It was just this weekend that a friend was happily recounting how a Best Buy store in Chicago matched the price of an iPad on the Apple website that they found on their smart phone - in the store!. And today's news is all about how Best Buy is turning around under CEO Hubert Joly mentioned in a previous post. While most news reports are highlighting the cost savings by way of closing stores,reducing layers of management, allying with Samsung and Microsoft to operate their own boutiques in Best Buy stores, it appears that Best Buy has re-invented the brick retail model.
Showrooming was really killing Best Buy, where customers would come to the store,touch and feel the product, learn about it and then search online to buy wherever it was the cheapest.Local retailers have been wanting Internet sales tax on online sales to combat "showrooming."
Best Buy has done something ridiculously simple and brilliant : match the price for 19 online retailers and also match lower prices for 15 days after the sale.Here is why the Best Buy strategy points to a re-invention of the Brick retail model:
- Value of a customer in the store: The value of a customer who actually enters your brick store is gigantic. For unlike the 2 second bounce from an online store, there is no way that you can leave a Best Buy in under 5 minutes or 300 seconds even if you did not speak to a sales rep. Now consider the great sales support and expertise of the sales people with the assurance that you will not pay more than the online price.
- Customer Lifetime Value: If you walked into a Best Buy and the store matched the price on your smart phone - would you buy? It is likely that you'd buy a case for the iPad as well like my friend did. And next time you search on Amazon, you'll think about checking out Best Buy because the risk of higher prices is simply taken away.
- Empowered store staff: The ability to match online prices is a huge empowering move for the store staff. Motivation and morale can really zoom when floor sales people know that they can match online prices just as customers search prices on their smart phones in the store.
- Store as fulfillment center: Best Buy is trying out 50 pilot stores as fulfillment centers according to ZD Net. While there may be concerns about efficiencies in such small operations, online Best Buy customers will have a reason to visit the brick store... and that comes with the opportunity to check out other offerings.
If the quarterly profit of Best Buy is an indicator, price matching is working and might be the way to go for every business that has a bricks presence. Contact StratoServe.