Best Buy Co. Inc (NYSE:BBY) will intensify its competition against online retailers such as Amazon.com, Inc. (NASDAQ:AMZN) this holiday season. The electronics retailer plans to match the prices of its online competitors. Best Buy will also offer free home delivery on products that are out of stock in stores, according to the report from Wall Street Journal.
The company aims to reduce the practice of “showrooming” among consumers who normally browse and check the features of the electronics in stores just to make sure that they will purchase the right product online. Many consumers end up buying online because the prices are more competitive than prices offered in stores. Plus its a good option for the lazy among us.
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Approximately 40 percent of consumers who walk in to Best Buy Co., Inc. (NYSE:BBY) stores leave with a purchase. The company aims to increase the number of consumers purchasing products in the store. Best Buy Spokesperson Matthew Furman said, “We have a tremendous opportunity to increase that close rate.”
Bill Hoffman, vice president of consumer insights of Best Buy Co., Inc. (NYSE:BBY) explained that showrooming is “material” for the company in an interview with the Journal. The number of instances is “still very low,” but the company needs to pay attention to it, according to him. Hoffman’s team evaluates 120,ooo Best Buy customer surveys every month.
For the past two years, the number of mid teen customers who walk into Best Buy stores increased by three percent. One out of five showrooming shoppers buy products in stores, according to Best Buy.
The company believes that the number of customers purchasing online will reduce due to the implementation of online sales tax in several states. Amazon.com, Inc. (NASDAQ:AMZN)’s advantage in pricing will also decrease.
A study conducted by Alix Partners, a retail consultancy firm conducted a survey on showrooming last summer found that 33% of respondents and 43% of electronics buyers purchased a product online after checking it in store.
The survey also found that a majority of shoppers prefer to go home and compare prices of products online, and only a fraction of respondents compare prices in stores using their mobile phones.
Joel Bines, managing partner of Alix Partners said, “Comparison shopping is not new, but the Internet and smartphones have made it easier and more prevalent than ever.”
Bines recommended that retailers should compete with their online rivals by matching their prices and making customer reviews and recommendations available in stores for customers.