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Best Buy Wants You to Stop Using Its Stores as Showrooms

Published
By Laura Heller, dealnews contributor

Best Buy caused a stir when it announced that it would close 50 of its stores and focus its efforts more on mobile technology. Then, the retailer dropped another bomb when its CEO Brian Dunn declared he was resigning. A seismic executive shift and a reconsideration for what it sells is worrying behavior to say the least, but will these events actually impact the bottom line for consumers? Absolutely, if you're someone who likes to try out electronics in-store before buying online. In fact, it's that exact practice of using retailers as mere "showrooms" that has Best Buy currently in a tizzy.

To be clear, Best Buy isn't going out of business, although there's been much speculation as to the eventuality of that event. Dunn's departure indicates that its far from business as usual, and Best Buy likely won't be taking mere baby steps toward reinventing itself in the burgeoning era of online retail anymore. When the company said that it would be closing 50 of its larger stores and resetting some in two markets (San Antonio and the Twin Cities) to test expanded mobile electronics departments, the move was presented to the financial community as a way to reduce costs. But there are some real implications for shoppers.

Mobile Technology Offers Greater Opportunity for Profits

Best Buy wants — no, needs — to increase its participation and sales in the more profitable mobile electronics categories. Notebooks, tablets, and smartphones are all selling in high numbers with some healthy profit margins, since they haven’t quite become commodities yet. Speaking of which, the word "commodity" gets thrown around quite a bit when it comes to electronics like TVs and desktop computers. But the later two are now everyday items for shoppers, who are more likely to buy these goods based on price rather than features. And for savvy shoppers, like dealnews readers, it’s pretty easy to find a good, well-reviewed piece of technology at a great price online, with free shipping and white glove service thrown in.

It's especially difficult to be a consumer electronics retailer these days. And if, like Best Buy, there are staff and physical stores to maintain, it's darn near impossible to turn a profit. TVs, cameras, Blu-ray players, and computers have slim to nonexistent profit margins. Pre-recorded movies and music are "loser" categories and getting worse by the minute. And while appliances are big ticket, they too don’t carry a big profit margin. (Nor has Best Buy managed to win over shoppers in that category anyway.)

Best Buy Wishes You'd Buy In-Store More

dealnews readers know how to score top electronics at great prices, and how to use physical stores to help in the process — and that's exactly what frightens these brick and mortar businesses. Retailers like Best Buy (and to a lesser extent stores like Target, Walmart, and Sears) are suffering from the "showroom effect:" when shoppers go into a store, test out a product, pry some information from a sales associate, and then find it for less online. Target went so far as to send a note to its suppliers last fall demanding help in mitigating this problem.

The showroom effect is particularly dire for electronics retailers, where a 5% to 10% price difference can be a significant amount. But for the consumer, it just doesn’t make much sense to pay for the in-store experience when there are not real measurable benefits. There is, however, one big downside: reduced competition in the retail channel can be bad for bargain hunters.

Back when there were several national electronics chains and more than a few mom and pop shops, consumers could pit one against the other and negotiate better prices, free installation or delivery, and extended warrantees. Then came big box discount stores and eventually online-only retailers that offered products for less than the electronics chains. Circuit City went away, Ultimate Electronics and CompUSA disappeared, and a good many smaller chains and specialty stores closed up shop. Best Buy remains the only one with some bargaining power; it can secure good prices from vendors and offer shoppers a way to test a product and take it home the same day. Thus, a Best Buy in trouble is bad for shoppers who value those options.

So How Will This Effect the Deals We See?

In the short run, look for overall increased promotions in the electronics category. Apple is testing small departments in some Target stores, and online retailers are eager to get rid of the competition; Amazon becomes more powerful with every season. And even discount stores like Walmart are doing a better job every day of stocking the same feature-rich products as their competitors.

Best Buy is trying to bulk up its online sales capabilities (it has fallen behind in creating a comprehensive Internet retail program), so there will be an increase in deals as the competition heats up online. But will Best Buy's efforts suffice to thwart in-store price comparing and thereby showrooming? We want to know if you, savvy dealnews readers, feel guilty about heading in-store to learn about an item before setting out to buy it online at a lower price.

Front page photo credit: Kotaku
Photo credits top to bottom: Best Buy Jobs,
The Next Web, and Typophile


Laura Heller is a freelance writer based in Chicago who specializes in mass market retail trends and consumer electronics industries. You can follow her on Twitter @lfheller.

Follow @dealnewsfeature on Twitter for the latest roundups, price trend info, and stories. You can also sign up for an email alert for all dealnews features.

Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).
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35 comments
archielee
To use the sales person in a store to gain information and recommendation and then to go and buy it online is not ethical in my book. I do my own research online. Now if I'm at a store I may do a price check to see what its selling for online but that's different. That is merely price comparison shopping. I not tying up a salesperson's time or utilizing their knowledge. But getting help from a salesperson and then going online to buy it that just not right. The store has to pay these employees. A totally online company has significantly lower overhead because they aren't providing much in terms of advice and recommendations.
Desirsar
Use a store? As a showroom? We're talking about Best Buy right? They are no Micro Center. I go into Best Buy and I don't find what I want, so I leave. I go to the Best Buy website, I can't filter for what stores might carry, and I certainly can't see their current inventory of an item. The problem isn't that I might use Best Buy as a showroom, it's that I can't go to the store, today, when I want, and have the item I want be on the shelf when I get there. Not Site-To-Store (actually, I think that's Walmart's name for it), not ship to my house - I want to walk out with it in my hand, today.

Hence the comparison to Micro Center - I go to Best Buy looking for cables after Walmart didn't have what I wanted, guitar stores (local or big box) don't carry what I want, and I can't find them. My last resort is now my first stop because they kept having what I wanted. On. The. Shelf.

The only thing left for any chain to do is go 24 hours, no holidays. I'd shop there forever.
married2lori
I used to work on commission at an electronics retailer in the days before the internet, and felt like it was stealing when somebody asked me to demonstrate a piece of equipment that they knew they were not going to buy from me simply to get the hands on experience a mail order house couldn't give them.  

However, today, the internet allows so many options for shoppers that brick and mortar stores don't.  I can read reviews from people who have used the product.  I can download users manuals for most products to see if it will do what I want it to do.  I can compare the product with a multitude of other products.  

So, now, the situation has reversed itself. Before I make an online purchase, I will often search Google Shopper to make sure that it isn't available locally so that I don't have to wait or pay shipping.  Sometimes, the cost to ship is greater than the savings online.  Sometimes, I am willing to spend a few bucks more to get something now. 

As for Best Buy, it is not their prices, it is their contempt for the customer.  The incentive to purchase at a brick and mortar store should be service after the sale.  But, with Best Buy that is a reason to shop online. Whose customer service would you rather deal with, Best Buy's or Amazon's?  
toddcovelli
SO you still praise Dealnews as they rake in hundreds of thousands of dollars in revenue from Best Buy? I mean, I used to LOVE Dealnews, now, I "showroom shop" at Dealnews, leave their site and get the deal without clicking through and giving them credit. When DN started acting like Best Buy, that is when I lost all respect for them.
supermoogle
How does turning around and calling the consumer the problem build a good customer experience?  It's this kind of negligence toward customer service that is killing their bottom line, not the showroom effect.  I don't buy things from BB because I can never find help when I need it and often when I do find someone they know less than I do about product.

Also their "showroom" has become quite poor, I'm not sure who would even use it for that anymore.  No one can trust any tv or speaker lineup since there are far too many uncontrolled variables between the demos.  Even their little fact sheets next to their prices often are missing too much key information to be able to compare things effectively.  Where can I get all the information I need for that in a way that's easy to read?  Online.
therealpae
You know whats interesting, I never shop at BB for electronics, the only thing I purchase are video games on sale, and they gotta be really cheap. But when I'm in there I stop at different depts to look around, and I at times ask the customer service rep a question, and these dudes usually dont know jack, in all hoenesty I know a whole lot more with my feeble mind. But on the other hand I do homework.
NeonElixir
Whether I use a store as a showroom depends where I'm shopping.  I don't feel bad at Best Buy because I've had so many bad experiences there over the years.
garydech
This story misses another key driver, in my opinion.  Best buy has frustrated consumers with poor product availability and bait-and-switch practices in the last 2 years.  I bought a TV online before christmas, and 5 weeks later my order was cancelled without any warning.  They promised me follow-up phone calls and gift cards as compensation and never followed through.  Dealnews documened this debacle very well.  I tried one last time for superbowl, went to BB store to buy TV that was advertised at a great deal, but it was sold out in first day.  They would do nothing but say sorry. That same day I was able to walk across street to costco, buy the EXACT same TV, at a lower price than Best buy's national ad.  Bottom line is they have not offered any tangible advantage, they are rude and unprofessional, and I'll buy at costco / Sams / online before I shop there again. 
Aeromot
I have not been in a Best Buy since 2009, even though I live near one. That year I decided to buy a big cost-screen TV & Blu-Ray player. Costco beat BB's price on the TV by almost $400, and the Blu-Ray player was a few bucks cheaper too. Costco also extends the warranty and offers painless returns. But what sent me away fuming was when I realized I needed an HDMI cable and went to BB to get one. The cheapest one they had was $50, and when I asked, the salesperson tried to tell me that I didn't buy all this great gear to waste in on a crummy cable and that I really wanted the $70 one. I bought one at Fry's IIRC, for $9, and ordered several more online for $6 each. I used to go in BB once or twice a week, but no more. That arrogance drove me away. Now Fry's is my electronics store, in part because it competes with the online stores in price.
okani
I would prefer to buy in Best Buy not only because you can return an item in 30 days to them if you didn't like it or it broke, (you deal with the real person in Returns/Exchange department unlike over the phone + paying the shipping) but also because of the warranty they offer - you can come back within your warranty period and either get a new item if your's is damaged or have them fix it. Anyone of us would prefer brick and mortar store for that rather than online. There is no online electronics store that does have both ways shipping free like Zappos. And Yes, I hate those lines in BB in Brooklyn, once you picked up an item and go to check out or ready to pay in that department using credit card - it takes hour to do that, or when you need a sales person in non-computer/music departments - it takes forever for one to assist you (like in home appliances department if you need vacuum,washer/dryer). 
blueii
If their prices were competitive they would sell product and I'm not talking about selling below net prices.
BigDawg22222222
Best buy needs to learn about customer service...They do not have it..They have an arrogance about the business, and they will lose to all the other online services that have it down already...They need to wake up and smell the coffee...
Magnitude_pop_pop
I personally browse at BestBuy, the Sony Store, Apple Store, Target, Walmart etc,  I'm not ashamed of it.  You can always find a better deals online and in most cases free shipping, no tax.  Amazon is my favorite online store, most times the best prices, no tax in NJ and easy returns.
Opie415
When I run across a product at BB for 549, and it's 389 online, and not grey market, I have no issues with ordering online. Microcenter doesn't seem to have an issue. I go there all of the time. They match online prices most of the time, unless they go under their cost. If it's close, I buy local.
catski66
Not surprised at all that BB is hurting for business..... I might feel guilty about using them for a showroom, if (as you'll read in other postings) they didn't have such blatantly awful prices... I was browsing for a 
screen protecter  for my android phone. I saw one that matched my phone, but didn't have a price labeled.... When I asked the "phone" guy there how much it was....... $30!!!!! This is a rectangular, small piece of plastic worth a couple of cents!!! He explained that this was a special screen protecter and that you had to have it installed "specially" in store. Curiously, I said, "Well, how many come in the box?" (expecting at least 3).... Nope, only 1.... Ridiculous.... but common at BB  
kcw118
I do try to support local businesses if the price is similar to what I can get it for online (considering shipping and taxes).  But as for customer service, that is a joke.  One time I went in shopping for a laptop and asked a sales person what's the difference between these two laptops, and the guy just read the two display labels to me.  I was like, ok, thanks...  I'm glad they hired workers who can read.
toddcovelli
Deal News gets paid on click throughs, I recently emailed Dealnews 3 times about being scammed by ALL4CELLULAR, they didn't even care to respond, even though I have been a DN shopper for years. So, the "editorial gaurantee" is just code for "we get paid by click throughs so we care more about the 500-1M plus revenue each year than your experience with a retailer we promote"
toddcovelli
I will say that after the California Attorney General got done with BB a few years ago, their return policy is actually decent now. The problem Best Buy has, is their employees, their attitudes are awful for the most part, there is one girl at the best Buy in La Jolla that is super cool, totally into Nintendo and always has great, personal reviews of the games, she is always smiling and really sweet (Tanisha, I think her name is). Sadly, though, I saw a manager scold her for "spendig too much time chatting" with a woman who had tons of questions about what Nintendo portable to buy her young child. I mean BB should PROMOTE a person like Tenisha, not scold her! I hope she moves on to a better place that will appreciate her awesomeness.
dsylvak
I recently purchased a Samsung in late Jan. 2012.  It's Samsung's $999.99 model.  The drive got corrupted after the second month and would not boot up.  Took it back to geek squad thinking it would be exchanged for another unit, instead Best Boy's elite staff turned around and said the 30 day warranty was over and to deal with Samsung directly - I'm glad you guys are going out of business, and that goes for all you stores out there that think that the consumer needs you instead of the other way around.  Rename your store "Worst Buy" and things should improve!!!  Serves you bloody well right, now go out and work for your nearest deli.
dsylvak
I recentl
BboJim
I priced shopped Best Buy and Paul's TV: The King of Big Screen for my HDTVs. I bought the TVs from Paul's TV inside my local Art Van and NOT online. It's all about the best price & customer service. I did buy my DSLR from Best Buy online though as because no one had it in stock locally.
dealguy
FWIW, manufacturers already spend a LOT of their marketing money just to have a product appear on Best Buy's shelves.
Wolfman
How many times does Best Buy offer a deal good enough to show up on Dealnews? To me, that says it all.
Besides, if they can afford to sell an item at a discount for an entire week, they're not reaching deep enough.
Wolfman
Ho
Handimandad
I think with all the price comparing online and reviews on products purchased it gives you enough to go by when it comes to purchasing a product. Everyone has a opinion on how good something is, and I think you had a lot more of this years ago but most folks base there buying decisions on product reviews and online comparing like dealnews.
rockychocbill
"Customer service is a joke."

You got that right. Most of the employees I've dealt with, especially those with any type of power, have this arrogant attitude. Well, let's see how arrogant they are once the stores close and they have to take a job at a restaurant or some crummy retail store worse than BB.
rockychocbill
How would anyone know you went and bought it online though. Too difficult to track that kind of reward process.
newsdude
Best Buy really lost me the last time I was traveling out of town and realized I'd left a USB cable at home. I went to a Best Buy and all they had on the shelf was a $27 USB cable from Dynex. $27?!? I must have a hundred USB cables in a drawer at home that came with things I've bought. And smaller mom-and-pop stores typically sell the unwrapped unbranded ones (which work just fine) for as little as $5 or $6. Here I seriously needed an assist from Best Buy, and they just wanted to drill me. Same thing happened on another trip when I needed to pull a hard drive and drop it into an enclosure to connect to another computer. $49 at Best Buy. For a simple USB enclosure?

I like their stores and on some things (as davidd5927 noted above) they're too competitive to resist. But they stopped being my go-to store a long time ago.
Predacorp
In Orlando, Best buy is only a couple of Blocks from CompUSA. I would be a fool to purchase a DVD Rom from Best Buy @ $50 dollars when Comp has it @ $19 Same goes for most items. Outdated price margins will kill all the electronics brick & mortar stores. Your mobile section will also suffer as they seem to be heavily Iphone sided on both accesories and periperals marginalising the bigger Adroid market around them. Seems rather foolish, grow up BB...
njdevilsfaninnchell
Yes I do window shop at Best Buy but I use Best Buy mobile and would highly recommend them.  Also the Black Friday stuff you can do good and I have been happy with their open boxed appliances.  BUT what I really hate is paying TAX and that is why I mostly use the internet!!
davidd5927
Ok Best Buy, here is the news!
I purchased 2, count 'em 2!, Apple MacBooks from my local store in the past year. Why? Because the price was LOWER than the Apple website AND I could see and work the machine IN YOUR STORE! One I paid for in full and one I financed thru you. What more do you want? Closing local stores is not the answer to your problems. Run better sales and I will still shop your store!
nimer
Though most of my shopping is done online (thanks dealnews), nothing beats the real experience of trying out the product, saying "i'll take it" and going home with your new toy. However, BestBuy has been constantly ripping off customers **especially** in the accessories department (cables, batteries, cases, etc..), things you can get for 80 - 90% less online. Not only that, they advertise a different price on their own web site, are they competing with themselves?

BestBuy should take a page from Apple stores; were price is the same, whether you buy online or from the store.
Zenwood
I think the Major Brands should pay a showroom fee to Best
Buy. If I go to Buys Buy and pick out a Panasonic TV based on what I saw in the
store and then order it online Panasonic makes a sale. Panasonic should then share
some of the profit with Best Buy.
lcbrownz
My local Best Buy has reduced it's inventory and employees by 60% since 2008. You are lucky to find 6 employees in the whole store at any given time. This Best Buy's main focus is on cell phones, Geek Squad, tables, and notebooks. Customer service is a joke. Customers have now realized that Best Buy has been selling merchandise at manufacturer's suggested retail price and they are not going to ripped off anymore.
bhennon
I would still rather ship at a Brick and Mortar store but i always feel like i am being taken advantage of. I don't mind paying a fair price for a product or even a little more for the in store experience. What i do mind is paying way too much for a product. 

This is the reason many people shop online after (or during) visiting a local store. Then you see that there is a large discrepancy between what the store is charging and what you can get it for online which further discourages you from going back to that store and causes you to then re-think each and every store purchase which creates more discouragement and so on and so forth. 

I recently purchased two HDMI cables that i found on dealnews for around $10 with free shipping.  The same exact cords were $15 each at my local store. I guess they figure that if i really need it i will pay that price.  That is the practice that makes me plan ahead and shop online vs going to a local store. 
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