Best Buy Makes Price Match Permanent to Win Back Clients

Best Buy Co. will make permanent its holiday price-matching policy to get shoppers to stop using its stores for scouting products they later buy online elsewhere.

The year-round policy, designed to end the practice known as “showrooming,” takes effect March 3, Matt Furman, a Best Buy spokesman, said today in a telephone interview. The electronics retailer also will reduce its merchandise return policy to 15 days from 30 days, he said.

Retailers such as Best Buy and Target Corp. are matching online prices as they seek to win back customers from e-commerce sites such as Amazon.com Inc. Price cuts and matching led Best Buy to post holiday sales that were unchanged from a year earlier and exceeded analysts’ estimates.

“They don’t want to lose more market share to online retailers,” Erik Gordon, a business and law professor at the University of Michigan in Ann Arbor, said today by e-mail.

Best Buy climbed 7.4 percent to $16.87 at the close in New York. The shares have risen 42 percent this year, following three straight years of declines.

The Richfield, Minnesota-based retailer is scheduled to report fiscal fourth-quarter results Feb. 28, when investors will see whether holiday discounts and price matching hurt profitability.

The end of February is also the deadline for Richard Schulze, Best Buy’s founder, to make an offer to buy the retailer. In August, Schulze, the retailer’s former chairman, proposed offering $24 to $26 a share for Best Buy.

15 Days

The permanent price match has been expanded to cover almost all categories of merchandise, including accessories such as smartphone chargers, Furman said. It doesn’t cover phones purchased under contract.

“We are going to a low-price guarantee,” Furman said. “There is no doubt that this new policy ends showrooming for Best Buy customers.”

Best Buy narrowed its window for returning merchandise to 15 days to coincide with its policy that allows customers to claim lower prices on items they’ve purchased in the retailer’s stores and online, Furman said. Customers have 15 days to take advantage of such lower prices.

Best Buy is continuing its policy of not charging restocking fees on returns, Furman said. He wouldn’t discuss how the move may affect profitability.

“If their sales are OK, they can claim that cost-cutting measures will make up for the gross margin contraction,” Gordon said.

Sales at U.S. stores open at least 14 months were unchanged in the nine weeks ended Jan. 5, Best Buy said Jan. 11. Global comparable sales fell 1.4 percent, less than the 2 percent decline projected by analysts Mike Baker at Deutsche Bank AG and Scott Tilghman of B. Riley & Co.

Target, the second-largest U.S. discount retailer, last month made permanent its holiday policy to match prices charged by the e-commerce sites of Best Buy, Amazon, Wal-Mart Stores Inc. and Toys “R” Us Inc. Target stores will also match the prices of goods found on its own website, the Minneapolis-based company said in a statement.

To contact the reporter on this story: Chris Burritt in Greensboro at cburritt@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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