Electronics giant Best Buy is suffering from one of the worst cases of “showrooming” -- the phenomenon of customers going into a brick-and-mortar store to look at a product, then buying it at a lower price online.
It’s had no little impact on the company. The retail giant’s U.S. division reported a loss of $1.7 billion in the fourth quarter, prompting the closure of 50 U.S. locations and the recent announcement of 2,400 layoffs. For those who recall how big-box retailers conquered mom-and-pop stores in the 1990s, it’s a surprising reversal that is prompting calls for the company to change direction.
But it’s Best Buy’s Canadian division, which has so far avoided the financial problems plaguing the U.S. division, that has launched what it hopes is a solution to showrooming.
The company announced this week that it will match any Canadian online retailer’s price, and plans to open small boutique stores where customers will be able to order products from web-based kiosks, to be delivered directly to their homes, according to a report from Reuters.
The company also plans to challenge online retailer Amazon on its own turf, expanding its selection away from electronics to include things such as furniture, home decor and luggage.
It’s a major step away from the big-box model of electronics retailing that Best Buy helped pioneer in recent decades, and part of a strategy that will see the company’s online operations become more closely integrated with its brick-and-mortar stores.
Best Buy Canada President Mike Pratt sounded confident this week the strategy would put an end to consumers window-shopping in one place and buying in another.
“Showrooming is a completely price-based concept — it’s about the perception of getting a lower price somewhere. When Web pure-play competitors don’t have price, they don’t have any other advantage, quite frankly,” he said, as quoted at the National Post.
No word yet on whether the strategy will be adopted in the U.S., but the Canadian plan sounds a lot like what interim Best Buy CEO Mike Mikan hinted at recently when he said the U.S. company’s strategy would involve beefing up the store’s online catalog, reducing the square footage of its locations, and opening smaller stores that focus on particular product types.
Mikan took over from previous Best Buy CEO Mike Dunn, who resigned from the company in April amid an investigation into an alleged improper relationship with a female employee. Best Buy chairman and founder Richard Schulze resigned from his role at the company after it was revealed he had kept quiet about the alleged relationship.