How Can Best Buy Thrive in The New Digital World?

 The Writing is on the Wall.

My wife is planning a family trip with her sisters and parents, back to Poland where they grew up (her family immigrated to America when she was twelve years old). So last night we went to the Best Buy in Chino Hills, CA (near where we live) to look for a European electrical transformer and plug set. On the way in I noticed a sign stating that Best Buy was moving. Naturally I was disappointed so I inquired with the Manager.

Best BuyThe Manager’s answer struck me as a bellwether about the future of retail. He said, “Well, a small part of it is financial, but we’re moving to the new location because we want to make our stores more e-commerce friendly. We’re going to have places where people can sit and shop online. This location just doesn’t allow us to get that set up.”

WHAM! That was the confirmation I needed and sealed an opinion that’s been forming in my head for a long time. Retail is not changing; it has changed.

Retailers have been concerned about “showrooming” for a long time now. A search for “showrooming” at Google turns up articles at every major retail and business trade magazine. Showrooming is a hot topic at every retail trade conference around the country.

What is Showrooming?

Showrooming is the (already well adopted) practice of consumers going to the store to touch and feel products they are interested in and then going home to buy them online for a lower price (or buying them right from their smartphones). Brick and mortar retailers are rightly concerned. Before last Christmas, Comscore reported that over 40% of mobile phone users had smartphones and Internet access in their pockets. Since then, mobile Internet access (via smartphones) has pushed over 50%. The most important sector of affluent buyers now can shop the world right from your showroom!

The Good (News), The Bad, The Ugly (Solutions)…

The good news is that this particular Best Buy is moving closer to where I live. I was happy to hear that. Sadly, the good news ended there.

The bad and ugly news is that as I prepared for this article I found an article indicating that Best Buy may be going about this in completely the wrong way (by the way, I like Best Buy and want to see them succeed). I read a Forbes article that suggested that Best Buy may be training employees to discourage the practice of showrooming; approaching clients that they suspect of doing it. The article contained a reference to anti-showroom lasers that could thwart handheld scanners. I was aghast at reading this and I pray that Best Buy management isn’t considering any of these terrible strategies. I’d never come back if an employee tried to hassle me about using my phone. I’d be even more angry at a policy of jamming my equipment in any way. Showrooming is a Tsunami force that can’t be stopped with a small beach fort.

But there is another Tsunami force that can make the difference if used properly. This is the same force that all retailers need; an approach that endears customers to your company and your brand. You still have to compete on price. You still have to have good customer service and informed employees. Best Buy has those things…

And The Correct (Solution)

What they don’t have and what will make the difference is a properly-executed marketing automation process. When was the last time that an employee from a retailer called you or emailed you after a visit. I can’t remember it happening. They may care but they’re not trained to care beyond the borders of their store. They’re also not paid enough to care. But paying employees more is not the answer. Putting best marketing automation practices in place is the answer. Good marketing automation does not require employees to do anything more than encourage store visitors to take advantage of promos that capture an email address and phone number while they’re in the store. The rest can be automated and done very well with today’s tools.

Here are a few steps that Best Buy can take to get this initiative right.

1.) Start Capturing Visitor Data Online And In Your Stores. With over 1000 U.S. stores you likely get a million walk-ins per day. What percent of those walk-ins are leaving their contact information (at least an email address) with your company to follow up on? You’ve got a sieve to fix.

2.) Do More Online. The fastest growing sector in retail is online. This is another Tsunami. You can’t stop it; just get better at it and use your brick and mortar presence as an advantage! In your annual report you state:

“Some of our competitors operate low cost operating structures and seek to compete for sales purely on price. In addition, in the U.S., Internet operators receive an exemption from collecting sales taxes for sales in certain states. We believe this advantage will continue to be eroded as sales tax rules are re-evaluated at both the state and federal level.”

Stop that!. You sell online too. There is no online advantage that you can’t capture. In fact, there is something that only a few top retailers are using properly and it is available to smart retailers like Best Buy too…

3.) Implement Marketing Automation For Both Your Physical And Online Sales Operations. Marketing automation is the one place where you can stake your claim for future success. It is not email spamming or high pressure sales. It is the modern practice of engaging clients on their frequencies and in their timing and keeping them smartly engaged through their entire process.

Properly implemented marketing automation is the key differentiator in successful retailing today. It’s the one area that is still not fully known nor exploited by every major retailer. Many retailers have signed up for MA, but very few know how to use it properly.

I hope Best Buy listens. They are one of my favorite stores in the world.

Reference Stories:

1.) Best Buy’s New Showrooming Defense Could Scare Off Legitimate Customers

In an effort to curtail a practice that threatens to destroy big box retailers, Best Buy (NYSE: BBY) has vowed to eliminate showrooming in all of its stores.

The company, which operates more than 1,000 retail locations in the United States, has been hit hard with declining sales, poor management, and a questionable credit rating. Best Buy attributes some of its losses…

Read the story… | Source: Forbes | Date posted: 9/15/2012

2.) comScore Reports December 2011 U.S. Mobile Subscriber Market Share

Smartphone Penetration Climbs Over 40 Percent during December Holiday Shopping Season

RESTON, VA, February 2, 2012 – comScore… released data from the comScore MobiLens service, reporting key trends in the U.S. mobile phone industry during the three month average period ending December 2011. The study showed that… 97.9 million people in the U.S. owned smartphones during the three months ending in December, representing 40 percent of all mobile subscribers…

Read the story… | Source: Comscore | Date posted: 9/15/2012

3.) E-retail spending to increase 62% by 2016

U.S. consumers will spend $327 billion online in 2016, Forrester Research says.

Online shoppers in the United States will spend $327 billion in 2016, up 45% from $226 billion this year and 62% from $202 billion in 2011, according to a projection released today by Forrester Research Inc. In 2016, e-retail will account for 9% of total retail sales, up from 7% in both 2012 and 2011, according to the report…

Read the story… | Source: Internet Retailer | Date posted: 9/15/2012

4.) Best Buy’s Annual Report

Read the report… | Source: Forbes | Date posted: 9/15/2012

I've been intrigued by the use of automation in marketing since 1996. I started this blog to write, discuss, and review programs, applications, and ideas with others. If you'd like to contribute articles, ideas, interviews, reviews, or a how-to about a product or program, please contact me. I can be reached at (951) 313-7200.

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