Showrooming at Best Buy Harvard Case Solution & Analysis

Showrooming at Best Buy Case Solution

1.     Introduction:

Best Buy is the international leader in consumer electronics and appliances retail. Best Buy runs retail stores throughout the US, China, Europe, Mexico and Canada. The company sells products in a variety of categories such as; consumer electronics, appliances, video games, music and movies. Best Buy operates under the differentiation strategy, which includes broad selection of products, repair and warranty service, home delivery, and financing.(Graham Charlton, 2013)

The case highlights the problems of showrooming at Best Buy. During the holiday shopping season in 2012, stores were jammed packed with customers to check the new gadgets (tablets and mobiles phone) in the stores. Despite the increase in the crowd within the store, target sales were flat without the increase in revenue all over the year. Amazon, eBay, and other online retailers decided to release mobile apps that could enable shoppers to search for the best deals online. The mobile app facilitated shoppers to easily find the better prices and discount online. Consequently, shoppers started to use brick and mortar retail stores as showrooms.

During the holiday shopping season of 2012, it has been noticed that 27% customers were searching for the best prices available online while being present in the physical stores. The showrooming concept had made the prices transparent and natural to be compared with, which affected traditional retailers to compete in themarket in which shoppers had access to the competing prices and offers.

The emergence of Amazon and other retailers had changed the way of shopping, as they made it easier for people to find users reviews and information on prices over the internet.  Despite the growth of e-commerce, customers who purchasedelectronics items still preferred to visit physical stores to look into the new electronic items such as flat screen TV, and listened to stereo personally and then searched online deals for the desired item. Amazon was the first to encourage this behavior by launching a mobile app that would allow customers to search the prices earlier when they still were in the store.

After the success of its retail website, Amazon had initiated a shopping app for mobile phones which enabled shoppers to search for products on Amazon’s website. Soon after, it followed its price comparison application through which the customers would only need to type the product’s name or take the picture of its barcode with the phone camera. The application would then search that particular item at a lower price within the inventory of Amazon and other retail partners at alower price.

2.     Concept of Showrooming:

Showrooming is another retail industry emerging from trends in mobility and varying consumer shopping habits. Consumers are now using their smart phones within brick and mortal retail stores to enter product stock keeping units or scan products bar codes to compare the pricing with e-tailers. The showrooming caused retailers, to becoming unpaid showrooms for consumers to touch, play and evaluate the product physically and then order them somewhere else virtually.(How Brick-and-Mortar is Turning the Showrooming Tide, 2013)

The survey from shoppers had revealed that showrooming facilitated towards better online prices, evaluation of product in person before ordering online, and the problem with the item being out of stock at the retail store. In addition, the survey also revealed that the electronics item were the main showrooming product type.

Impact of showrooming on retailers:

Best Buy was facing difficulty as the customers were visiting its stores just to have a view and test certain products. The showrooming had affected Best Buy, as its sales had reducedby 4% and another retailer like J.C. Penney’s as its sales had fallen over 26%....................

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