Question 1

Best Buy is universally known as one of the prominent electronics retailers having approximately 2000 stores around the globe. In 2012, the increasing prominence of price-matching apps for mobiles phones caused transparency in price differences between offline, online and retailers. As a result, the growing desires of shoppers to test electronics first-hand before purchasing them moved them towards showrooms. Customers visit the showroom to have a glimpse of the new collection of products and then search for good deals via their smart phones. As a result, this article explores how brick-and-mortar retail stores battle showroom implications via changes in product assortment, loyalty programs, development of apps and changes in pricing policy. The case examines whether Best Buy can survive by permanently employing the price-matching technique of their online-online competitors, especially Amazon, despite possessing products of the reasonably high cost.

Question 2a

Its new policy on matching prices on other online retailers and Amazon developed in phases becoming more encompassing and more extensive as its bottom line continued to incur changes. The retail company promised to match prices from the neighboring brick-and-mortar stores in 2012 but ended up excluding online retailers. Later the same year just before the commencement of the holiday season, it announced that it would start price matching its product costs with online retailers. The announcement was met with regulations and rules. The price matching was only appropriate during the course of the holiday season only. It was not applicable during the most lucrative shopping weeks such as from the thanksgiving Sunday to the Monday after. Besides, only around 230 online retailers would be used in the price-matching. The policy was not even permanent considering that the Best Buy staffers were responsible for making decisions on when to match the prices. Best Buy then announced that it would make this policy permanent considering that the previous one flopped tremendously. Under the new policy reform, Best Buy will engage in price matching for all local retail competitors, coupled with approximately nineteen other online retailers in all product segments and on all stocks requested by the customer.

Question 2 c

The price matching policy at best buy is not old-fashioned. It is the responsibility of the company to match prices for a customer upon request, and the final decision and choice will fall on the retailer’s staff. Customers may also be requested to provide evidence of still-in-effect reduced prices at a neighboring website or store. In the process, Best Buy will also not engage in matching the prices in exchange or return period. In doing so, it is a minor trade-off will be involved. Although the company has not commented on the effect of this policy regarding profitability, it is apparent that it will result in improved sales and cost-cutting, which will help in catering for margin contraction.

Question 2 d

Best Buy should keep this policy because retailers such as Amazon and Wal Mart are slowly changing their mode of business from pure-play consumer electronics retailers by issuing extensive amounts of discounts. Many consumers are still using physical shopping to check out and visit stores and conduct practical testing with gadgets. Nonetheless, several consumers then proceed to purchase the same products from online stores such as Amazon at relatively affordable prices. As a result, this ideology of show rooming has affected business operations in retail companies such as Best Buy and RadioShack. By keeping this Policy, Best Buy will be able to attract a reasonable amount of customers to their stores while leaving room for giving matching prices for customers similar to what is issued at other online platforms. In doing so, this will help in leveraging its sales.

pur-new-sol

Related Questions