthies

"The struggling electronics retailer is now doing something about it, and the move may prove to be a turning point in the online-vs.-brick-and-mortar war that’s heating up just in time for the holidays."

This is no "turning point".  While matching, beating, etc. price is a mainstay in consumer electronics marketing, it is also explains why Best Buy and so many other CE retailers have the problems they do.  

Best Buy's merchandising has been lacking for years and without that as a point of differentiation the consumer is left with nothing but price as a consideration. While BB may be able to match Amazon pricing in the short-term, attempting to do so in the long-term is nothing less than insuring a quick and unwanted end to their death spiral.

J. Maynard
J. Maynard

Best Buy has worse issues than just price competitiveness. Their customer service is awful, and I have personally been burned by their ripoff "warranties." I don't even bother "showrooming" - I go straight to the internet.

m_a_c_11
m_a_c_11

I doubt price-matching will bring much change----there's the case of sales taxes. For example, a 300 dollar camera will have a tax of  ~21 dollars in Best Buy in NC, but zero tax in amazon.   

formerlyjamesm
formerlyjamesm

Best Buy can blame themselves if they go down.  Long history of predatory practices including price manipulations, bundling, warranties, and above all financial schemes.  Dating long before and long after Amazon became the standard for dependability and honesty.  As the expression goes, when you're up to your tail in alligators, too late to drain the swamp.

formerlyjamesm
formerlyjamesm

Best Buy has a long history of predatory practices, including price manipulation, bundling, warranty sales, and above all financing schemes.  That history predates the rise of Amazon as a dependable and reliable source of all consumer products.

I hate to see any business fail,  but they can blame themselves for screwing consumers for so long.  As the expression goes, when you're already up to your ass in alligators, too late to drain the swamp.

MikeTime
MikeTime

"Best Buy staffers have the leeway to decide against matching prices if the store decides that's it not in its best interest"

This clause right there will doom this new plan and backfire because it will PO customers coming in with online ads.

"I have this printout of a price match on this flat screen TV."

"Sorry, but we choose not match this price because it's 'not in our best' interest"

"Well, what about this game console?"

"Not in our best interest".

"Well, what IS in your best interest?"

"Not to price match anything unless it sells for more than we sell it for"

Beverly Wantanabe
Beverly Wantanabe

"matching" ... nowhere good enough.  Come January, AMAZ will start collecting sales tax in VA.  So, Best Buy wants me to drive 50 miles for an equal price?  Not going to happen. 

But, if they were to offer me a "match less $50", I'd be interested.  But they'd go broke, with their "brick 'n mortar" overhead.

Another example of CircuitCityitis ... head in the sand.