Best Buy CEO Says Chain Open for Showrooming

Discussion
Nov 16, 2012
George Anderson

Best Buy shouldn’t fear showrooming; it should embrace it. So says the consumer electronics chain’s new CEO, Hubert Joly.

According to an Associated Press report, Mr. Joly said consumers entering Best Buy stores to compare products and pricing represent an opportunity for the chain to grow its sales.

"Once customers are in our stores, they’re ours to lose," Mr. Joly said.

The Best Buy CEO’s views are supported by research from Deloitte Consulting earlier in the year which found that smartphone shoppers are 14 percent more likely to make a purchase in a store than consumers not using a mobile device.

New research from IDC Retail Insights found that seven to 13 percent of consumer electronics shoppers will use their smartphones at least once in stores during the holiday season. Showrooming will play a role in 1.4 percent of consumer electronic sales during the period.

"The merchandising and customer services strategies that differentiate a retailer and define its value bear on showrooming shoppers’ propensity to rely on their smartphones in stores," said Greg Girard, program director, IDC Retail Insights, in a statement. "Private labels or exclusive brands, customer service, and loyalty stand out as the most promising strategies for dealing with showrooming."

Overall, about 20 percent of adults, 48 million people, are expected to engage in showrooming this holiday season. This number, according to IDC, represents a 134 percent increase over 2011.

How important is it for Best Buy to get showrooming consumers to buy in its stores? What steps do you think will be most effective in helping Best Buy to convert these shoppers?

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32 Comments on "Best Buy CEO Says Chain Open for Showrooming"


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Bob Phibbs
Guest
8 years 3 months ago

I could see that from a luxury retailer or a Nordstrom which are known for extensive attention to the customer, but BB? Ask anyone who’d shopped there and it is all about the extended warranty.

Up your customer service and that still doesn’t stop showrooming — they got all the information then scan and get the best of both worlds — where is the profit for a struggling retailer to afford the best help?

I don’t see how you both can price-match and double your operating margin, but good luck with that.

Ian Percy
Guest
8 years 3 months ago

There are two “illogical” and “non-intuitive” competitive strategies that I’m very fond of…and maybe some day I’ll actually and fully understand them.

1. Always paint your problems in bright colors. If you have a visible drain pipe running down your wall of your apartment, paint it orange. If “showrooming” is a problem, turn it into an event and sell tickets.

2. Attack the weakness of your competitor’s strength. If your competitor is 100X your size, attack the fact that they can’t innovate without three years of committee work. The weakness of online strength is the absence of reality. The touch, feel, smell, energy — the ‘I’ve seen it with my own eyes’ reality. Showrooms give you that.

Seems to me Best Buy is showing remarkable insight. Congratulations to Mr. Joly.

Mark Heckman
Guest
8 years 3 months ago

Best Buy has exactly the right position on showrooming in that any human being that walks in their store, for whatever reason, is a potential sale for Best Buy. With staff in place to assist shoppers, answer questions, and facilitate the purchase, Best Buy has more than a fighting chance to earn the sale, even if the item could be found cheaper online.

In addition, Best Buy’s own price guarantee that credits shoppers the difference on any item they purchase for a period of time if the item is reduced in price, is another vehicle for customer trust and loyalty. Converting foot traffic to shoppers and shopper to buyers is the retailer’s primary role. Best Buy is apparently “buying in” on that premise!

Richard J. George, Ph.D.
Guest
8 years 3 months ago

Very important. I think Best Buy and others targeting the showrooming consumers need to recognize their presence and address potential needs and points of difference. I would consider every live opportunity that showrooms could do better than the online sellers. For example, product demonstrations, customer education, product installations, immediate availability, complimentary products, and bundled offerings are a few of the things that could convert showroomers to buyers.

Steve Montgomery
Guest
8 years 3 months ago

Shoppers or buyers — ah, that is the question. Best Buy is recognizing the fact that customers using their mobile devises to do price and other comparisons while they are in their stores are likely ready to make a purchase. The only question is where they will be buying it from.

Given our society’s “I want it and I want it now” trend, Best Buy has the time advantage (for most items) which may outweigh any price benefit an e-retailer may have. I would suggest that sales associates be trained so that when they see someone with a phone checking on an item, they place the person in the serious buyer space and treat them as such.

Dick Seesel
Guest
8 years 3 months ago

It’s important to remember the name of the company (“Best Buy”) as a reflection of its mission, no matter whether it sells TVs, computers or appliances. So Mr. Joly is absolutely right that any customer walking in the door needs to be encouraged to walk out with a purchase or an online order. Getting those customers into your store is half the battle, whether they are checking prices on their smartphones or not.

But price-matching (and more aggressive pricing in the first place) is only part of the battle. Best Buy needs to focus more quickly on the entire customer experience, which is disappointing today by the standards set by Apple. It needs to de-clutter the center core of the store, it should make the “Geek Squad” key to its mission, and it must focus on selling product — not service contracts, no matter how much they help drive the bottom line.

Tony Orlando
Guest
8 years 3 months ago

Lets start with an educated salesperson willing to get the price close to the showroom deal. If they can, most consumers will pick the store if — and only if — the salesperson knows how to close the deal. Most sales clerks are lousy at what they do, but the top 20% of them can and usually will get the consumer to buy with them, as great product plus great sales ability always are a winner. I hope Best Buy has the right staffing for the Holiday or it will continue to get ugly for them.

Doug Stephens
Guest
Doug Stephens
8 years 3 months ago

If you’re open to showrooming it means you’re not sufficiently differentiated. Embrace it? No way! Take it as a warning that innovation is essential? You bet. Best Buy needs to create something so distinct, so remarkable that all comparisons are laid to rest! Or they should simply sell the chain to Amazon.

Tom Redd
Guest
8 years 3 months ago
Get them in and you can sell them. To get shoppers into a CE store you must have 3 things. 1. The right brands for the specific by store/zone. 2. The right price range. 3. And the #1 thing? People who can sell. Yes, we can call it customer service, but the real name for it — especially in CE — is customer sales pros. We are not talking hardcore push or drive the sale home types. We are talking experienced CE people that know the products because they used them. 75% of the time when I am in a Best Buy and I see a person trying to decide between a select external hard drive for their PC and a router for their in-home network, I step in and help them decide and in the end influence their decision. I have a very high close rate in CE. Yes, I am a data comm/storage geek. When shoppers are sold to in the right way they — for a moment — ignore the online shopping/price… Read more »
Max Goldberg
Guest
8 years 3 months ago

If you can’t beat ’em, join ’em. Whether Best Buy wants to or not, consumers will use them to showroom. The retailer is wise to embrace all consumers and try to convert those who are “just looking.”

To turn lookers to buyers BB needs to have superior customer service, knowledgeable sales people and in-stock merchandise. They need to make customers feel welcome. It’s a tall order, especially given the recent turmoil in the company, but it is doable.

Jason Goldberg
Guest
8 years 3 months ago
Showrooming does happen, but it is far from a brick and mortar retailer’s biggest program. When a retailer is used as a destination for a “showrooming” trip, it has benefits as well detriments for that retailer. I think Best Buy is right to encourage shoppers to visit its stores. As anyone who has ever worked at a Ferrari dealer will tell you, not every shopper has real buying intent. In fact of the 50% of shoppers that walk out of a Best Buy store every day, far greater numbers will immediately visit a Walmart to make the purchase than will buy it online while in the store. Which is why despite the hype, I don’t think show rooming is any brick and mortar retailers biggest problem. The magic question is, do you want your brick and mortar stores to be a destination, even with there is not strong buying intent? To me the answer is clearly yes. I have to offer a great experience to my shoppers that really do walk in the store to… Read more »
Zel Bianco
Guest
8 years 3 months ago

Consumers are going to comparison shop and are no longer tied to their computers to do this; thanks to the prevalence of smartphones and tablets, they can do their comparison shopping on-the-fly in stores. Best Buy needs to address showrooming and use it to their advantage to convert shoppers through such things as competitive price matching, in-store only deals, outstanding customer service and quality products.

Herb Sorensen
Guest
8 years 3 months ago

Showrooming isn’t an option, it is what shoppers are bringing into your bricks store, like it or not. The Convergence of Online, Mobile and Bricks (COMB) retailing is a fact of life, whether any particular retailer likes it or not. Most retailers (with websites) seem to have finally begun to see that the web and the store are a team, each being a shortstop for the other. The fact that mobile devices are FAR, far from optimized anywhere only represents opportunity for mobile that cements the three together in a seamless way.

Frank Riso
Guest
8 years 3 months ago

This is a great example of a retailer taking what most of us consider a negative and turning into a positive. Showrooming is not something to run away from, but to use to become a better retailer. It is a tool if used properly can be of benefit to both the consumer and the retailer. A number retailers are making very big decisions getting ready for the Christmas shopping season; this is by far the most forward thinking that I have seen this year.

Robert DiPietro
Guest
8 years 3 months ago

Turning lemons into lemonade! I agree that when you have the customers in your store they are yours to lose. Best Buy wins them on service, product knowledge, price and selection.

As long as the prices are within reason customers will not leave the store to go buy the product online. They will stay for the service and product knowledge.

Joe Nassour
Guest
Joe Nassour
8 years 3 months ago

Once a customer is in the store, you have the opportunity to develop a relationship with them. You can sell them on private label items and sell them services not available online.

At least you can price match the item and sell them accessories.

It is better for the customer to be in your store than to completely bypass you altogether.

Phil Rubin
Guest
8 years 3 months ago

Waking up to the reality that a store is going to have an easier time selling to a customer inside its doors is the best move by Best Buy in a while. Retail marketing is all about driving a store visit, whether online or physical.

Marc de Speville
Guest
Marc de Speville
8 years 3 months ago
As a couple of others have already mentioned, the key is to 1) have knowledgeable salespeople who are both willing and able to make the sale; and 2) prices that are at or near the online average (which is where Amazon — a smart price follower, not disruptor — positions itself. This may involve giving salespeople the power to negotiate discounts (with clear limits and guidelines of course). When it comes to trying to implement the above, Best Buy currently faces two major hurdles. First, raising the service bar will take time, along with upfront investment in training and improved logistic integration, hence possibly a quarter or two of missing Wall Street estimates. Second, Amazon and other pure online specialists STILL benefit from a significant tax burden advantage, not only at the sales tax level, which implies an immediate price advantage of around 7% in states where Amazon does not have a so-called mexus aka major DC, but it also escapes the various state and federal commercial and building taxes. Unless the tax disadvantage is… Read more »
Ed Rosenbaum
Guest
8 years 3 months ago

The one single line in the article most impressive and saying a lot about the new leadership was Mr. Joly’s “Once customers are in our stores, they are ours to lose.” More retailers should have this aggressive approach to sales and competition!

Paul Sikkema
Guest
Paul Sikkema
8 years 3 months ago

You have the “showroomer” in your store. You convinced them to buy from you.

Now…Do you have it in stock at that store?

Jonathan Marek
Guest
8 years 3 months ago

This is exactly the right attitude…because it is the only possible path to success. If showrooming can bring ’em in, then the retailer has to convert. The question of how to convert is hard, though. Best Buy ought to be testing all sorts of conversion oriented programs and incentives to buy now, to sort out which ones work and which don’t. Hit rate will be low, so there is a real premium on testing many many different ideas.

Lee Kent
Guest
8 years 3 months ago

I think BB has great potential if they invest in using their stores as showrooms. Get vendors in to do demos, host events, set up spaces with all the gadgets, gizmos, and add-ons you would put into the space. Show the customer things they may not have thought of, but are cool in the space. It’s not just about buying the big screen, but what about the audio strip, etc. Let them see it all and want what they didn’t know they needed. I, once again, totally support what Ian Percy has to say. Ian, we should meet!

David Slavick
Guest
David Slavick
8 years 3 months ago
I highly recommend those commenting here visit BBY’s website, click on Perfect Match Promise and read the fine print. There are a lot of exclusions. For instance, if you do find a better price online, they WILL NOT match it. If you find a better price at a competitor and the item is EXACTLY the same, they will match it same day with the purchase transaction. BBY has evolved as earlier this year I believe there was a time where you were forced to make an informed purchase, but potentially at a higher price even though the competition was less on the same item and they would only credit you the difference POST 30 days from date of purchase — if you came back to the store and asked for the credit. Hmmmm. Lots of great comments and observations shared here. You mean Mr. Joly has to say we aren’t going to let a buyer with intent leave the store without making the sale to believe that is now a new thing? Come on people,… Read more »
Martin Mehalchin
Guest
Martin Mehalchin
8 years 3 months ago

Capturing these consumers is mission critical for Best Buy and Joly has the right perspective on it. Best Buy does still have a long way to go on execution. They need to offer truly exclusive product, as today they are one of the worst offenders on “fake exclusives” that are really the same product as elsewhere, but with a different model number. They need to implement an “endless aisle” offering so they can order and fulfill for customers when an item is not in physical inventory at the store, and their Rewards program could stand a revamp.

Craig Sundstrom
Guest
8 years 3 months ago

“Once customers are in our stores, they’re ours to lose.” Merci, Hubert, for stating the obvious, but the problem of course is that Best Buy HAS been losing them. It’s axiomatic that if someone is in store there is a possibility of them buying — even if their intention was only to see something they planned to buy elsewhere — but by offering no clear advantage in price, service, or frothy lattes that one can sip while browsing, BB seldom realizes it. And I don’t see much of a plan here, only platitudes…it all seems rather silly, non?