Best Buy Case Study
What were Best Buy's responses? Analyze the effectiveness of each response.
Change to in store barcodes- used in store barcodes and even removed barcodes from products Offered exclusive products- exclusive editions of blu ray movies Created its own shopping app- partnered with ShopKick Matched lower prices under certain conditions in 2012 Offered low price guarantee for 2013 How successful? First 3 had limited success 2012 low price matching had disappointing sales results
What threats do these changes represent to "brick and mortar" retailers?
"Showrooming"- Shoppers go to best buy to test products before purchasing, then buy them online
What changes in the environment were taking place in the USA retail market in 2012? (Demographic? Social? Economic? Competitive? Technological?)
Economic- lingering effects of the 2008 recession, less spending in stores Competitive- Increase in online shopping Technological- Increased use of smartphones for shopping Technological- Introduction of shopping apps that allow price comparison Behavioral- Change in consumer's shopping habits
Do you have any suggestions for an alternate course of action by Best Buy?
Match Amazon's pricing- costs best buy real money, but it also gives customers a reason to stay in the store and avoids handing business to competitors Focus on humans- develop excellent customer service Turn brick and mortar into showcase and ship- use stores to ship online orders Slotting fees- Best buy also struck deals with large electronics companies like Samsung, Apple, and Microsoft to feature their products in branded areas within the store. Manufacturers must use Best buy because their big box rivals (Circuit city, Radio shack, HH Gregg) have gone bankrupt or shut down completely
How did "brick and mortar" stores fight back? Analyze the effectiveness of each strategy.
Store owned and third party apps- Shopkick point system encouraged in store shopping by awarding points for checking in Product assortment changes- Carry products that can only be purchased at the store or in their own website, develop exclusive products Price policy changes- lower prices, encouraged manufacturers to adopt minimum advertised price - MAP - policy Rewarding loyalty- special deals, coupons Punishments- just looking fee Did it work: Customers just went to get the point, coupons, etc
Analyze the potential for success of Best Buy's ultimate strategy in terms of its strengths and weaknesses.
Strengths- 2000 stores w/ 160,000, Showroom, Customer service (tech support), immediate delivery Weakness- Higher costs than Amazon, lower share of internet retail, prices 8% higher than Amazon Can they lower their prices by 8% and still make money?