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Smartphones leveled the playing field, and now retail prices are being leveled offline and online

2/19/2013

 
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Before the ubiquity of smartphones, retailers had the advantage over consumers.  It was nearly impossible for consumers to compare prices in real time between offline and online retail channels.  The smartphone leveled the playing field for consumers.  Not surprisingly, prices are being leveled in the process.  All else being equal, consumers want to pay less than more.   Duh! Consumers, with the new found power in the palm of their hands, understandably took to showrooming to make sure they were getting the best price/deal. 

Showrooming is when a consumer checks out a product in a physical store then goes online to make the purchase.  Showrooming impacts some retailers more than others.  E.g. Customers showroom electronics more than any other product category.

Where digital is integrated in the real world, there is only going to be one price (adjusted for shipping and handling, warranty, etc) for both offline and online retail channels.  Retailers would be wise to use their pricing strategy to encourage consumers to visit their physical store, their online store, or both, and purchase via whichever makes them most comfortable.  With pricing leveled, retail success will be driven by service and selection.

Best Buy recently launched a new initiative "to price match the current pre-tax price for new, identical, immediately available products from local retail competitors and select designated major online retailers at the time of purchase only. (No subsequent price matching of competitors is allowed).  If Best Buy lowers a price on a product (online or in-store) we will allow price-matching up to 15 days following the original purchase."

With pricing leveled, Best Buy will have to compete on service and selection.  

Must Haves for Customer Service Differentiation:
  • Seamless integration between offline and online
  • Knowledgeable and supportive retail experience whether offline or online with no forced upselling
  • Ability to purchase online in-store if out of stock in-store
  • Do the homework for consumers and make it easy for consumers to self-educate themselves on why your price is  the best value for the product including delivery and warranty

Must Haves For Product Selection Differentiation:
  • Exclusivity, even if only for a lead period
  • If a mass market retailer, wide selection across styles and price points
  • If a niche market retailer, unique selection at price points relevant to target consumers
  • Latest models

Source: "Best Buy Says It Has Killed 'Showrooming' For Good", Business Insider, February 18, 2013
http://www.businessinsider.com/best-buy-new-price-matching-policy-2013-2

CKB Solutions is all about real solutions for the real world.  To learn how we can help your business, contact Greg Kovacic in Hong Kong.



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    Author

    Greg Kovacic is a Director with CKB Solutions in Hong Kong. He advises senior executives and entrepreneurs on strategy, corporate finance, operations and marketing with a focus on crafting real solutions for the real world.  
    You can contact Greg at: greg@ckbsolutions.com

    View my profile on LinkedIn

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