Best Buy Battles Showrooming with a Customer-Focused Comeback

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Customer Engagement
Customer Experience
In so many respects, the odds are stacked against a big box electronics retailer like Best Buy. Armed with the equivalent of a computer in their hands, today's mobile shoppers are able to compare product prices while shopping in brick-and-mortar stores with online retailers such as Amazon and then purchase online. A recent study by Empathica reveals that 55 percent of smartphone owners use their mobile devices to check prices while shopping in-store. After watching its sales and profits erode as the showrooming phenomena has gained momentum, Best Buy is fighting back through a series of strategic moves that are aimed at elevating the customer experience across channels while improving its operational efficiencies.

In so many respects, the odds are stacked against a big box electronics retailer like Best Buy. Armed with the equivalent of a computer in their hands, today's mobile shoppers are able to compare product prices while shopping in brick-and-mortar stores with online retailers such as Amazon and then purchase online. A recent study by Empathica reveals that 55 percent of smartphone owners use their mobile devices to check prices while shopping in-store. After watching its sales and profits erode as the showrooming phenomena has gained momentum, Best Buy is fighting back through a series of strategic moves that are aimed at elevating the customer experience across channels while improving its operational efficiencies.According to Forbes, key initiatives under Best Buy's "Renew Blue" program include price matching and efforts to improve customers' online experiences as well as their experiences in other channels. The company is developing a more interactive shopping experience for its online customers and providing them with recommendations based on their browsing history. In addition, Best Buy is working on making product search capabilities more navigable and consistent across devices

Meanwhile, Best Buy has been making greater use of Net Promoter Score to track customer satisfaction with the company's sales associates, services, and pricing, whether shoppers buy from the company or not. According to Forbes, Best Buy's NPS scores have shown a dramatic improvement the company began using the metric in November.

The company is also taking steps to improve its operational efficiency. In addition to closing 49 big box stores last year and another 5-to-10 that are slated to be shuttered this year, Best Buy is also making more effective use of its existing space by stocking more high-margin items such as smartphones, tablets, and appliances and fewer low-margin products such as CDs and DVDs.

Best Buy's efforts appear to be gaining traction. The Minneapolis Star Tribune reports that 10 Wall St. analysts have upgraded the stock over the past six weeks. Meanwhile, same-store sales in the company's fourth quarter rose 0.9 percent, the company's largest gain in the past three years.

Coincidentally, market research firm ClickIQ just published a study on showrooming which reveals that it's not just Amazon and other pure-play online retailers that are benefitting from showrooming. Best Buy, Target, and Walmart have each gained and lost sales as a result of multichannel price comparisons. According to the ClickIQ study, 20 percent of 368 respondents who researched a product while at a Best Buy store wound up purchasing the product at Target, or twice as many who ended up buying at Amazon. The study reveals that shoppers are jumping between retailers quite a bit.

How Best Buy fares in the long run remains unclear. But so far, at least, the company's customer-centric efforts appear to be paying dividends.

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