June 22, 2012, 3:47 PM

Best Buy attacks ‘showrooming’

The consumer electronics chain will outfit store employees with tablets.

Paul Demery

Managing Editor, B2B E-commerce

Lead Photo

Best Buy Co. Inc. is taking several steps to reverse the practice of “showrooming,” the growing trend of consumers to research products in stores and then buy them from other retailers online at a lower price, interim CEO Mike Mikan and other senior executives told investors Thursday at the company’s annual shareholders meeting.

The move comes amid the chain’s sharper focus on e-commerce and its anticipation that annual online sales will reach $4 billion in fiscal 2016.

The 46-year-old retail chain, No. 11 in the Internet Retailer Top 500 Guide, is providing store employees with new training and mobile technology to better serve customers, expanding its technology services to both consumers and small businesses, and committing to offering shoppers the “best price” whether they’re shopping in a bricks-and-mortar store or online. “Improving the customer experience, delivering the best price, and strengthening our technical expertise are key to our strategy for reversing the practice of showrooming,” Mikan said.

He added that Best Buy, which operates more than 1,400 stores in the United States and more than 4,300 worldwide under several store brands including Best Buy, Magnolia Audio Video and others, will continue to shift more of its traditional focus from big-box stores to the online world. “We can no longer just focus on the box,” Mikan said at the shareholders meeting, which is recorded in a webcast on the retailer’s web site. “We must focus on both the physical and virtual customer experience, and our capital investment must reflect that.”

The company’s stores are slated to receive more mobile devices such as tablet computers to enable “blue shirt” and Geek Squad store associates to better provide shoppers with more assistance in researching information such as product details and customer reviews. And stores will be better equipped to let shoppers do their own online research. Best Buy will release more details later this summer, executives said.

When a shareholder at the meeting asked how Best Buy would avoid problems it had in the 2011 holiday shopping season, when it didn’t always have stock on hand to fulfill customers’ online orders, executives said the main problem was in an outdated system that displayed products online that were no longer available for ordering. “That won’t happen again,” said Mike Vitelli, president of U.S. operations, adding that the company had changed its system of updating product availability.

Another shareholder asked how Best Buy can compete with Amazon.com Inc., No 1 in the Internet Retailer Top 500 Guide. Executives noted that Best Buy was committed to better competing against Amazon as well as other online retailers, even when they offer free shipping, by offering a stronger in-store shopping experience backed by digital technology and services that provide consumers with virtually all the information they need to make purchasing decisions.

“There is something that can compete with and beat free-shipping, and that is in-stock, right now, and near me,” said Stephen Gillett, president of Best Buy Digital, global marketing and strategy. “If [customers] come into your store and experience that with the right trained person and the right transparency to price and reviews and product, we feel very happy with our odds to engage that customer.”

Comments | 3 Responses

  • From my recent experience, Best Buy has still *not* fixed the inventory problem. Last month, I placed on order at approximately 7pm on a Saturday and the Best Buy site stated the item was available for pickup that night at the nearest store. However, a confirmation was not generated until late the following morning which corrected the status and stated the item was actually *not* available. I continued to monitor the site over the next week hoping to see the item replenished in store. Oddly the availability changed often from "not available" to "in stock" to "available in xx days" back to "not available". I filled out a lengthy survey form (at Best Buy's request) detailing the issue and my disatisification with the store pickup process and heard nothing back. Guess where I'm *not* shopping next time?

  • Best Buy needs to find a way to have unique products in their stores. Given it's electronics, not sure private label is necessarily the answer. Instead they should work with manufacturers to create variants -- this could be relatively trivial like unique colors or more elaborate like feature and function combinations only available through Best Buy. This is common in other categories. And since it's definitely not in manufacturers interest to see Best Buy follow Circuit City under the Amazon steamroller, they should be supportive of introducing the added complexity to their supply chains for an outlet as large as Best Buy.

  • Just a consumer anecdote -- I just bought a laptop from Best Buy. I did my shopping on the Internet and went to the store to pick up. I had to tell the sales person (1) they had the particular one on sale and (2) as of that morning they had 18 in stock in the store. So it sounds like a good plan, but for the opposite reason!

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