Best Buy targets online buyers

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This article was published 14/07/2012 (5172 days ago), so information in it may no longer be current.

TORONTO — Best Buy Canada is trying to tackle growing competition from online retailers in hopes of encouraging shoppers to buy electronic gadgets in its stores instead of just browsing and buying elsewhere.

Mike Pratt, president and chief operating officer of Best Buy Canada, says more consumers are going online and the retailer needs to adapt — so it plans to extend price-match guarantees to include e-commerce rivals.

“Obviously, there’s a big increase in online shopping, so that’s one need we need to respond to quickly,” Pratt said.

“Secondly, people are expecting a very unique and ubiquitous experience between the web and retail stores.”

Best Buy stores in the U.S. have been suffering amid a growing trend of ‘showrooming,’ as consumers test out products in stores, but go home to buy them cheaper online or at discounters.

Last week, the company said it was laying off 600 staffers in its Geek Squad technical-support division and 1,800 other store workers in the U.S. as part of a restructuring of its operations to improve results.

The cuts follow an announcement earlier this year it would close 50 U.S. stores, cutting 400 corporate jobs and trimming $800 million in costs.

Pratt said Best Buy isn’t closing any stores in Canada, noting locations here have yet to face as much competition from sites such as Amazon.com and have also benefited from a more stable economy.

Best Buy’s moves in Canada come ahead of the arrival of U.S. retailer Target in Canada next year.

The popular discount retailer, which sells many of the same electronics found at Best Buy, plans to open 125 to 135 stores in Canada starting early next year.

Best Buy Canada announced earlier this week it will extend its policy of beating prices to online retailers as well as traditional brick-and-mortar businesses.

“Once you take price away from a pure web competitor, they really don’t have anything else,” Pratt said.

While online shopping is on the rise, Pratt said the majority of customers find it easier to pick up their items in the store, rather than waiting at home for a delivery.

Customers also want the same price in the store as they can find online as well as be able to return their items to the store if there’s anything wrong with them, rather than having to ship them back in a box, he said.

Jim Danahy, who runs retail consulting firm CustomerLAB, said Best Buy’s strategy should be effective, but it’s not a novel concept.

Price-beating is the oldest retail strategy, said Danahy, and in-store pickup stations have existed since the days of catalogue desks at department stores.

“What we’re really talking about in these cases is old principles that are now being reconfigured with new technology to support them,” said Danahy.

He said as retailers such as Best Buy move to more online sales, they’re hoping to reduce costs by having smaller outlets with lower rent and staffing costs.

“What Best Buy is desperately banking on is that the cost of operating a bricks-and-mortar store will fall significantly by having a store that is 15 to 20 per cent the size of their traditional stores,” he said.

 

— The Canadian Press