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.
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.
“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.”
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.”