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Donna L. Montaldo

Big-Box Stores Go After Holiday Internet Shoppers

By October 15, 2012

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According to the Wall Street Journal, Best Buy will be matching Amazon.com prices and other internet retailers over the holiday season. They will also be implementing a free delivery program when stores are sold out of select products.

This new move is to help close the sale at the store level, which has become more challenging for many brick & mortar stores. The issue, referred to as "showrooming," occurs when shoppers visit local retailers to compare the products that they are interested in purchasing, then get online either with their mobile phones or computers, to search for the best price and other perks like free shipping and no sales tax.

While many retailers see this as having a negative impact on sales, Wal-Mart's CEO Mike Duke is taking the opposite stand and wants Wal-Mart to be the "showroom" destination for shoppers. This is a smart stand for Wal-Mart to take, although unless they improve customer service, shoppers will likely leave the stores without much more knowledge than what they walked in with.

Toys "R" Us has offset the showrooming problem by developing more private-label products, thus alleviating the price-comparison issue. Regardless, CEO Gerald Storch does not see showrooming effecting sales.

Storch told the Wall Street Journal, "People might come to the store and are not ready to buy," then go home to buy online, Storch said. "But what is not happening is that people are standing in the aisle and checking prices on their phones."

My guess is that Mr. Storch is partially correct, in that many shoppers will not bother to compare prices on low to moderately priced items, but I can't imagine that being the case with medium to high-ticketed items - not in today's world.

Faster Delivery

In an effort to compete with online retailers like Amazon.com and Newegg.com, stores like Wal-Mart are looking for ways to improve shipping to their internet shoppers. Wal-Mart is currently testing same-day delivery on products in demand in select markets by creating fulfillment centers. Best Buy will likely do something similar to expedite shipping.

Bottom-Line - Just do a Better Job

When I first read the headlines about Best Buy matching some of the big online stores' prices during the holidays, my first thought was - why just during the holidays? Shouldn't Best Buy, Wal-Mart and other big-box stores always offer a price-guarantee which includes internet stores' prices? And really, regardless of who has the best prices, delivers the merchandise the fastest, or opens its stores to shoppers who just want to compare products, the bottom-line is going to fall back to service and product protection.

One reason many shoppers search for the cheapest prices isn't just about the money, but also because the life span of the products we are buying is so dismal. It seems regardless of how much you spend, the chances that the product will be performing at top level in two years seems unlikely.

Shoppers are tired of paying extra money to protect products that they are buying in case it falls apart in six months or a year. The retailers that address this problem by standing behind their products and offering improved, and in most cases, real product-protection programs, will likely sway shoppers more than "fluff" shipping programs that prevent us waiting an additional 24 hours to receive our purchases.

In addition, it is time for retailers to do something different and go beyond chasing the lowest prices. The brick & mortar stores need to not only offer what shoppers search for on the internet - product information and comparisons, true consumer reviews and then good prices, but also real consumer education and real service after the sale.

The concept of sponsoring events, like Home Depot for example, which holds weekly in-store do-it-yourself courses for home projects, could be adapted in big-box stores like Best Buy, Sears and Wal-Mart, to help educate shoppers about electronics, mobile devices and televisions.

Creating an unintimidating environment, like Saturday morning clinics, to help shoppers understand the advantages and disadvantages of different products, protection plans and buy-back programs and then topping it off with the "fluff" of special prices or other incentives could improve the percentage of closed sales and customer loyalty. Offering basic product training could also help improve sales, so that consumers have an opportunity to get the most from the products that they purchase.

Self Destruct Product Problems

The level of frustration that consumers experience when trying to resolve problems with product failure has to be at an all time high. And who do the consumers ultimately blame for a crappy product? The store that refuses to do anything about it. Why? Because they are the ones that profited from the sale.

It used to be that the reason consumers would buy locally instead of online was because it offered a more secure feeling in case something went wrong with the product. However, now most local retailers deal with faulty products much in the same way as internet retailers -- they point you to the manufacturer for help.

The first big-box retailer that steps up to the plate and assumes some level of responsibility for faulty products will be the retailer that wins internet shoppers back to its doors. Assigning "customer advocates" to help handle problems after the sale by battling it out with the manufacturers instead of expecting their customers to do it, would convince many shoppers to buy locally rather than online.

In other words, brick & mortar retailers need to offer more than internet retailers, if they really want to compete.

October 21, 2012 at 1:17 am
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