It's no secret that Best Buy has had many business challenges lately as the chain faces declining sales and potential door closures. Many analysts have pointed to showrooming for online vendors as one of the major culprits of Best Buy's woes.
Showrooming is the concept that consumers browse a product in a traditional brick-and-morter store, only to purchase it online at a cheaper price. The primary case study of showrooming has aways been consumers browse and compare TVs in person at Best Buy and then ultimately purchasing online at Amazon where they traditionally haven't had to pay sales tax.
A recent analysis of the Stevenson Company’s TraQline market studies by the Consumer Electronics Association shows that while showrooming may be allowing Amazon to cannibalize customers away from Best Buy, its actually other brick-an-morter stores that appear to be more of an issue.
The study suggests that when it comes to purchasing a new TV, 48% of all TV shoppers visited Best Buy to browse the TV section. Of these shoppers, over half (56%) ultimately purchased a TV at Best Buy, while 44% ultimately purchased somewhere else. So where did these consumers purchase their TVs? The TraQline data suggests that of the shoppers who visited Best Buy, but purchased a TV elsewhere:
- 31% purchased at Walmart
- 9% purchased at Costco
- 8% purchased at Amazon
- 7% purchased at Target
So, while Amazon is siphoning of 8% of purchasers and one would expect that number to continue climbing, the data clearly indicates that Best Buy has larger challenges than showrooming for online vendors. The data suggests Best Buys value equation is less compelling than many competitors. As Best Buy continues to lose shoppers to multiple competitors that consumers feel offer better value, it needs to reexamine its overall value equation and better define its proposition for consumers.
