"Showrooming" Whaddya Think?

[Buckeye]

I got great service the other day from Alex at our Best Buy Mobile store. My Virgin Mobile Paylo phone was acting up and I had the "replace it for any reason" warranty. I ended up with a new phone, another 2 year warranty, everything moved from the old phone to the new phone and a gift card with $30 in refunds. The replacement phone was less expensive so I got a phone credit and a warrarnty credit.

[photoguy]

Does anybody know how Fry's is doing in comparison to BestBuy? They are similar but I guess Fry's caters a little more to the hobbyist. I often go to Fry's to pick up hard drives for backup purposes (I must have something like 20TB of drives) and their prices are often as good as online (sometimes better).

[audreyh1]

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Originally Posted by samclem You're not the only one! (Note: From The Onion) Even CEO Can't Figure Out How RadioShack Still In Business (in part--also contains "the CEO's" theories on how the chain survives.)

Hilarious! Thanks for sharing.

[yakers]

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Originally Posted by photoguy Does anybody know how Fry's is doing in comparison to BestBuy? They are similar but I guess Fry's caters a little more to the hobbyist. I often go to Fry's to pick up hard drives for backup purposes (I must have something like 20TB of drives) and their prices are often as good as online (sometimes better).

Yeah, when Frys puts something on sale its often better than the internet. Now service, they are about as bad as you can get. When they started they used to have one person in each department who actually knew what they were doing. I remember talking to the RAM guy for my Powerbook 180, dating myself. Now I am not sure anyone understands anything. Fortunately when I had a problem with a WD passport hard disk I was preparing to deal with Frys service (could I even find the sales receipt?) I went on the WD website and by serial number determined it was under warranty and got a RMA and sent it in to WD.
I do pay extra for tools at Sears because of their quality and return policy even though Harbor Freight has better prices for lesser quality stuff.

[Nords]

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Originally Posted by audreyh1 Honestly, I've really wondered how Radio Shack has stayed in business all these years......

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Originally Posted by MichaelB Me too. I've shopped there a number of times over the past couple of years, but always <$10 for a connector or cable. Not a lot of people in the store, and quite a bit of floor space dedicated to cell phones.

Hey, I go in there at least once a month and ask the clerks to show me their latest MOSFETs. Then I ask them to help me find a one-farad capacitor, which is always good for a few laughs...

[MichaelB]

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Originally Posted by audreyh1 Hilarious! Thanks for sharing.

+1

[Lazarus]

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Originally Posted by Nords Hey, I go in there at least once a month and ask the clerks to show me their latest MOSFETs. Then I ask them to help me find a one-farad capacitor, which is always good for a few laughs...

Here you go.

http://www.frys.com/product/6181259

and

1 Farad Capacitor

[photoguy]

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Originally Posted by yakers Now service, they are about as bad as you can get. When they started they used to have one person in each department who actually knew what they were doing.

Thankfully the internet has given me an extra hobby of researching everything to death before buying any product more $50.

[HighRoller]

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Originally Posted by rodi I think Best Buy's declining sales has a lot to do with their declining customer service. I know they are on my "NEVER AGAIN" list. I'll go to Fryes. At least there they don't pretend to have good customer service... and the prices are cheaper.

+1

[ERD50]

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Originally Posted by Buckeye I got great service the other day from Alex at our Best Buy Mobile store. ...

I rarely go inside a Best Buy, but within the past year, for a couple items I searched for, Best Buy had the best price. In one case, I had to do the 'ship to store' thing, and pick it up a few days later. Most recently, I was buying a computer speaker system as a gift (to be used with a TV and/or iPod), and after reading a ton of reviews the unit I was considering was priced lowest at Best Buy, I could go in and listen to it (they had one as a demo), and the sales guy was super helpful. So I bought it and tested it out at home, so I could take it back if any problems showed, rather than saddle the giftee with that - all was fine.

It's pretty rare I find someone priced lower than Amazon, and I check most times, but Best Buy has beat them from time-to-time. Occasionally I'll find overstock.com, buy.com, or newegg to be cheaper than Amazon also.

-ERD50

[Dreamer]

We have a Best Buy close by and I hope that they don't close. We just bought DH's main Christmas present, a Nikon D5100 camera and the bundle package. We bought our Mac laptop, Mac Desktop, printer, refrigerator, big screen TV and surround sound system and many smaller items. They did the price matching with the refrigerator and we could get it quicker with them and they took away our old refrigerator. They ended up having to take our kitchen door off the hinges and put it back on. They were very polite about it. I was the only adult at home and had my young grandchild, I think she was around 18 mos or 2 yrs at the time, so I was not any help to them at all.

[BigMoneyJim]

BnM retailers need to stop whining and adjust. I'm sure I'm not the only one who uses Amazon, NewEgg and others for reviews and research and then buy local on big ticket / bulky items, even allowing for higher local prices for the convenience and returnability.

As noted many times in this thread, Best Buy has done many things to alienate customers. I almost never go there to shop now, but I have occasionally bought a big appliance there with 0% financing. Maybe they're better now, but I wouldn't know because I've hardly been there the past 5 years. 15-20 years ago they were my primary tech shopping place, but they booted themselves out of that position.

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Originally Posted by imoldernu A manufacturer can become a retailer.Middlemen are eliminated at every step in the chain. If you were designing a more efficient structure for 300+ million consumers, how would you do it?

I would carefully plan it to be efficient and scalable, and then go out of business within a year because some kid who skipped college opened a store closer to the customer with free WiFi and other amenities to entice customers in and buy from him instead. Or some similar story where my engineer brain is easily outclassed by a poufy chair lounge and free muffins or something. Retail isn't about distribution efficiency.

More BnMs will fall on their face, but I can't imagine not having a physical showroom for many items; somebody will figure it out, and it probably won't be an engineer.

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Originally Posted by Midpack First Circuit City, will Best Buy follow? Article says Radio Shack & Game Stop are on the ropes too. Amazon, Walmart, Target, Costco and EBay for consumer electronics, sound good? Or will showrooming kill off all the brick-n-mortar options? Last time I looked, WalMart, Target & Costco didn't have any of the "good stuff" in consumer electronics, mostly the cheaper and off-brand televisions, computers, etc. - but maybe I'm out of date.

Walmart and Target are (relatively) cheap, and people are already there picking up their milk, cat food and toddler sneakers. Costco has a large selection of TVs and has developed a reputation for picking quality items where they have only one or two choices. Who goes to RadioShack? Game Stop was a cool idea, but more and more games are downloadable, and Craigslist and eBay fill the used equipment market. (I would miss Game Stop, though.)

Repeating myself, more bricks will fall, but somebody will figure out the magic combination of physical showrooms and profit. At some point a lack of physical stores would hurt online business.

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Originally Posted by yakers Yeah, when Frys puts something on sale its often better than the internet. Now service, they are about as bad as you can get.

Yeah, Fry's. Weird store. Hate it but couldn't live without it. (Maybe a little hyperbole there.) Lots of tech/electronics and pricing games. You pretty much have to play offline/online against each other to shop for value there, but the selection is good, and on any given weekend the price for the item you want could be right.

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Fortunately when I had a problem with a WD passport hard disk [...] I went on the WD website and by serial number determined it was under warranty and got a RMA and sent it in to WD.

Had a similar experience with a WD external drive bought on sale somewhere (?) with likely lost receipt. Serial number and postage got that replaced.

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Originally Posted by Nords Hey, I go in there at least once a month and ask the clerks to show me their latest MOSFETs. Then I ask them to help me find a one-farad capacitor, which is always good for a few laughs...

Pssst...Mouser Electronics, Mansfield, TX.

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Originally Posted by photoguy Thankfully the internet has given me an extra hobby of researching everything to death before buying any product more $50.

Heck yeah, reverse-showrooming! xkcd: Reviews

Edit: Ok, that's creepy. I finished posting and switched over to the tab I opened The Onion RadioShack article in, and the ad at the top is for Mouser Electronics. I thought I had opened that tab before I found Mouser's site...I think the Internet is predicting my surfing now rather than reacting to it.

[bUU]

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Originally Posted by BigMoneyJim BnM retailers need to stop whining and adjust.

The most appropriate adjustment, though, may be to close the showrooms. It may be hard to compete against Amazon.com online, but is much harder to complete as a B&M store when the vast majority of people walking through your showroom and taking up your staff's time with questions are Amazon.com customers using your showroom to check out what they're going to buy on Amazon.com. If it gets to a point where Best Buy realizes that there is no profitable aspect to incurring the costs of the showroom, then simple business logic says that that cost must not be incurred.

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Originally Posted by BigMoneyJim I'm sure I'm not the only one who uses Amazon, NewEgg and others for reviews and research and then buy local on big ticket / bulky items, even allowing for higher local prices for the convenience and returnability.

I believe even that is becoming a rarity. Anything small enough to carry into a Best Buy for a return, is small enough to ship back to a returns center. The UPS Store has effectively become a local B&M location for Amazon.com. And nothing is more convenient than having something - practically anything - delivered to my front door within two days.

We've bought a big-screen television from Amazon.com, and wouldn't think twice about buying anything else from there.

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Originally Posted by BigMoneyJim As noted many times in this thread, Best Buy has done many things to alienate customers.

The Best Buy here replaced a Circuit City, so my experience with Best Buy is limited to the last six or seven years. What I've seen them do, in the vein of "alienating" customers, is try to keep costs in line with the benefits of those costs. The average customer service experience is not what it should be because of simple mathematics: If customer purchases represent $X worth of value, then costs need to be something less than $X. If the costs are fairly divided between the customers who's purchases represent that $X worth of value, then the service will probably be considered exemplary (especially these days). Split that service quality to account for what might be a majority, or a vast majority of cost going to serve customers of Amazon.com, and suddenly everyone is getting inferior service.

And I'm not saying that Best Buy doesn't screw up or isn't making fundamental mistakes with its service systems. What I'm saying is that even if they're doing it perfectly, the deck is stacked against their providing good service.

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Originally Posted by BigMoneyJim Retail isn't about distribution efficiency.

This is a good point, and really the only way out for any seller who wants to go the B&M route: You need to create an experience - a purchasing experience - that customers will value more highly than the product they're buying alone. Those are great words, and they look slick on paper screen, but think about what they mean: It means that the way to succeed in a B&M model is to charge customers for more than just the product. It means you need to get them to be willing to pay you what they're willing to pay Amazon.com for the product - call that your loss-leader, because you as a B&M store cannot compete with Amazon.com's lower overhead costs - and willing to pay you extra for the overall experience of purchasing. And not just a little extra, but so much extra that that extra amount covers your loss on selling the product itself, covers the cost of providing the special experience, and provides you some profit. That's a tall order.

It is basically retail "first class". And while first class airline travel is a major component of airline business models, most of us still cram ourselves in the back of the airplane to save money. We cannot complain that the folks sitting up-front get a better experience than we get - after all, they're paying more for it. And carrying this back to retail, so many of us are as fixated on getting the lowest price (best value) for what we're buying as we are on getting the lowest airfare that we don't allow ourselves to put a price on the service we get, on how liberal the terms and conditions are, on how superior the showroom buying experience may be (and the latter perhaps only because we know, right now, we can enjoy that benefit without paying for it).

The other way folks get to sit up-front in the airplane is by demonstrating a willingness to put aside rabid price fixation enough in the past to show brand loyalty. That willingness to pay a bit more is important and something we Americans (at least) are generally unwilling to do, at least not in sufficient numbers to turn the tide against the race to the bottom. Airlines even have their own version of this "showrooming" problem - customers who are so fixated on price that $10 one way or the other will make a difference to them. As a result, some even have stopped providing credit toward elite frequent flyer status for super-low fares. We consumers talk a good game about service quality, but we really don't, collectively, put our money where our mouth is.

It's not unheard-of, though: Apple is the exception that proves the rule, in many respects. My cousin is a rabid Apple fan. I think he met his new wife because of the rabid fandom that Apple fosters. But sit an Apple laptop next to a Lenovo laptop, and put them through functional testing and usability testing, with folks who aren't affected by Apple's snow-job marketing, and Apple is unequivocally "over-priced".

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Originally Posted by BigMoneyJim More BnMs will fall on their face, but I can't imagine not having a physical showroom for many items; somebody will figure it out, and it probably won't be an engineer.

I'm interdisciplinary. I spent a career on the business side of things, learning how literally hundreds of companies balance customer behaviors with profits and possibilities, and then when the insane travel got to be too much for me, gave it all up to be a software engineer. One thing I learned from both my careers is that there actually are unsolvable problems. We like to poke the troops with the faux-inspirational "nothing is unsolvable" mythos, but that's actually only true when you leave most of the variables free to vary. When you define boundaries on all the significant variables (money, time, and quality) you can easily craft problems for which there is no solution whatsoever.

And like it or not, as a business manager you can set goals and objectives all you want but if you constrain all the variables, what's going to happen is that the variables you actually can directly control (i.e., in the triad above, money and time) will be respected, at the expense of the variable you actually cannot directly control (i.e., quality). In simple terms: Rush less accomplished staff and you get crap.

[Midpack]

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Originally Posted by BigMoneyJim Repeating myself, more bricks will fall, but somebody will figure out the magic combination of physical showrooms and profit. At some point a lack of physical stores would hurt online business.

That was the central point to me and the central question is do people who take advantage of BnM service/knowledge AND then buy online (all premeditated) realize they may be forced to buy everything sight unseen if they keep it up? Will they live to regret it? Frankly, I'm afraid they are and they will regret it...but it will be too late.

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Originally Posted by bicker And I'm not saying that Best Buy doesn't screw up or isn't making fundamental mistakes with its service systems. What I'm saying is that even if they're doing it perfectly, the deck is stacked against their providing good service.

Another central point IMO. Do folks who criticize BB (or other retailers) service realize they accelerate the demise of service by showrooming?

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Originally Posted by bicker This is a good point, and really the only way out for any seller who wants to go the B&M route: You need to create an experience - a purchasing experience - that customers will value more highly than the product they're buying alone. Those are great words, and they look slick on paper screen, but think about what they mean: It means that the way to succeed in a B&M model is to charge customers for more than just the product. It means you need to get them to be willing to pay you what they're willing to pay Amazon.com for the product - call that your loss-leader, because you as a B&M store cannot compete with Amazon.com's lower overhead costs - and willing to pay you extra for the overall experience of purchasing. And not just a little extra, but so much extra that that extra amount covers your loss on selling the product itself, covers the cost of providing the special experience, and provides you some profit. That's a tall order.

Once again the central interesting question IMO. I'm afraid most people are taking advantage of BnM retailers and will live to regret it. Charging a (justified) premium for service seems to be less and less viable, but I hope I am wrong. Apple & Nordstrom come to mind as exceptions, though Apple may be enjoying a fashionable status that won't endure. There have been lots of premium retailers who failed once the crowd moved on to the next fashion leader.

There's no answer, time will tell...

[bUU]

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Originally Posted by Midpack That was the central point to me and the central question is do people who take advantage of BnM service/knowledge AND then buy online (all premeditated) realize they may be forced to buy everything sight unseen if they keep it up? Will they live to regret it? Frankly, I'm afraid they are and they will regret it...but it will be too late.

I don't think that that reflects the actual calculus of those who are aware: There are a whole mess of "tricks, tips and techniques"-sharing out there -- whole websites devoted to it (and this website substantially so) -- and folks taking advantage of those resources generally consider themselves wise for doing so. "Let some other sucker pay full price - I'm going to use this arcane insight to pay less."

We hear many stories of how this drives the marketplace in a direction that will end up being arguably bad for all. Cut-rate airfare bargain-hunting has led to unbundling of fees, such as for checked baggage. "Sharing" CDs has led to annoying DRM on other types of digital media. Coupon commandos have been known to walk out of grocery stores with carts full to the brim, paying practically nothing - a perfectly legal exploit that nevertheless results in higher prices for those who don't capitalize as consistently on promotional discounts. Rental car companies have recently gotten much more stringent, dinging drivers for even the most trivial of damage, because so many drivers in the past would return cars with real damage that they didn't own up to. Universal Studios theme park now sells a special pass that lest you jump ahead of everyone else in line for a ride - what happens when everyone has one of those special passes? And so on...

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Originally Posted by Midpack I'm afraid most people are taking advantage of BnM retailers and will live to regret it.

I wonder, though, to what extent that's true.

First, some changes take time. My grandparents probably participated in common consumer behaviors that drove the marketplace in a certain direction, but the true negative ramifications of those changes weren't really felt until they had passed away. I'm sure we're all contributing to changes that will lead to negative (as well as positive) ramifications for our grandchildren.

Second, I doubt those "most people" you were talking about will put forth the effort to -- or even if they did, will be readily able to -- see the causal relationship between specific consumer behaviors they participated in and changes in the marketplace that they consider negative. I find many of the strongest advocates for the "tricks, tips, and techniques" I alluded to above are also the strongest apologists, denying accountability for the ramifications of what they promote. I know of no one who actively avoids engaging in all such exploitation of what's legally available for the taking. There are basically two groups of people: Those who don't care, and those who care but will do what's best for themselves in the short-run because the fact that so many other people do so would put them as an utterly unacceptable disadvantage if they did not participate as well.

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Originally Posted by Midpack Charging a (justified) premium for service seems to be less and less viable, but I hope I am wrong. Apple & Nordstrom come to mind as exceptions, though Apple may be enjoying a fashionable status that won't endure.

I was going to point that out, if you hadn't. You're not really paying extra for better service, but most of the premium is for the privilege of being able to put yourself into the mythology they've created. There is perhaps as much commonality between what you're buying between Apple and Disney or Dreamworks as between Apple and Samsung or Dell.

[Midpack]

Interesting, thanks for sharing. On this one...

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Originally Posted by bicker Second, I doubt those "most people" you were talking about will put forth the effort to -- or even if they did, will be readily able to -- see the causal relationship between specific consumer behaviors they participated in and changes in the marketplace that they consider negative. I find many of the strongest advocates for the "tricks, tips, and techniques" I alluded to above are also the strongest apologists, denying accountability for the ramifications of what they promote. I know of no one who actively avoids engaging in all such exploitation of what's legally available for the taking. There are basically two groups of people: Those who don't care, and those who care but will do what's best for themselves in the short-run because the fact that so many other people do so would put them as an utterly unacceptable disadvantage if they did not participate as well.

While the two groups have always existed, I think the balance has shifted dramatically, many more who "don't care" now IMO (which shifts the probability of what may happen). However, I've been predictably shouted down for that here before (by the same members each time), and I can't prove it to everyones satisfaction, so I won't argue. We agree to disagree where applicable...

[Midpack]

Interesting related article on the demise of BnM, not about showrooming specifically though...

The Death of the American Shopping Mall - Jobs & Economy - The Atlantic Cities

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A report from Co-Star observes that there are more than 200 malls with over 250,000 square feet that have vacancy rates of 35 percent or higher, a "clear marker for shopping center distress." These malls are becoming ghost towns. They are not viable now and will only get less so as online continues to steal retail sales from brick-and-mortar stores. Continued bankruptcies among historic mall anchors will increase the pressure on these marginal malls, as will store closures from retailers working to optimize their business. Hundreds of malls will soon need to be repurposed or demolished. Strong malls will stay strong for a while, as retailers are willing to pay for traffic and customers from failed malls seek offline alternatives, but even they stand in the path of the shift of retail spending from offline to online. This in turn creates further opportunity for online commerce. If I were thinking of starting a new retail brand right now, I would unquestionably start it online. And many very talented entrepreneurs are doing just this. I personally shop at Bonobos for pants, J.Hilburn for sweaters, Ledbury for shirts and Warby Parker for eyeglasses. All of these brands design and source their own goods. They historically would have started in the mall but they now are starting online, a trend that will undoubtedly continue. There clearly will be fewer new offline retailers to take the space vacated by the disappearing brick-and-mortar chains, further pressuring malls. And in an ironic turn, many of these online brands are experimenting with offline stores—but typically with some important twists. Bonobos and Warby Parker have built showrooms in their New York offices where consumers can come in and try on samples. But if the consumer wants to purchase items, then the companies fulfill the product from their warehouses—they don’t stock inventory in their "stores."

[bUU]

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Originally Posted by Midpack Interesting, thanks for sharing. On this one... While the two groups have always existed, I think the balance has shifted dramatically, many more who "don't care" now IMO (which shifts the probability of what may happen). However, I've been predictably shouted down for that here before (by the same members each time), and I can't prove it to everyones satisfaction, so I won't argue. We agree to disagree where applicable...

Throughout the 20th century, the US was still expanding its exploitation of its military and economic power worldwide to grow our nation's aggregate standard of living. We've grown up a bit, I think -- I doubt the US would explode nuclear weapons over two heavily-populated cities to end a war, these days, as we did in the last century. And the rest of the world has grown up a bit -- learning from us how to build power for themselves. I doubt that the world as a whole, today, would sit back and take what they took from us in the last century, as they were forced to, then, because there really was no way to pull together enough power to hold the US to account for -- really, anything, back then.

I'm not necessarily criticizing what we did or how we did it, back then (or if I am, it's not relevant to what we're talking about here), but rather pointing out that things have changed in the world and so that portion of our aggregate standard of living attributable to the manner in which we exploited military and economic power in the last century will naturally be going away. We can replace some of what we will invariably lose, from not exploiting the rest of the world as much as we have in the past, with innovation (green energy perhaps), but we've always had all three things working in our favor, full-throttle on all three. Now we're full-throttle on innovation (let's hope) and using power in a more measured and conscientious manner.

So how is this relevant? It comes down to pressure. Imagine you're on a roller coaster. The ascendancy of US power is like zooming down that first hill on a roller coaster. The more recent moderation of US power by both conscientiousness on our part and other nations learning from us how to gain power for themselves - that's like hitting that first uphill after the first downhill on a roller coaster. Guess where we are. After fifty-five years of experiencing the euphoria of the veritable weightlessness of relative prosperity in the nation, we hit the button of the downhill (1987) and now we're going to have to get that momentum up to get over this next uphill.

People figuratively "feel" that pressure. They feel it in many ways. We recognize it when we admit that our children may be the first generation less well-off than their parents. We probably don't like to think about the fact that much of that is because we've mortgaged their future so much. But regardless, we feel the pressure. And it drives our behaviors. That pressure motivates many people to cut corners that perhaps they wouldn't have cut in the 1950s - to be less community-minded and less kind to neighbors than they would have been in the mid-1990s, even. We're still climbing up that next uphill, and most of us don't even recognize that the downhill fun is already over, much less recognize that there is the necessary "pain" of the uphill to contend with.

[FinanceDude]

Best Buy is floundering, yet an upstart chain like HH Gregg is booming, can't open stores fast enough. Wide aisles, plenty of help, limited inventory, yet they make it work. You can't buy video games or movies or stuff like that there, because there is no margin in it. I predict as Best Buy closes stores, HH Gregg will take them over. Best Buy is doing the same thing Boston Chicken did many years ago, expand when times are good and hope times stay good...........

I make almost all my purchases of major electronics online. Amazon is killing Best Buy. While it is true that WalMart and others do not stock the good stuff that Best Buy does, WalMart's online has almost anything you would want. I bout DW an Ipod 4 touch for X-mas, WalMart's price killed everyone else.........

[bUU]

For what it's worth, though, HGG isn't necessarily doing that much better than BBY, and HGG has its own internal problems. According to Forbes, HGG posted declining sales for the six months ended September 30, and posted a loss of nearly $2 million. They are growing by making less money in more and more stores, incurring higher and higher costs to make less and less profit.

However, fair notice: My ability to qualitatively compare financial statements and other analysis of individual companies is somewhat limited.