Dov Perew
11/19/2013
Marketing
Showrooming Impacts Best Buy
Richard Schulze and James Wheeler were the two original founders of “The Sound of Music”, now best known as Best Buy. The electronic store opened up in St. Paul, Minnesota sometime in 1966. Four years later, the store goes viral and ends up hitting the one millionth mark in annual revenues. Nine other stores are in the process of opening all around Minnesota. The name changed to “Best Buy Co.” in 1983 and opened its first superstore in Burnsville, Minnesota. Since 1983, the number of Best Buy’s started increasing. There are now approximately 2,900 retail locations worldwide. According to Felix Lowe, “As of 2008 Best Buy is the largest retailer of consumer electronics in the US and Canada, valued at around $20.5bn and with an annual revenue of $40bn, it sells electronic goods, home-office products, entertainment software, appliances and related services to a global market.” Best Buy was at their peak a few years ago but they do not seem to be doing too well right now.
Showrooming is when you enter a retail store (usually chain stores) and you go around viewing the merchandise and looking elsewhere (typically online) to purchase the same product but cheaper. Several online stores (amazon) are starting to offer lower prices than the actual retail store itself. These online stores are able to afford to lower their prices because they do not have to worry about any operating expenses such as rent, gas, electricity, AC, and much more. On top of that, buying the product at the retail store is risky because you don’t know how many other customers’ hands have examined it; it’s more wear and tear. So the consumer is thinking to himself “Why should I drive out of my way ...
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