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Best Buy Co., Inc. (BBY) Extends Its Price-Matching Guarantee

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Best Buy Co., Inc. (NYSE:BBY) has announced that its price matching guarantee will extend beyond special offers. The big box store has promised to match prices from brick and mortar stores as well as nineteen online retailers. The development has been received well on the market. This moves comes after a turbulent period in which the company lost two of its directors.

Best Buy Co., Inc. (BBY) Extends Its Price-Matching Guarantee

The price guarantee previously offered by Best Buy covered special offers and holiday shopping. Now the company will match the prices advertised by its rivals the whole year around. Investors hope that the strategy will help the company compete with online retailers.

If customers are able to prove that a competitor is offering the same product for a lower cost, Best Buy will match the lower price. This full year guarantee will come into effect on March 3.

Amazon.com, Inc. (NASDAQ:AMZN) sales have been cannibalizing sales from Best Buy in recent years, as lower online prices attracted customers. Best Buy has been trying to justify its business model to investors in light of the increase in market share from the online sector. Amazon shares were up a fraction in today’s trading.

Best Buy Co. Inc. (NYSE:BBY)’s competitior, Target, announced earlier in 2013 that it was extending its offers to match prices from online retailers the whole year round. The attempts by brick and mortar competition to match the prices of online retailers may have provided the impetus for Best Buy to extend its own guarantee.

The move is seen as an attempt to stem losses from “show rooming.” Show rooming is the advertisement of products at prices that consumers cannot afford, in store due to limited stocks or other restrictions. Best Buy management have in the past blamed “show rooming” for weak sales.

Online retailers still have an advantage when it comes to pricing because of tax policies. Despite Congressional efforts there is no system that obligates online retailers to pay local taxes on their sales. Brick and mortar retailers like Best Buy are, of course, obligated to pay local taxes, making their products marginally more expensive.

Best Buy Co., Inc. (NYSE:BBY) shares were up 3% at time of writing. The firm’s shares have risen by more than 45% so far in 2013, outrunning S&P 500 (INDEXSP:.INX) gains of 7%. The firm’s earnings report for the last three months of 2012 showed an appreciable increase in online sales, fueling investor’s optimism about the company.

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