Case Study that what you do has consequences. This real-live shopping experience you're having here at Benjy's is help- ing you decide which TV to buy. And Can You if you order from Amazon, you're basically cheating us." She knew she sounded shrill. The couple looked as if they expected Win Back her next words to be "I'll get you, my pretties, and your little dog too!" Caught in the Middle Online Bertice wasn't accustomed to playing the Wicked Witch. Although she prided herself on her financial toughness, she was a Shoppers? natural mediator. Her even temper and evenhandedness had helped her succeed in her mostly male undergrad finance and MBA programs and then at a top-tier accounting firm, where A brick-and-mortar retailer searches for a response to "showrooming." she had become the sole African by Thales S. Teixeira and Sunil Gupta American partner. Bertice would soon be mediating among the board members of Benjy's B ertice Jenson couldn't believe figure out which TV you want to buy, as they discussed what she had just how shameless they were. Right you're going to order it from Amazon." seen in Oklahoma: "showrooming." in front of her in the Benjy's "Probably," the young man said Customers like the couple with the Thales S. Telxcelra superstore in Oklahoma City, a young "But this isn't Amazon's showroom," dog weren't unusual. More and more s an associate professor at couple pointed a smartphone at a said Bertice. "Benjy's doesn't display people were coming to Benjy's to Harvard Business Samsung 50-inch Ultra HD TV and these products and staff these stores look at products but then buying school. Sunll then used an app to find an online for the benefit of Amazon. We want them from online competitors whose Gupta Is the Edward W. price for it. They did the same for a you to buy from us." lack of a brick-and-mortar presence Carter Professor Sony and an LG LED model, as the They looked at her blankly. "Oh, enabled them to offer discount prices. of Business Munchkins from The Wizard of Oz you work here?" the woman asked. Research showed that 83% of people Administration Bertice wasn't dressed like the and the chair danced across all three screens. shopping for electronics and appli- of the General *Excuse me," Bertice said. "I see sales staff, and the couple had no ances were now practicing showroom- nuoweBevew what you're doing. Don't you think way of knowing that her father had ing. The chain's sales had nose-dived Program at Harvard Business that's kind of.unfair?" founded Benjy's and that she chaired as a result; the most recent quarterly School. The two shoppers looked at each the board of the $40 billion electron- loss was nearly $700 million. other as though this hadn't ics and appliance retailer. Bertice's father, Ben Jenson, and occurred to them. "We're only She was now making a the company's CEO, Stanley Farber, comparing prices," the young Benjy's routine drop-in visit to one knew that something had to be done, woman said, stroking of the chain's 2,000- but they didn't agree on what. Ben the terrier she was odd stores. But favored a two-pronged approach that cradling. Benjy's Benjy's that wasn't worth was already under way in a few stores: But the app- explaining make showrooming as difficult as it's Amazon's "Never mind," possible for customers, but if they did MATTIAS MACKLER right?" Bertice Benjy's Benjy's Benjy's Bertice said find a lower price online, then match asked. "Once you "Just be aware it, in keeping with the company'sCase Study 879219 3550 Teaching Notes traditional low-cost, high-volume Sunil Gupta and Thales S. Telelra teach cases about respect, I think we should scrap the ethos. The CEO wanted to pursue showrooming In their digital strategy and executive education a different strategy: He thought classes. Here Gupta shares some thoughts. defense and focus on a stronger of- fense. We need to be looking at what Benjy's should set itself apart from WHAT DREW YOU TO THIS STORY? the competition by emphasizing a I teach a case on Amazon and showrooming, but I more we can do for our customers- curated product mix, knowledgeable realized we should cover the topic from the perspective provide better service, knowledgeable of the brick-and-mortar retailer too. If technology is salespeople, exclusive products, and employees, and follow-up services. disrupting your business, what should you do? after-purchase support." After her visit to Oklahoma, Ben broke in: "But now you're Bertice flew to Atlanta, where the WHAT SUGGESTIONS DO STUDENTS MAKE? talking premium. Customers don't company had its headquarters, for a Match prices, use anti-showrooming tactics, improve want that from us. Our priority is regular board meeting. The first item customer service, ask manufacturers to create the biggest range of products at the on the agenda was how to address exclusive SKUs, focus on installation and repairs, lowest prices. That's the Benjy's showrooming, and she jumped right emphasize instant gratification. But there are problems promise. How can we make money in: "This is a serious problem for most with those approaches; this case highlights a few. by increasing our cost structure?" retailers, but particularly those of us WHAT LESSONS DO YOU HOPE TO TEACH? "Maybe it's time to change our in electronics. Amazon keeps making When the market changes, companies must reconsider promise," Farb said. He paged quickly it easier for shoppers to search for, how they create and capture value. Would consumers through the deck until he got to a slide find, and order a product online. We miss Best Buy if it disappeared? Yes, because many titled "The New Benjy's." Bertice was need to decide on a counterstrategy." like to see and touch products. Would manufacturers slightly miffed; Farb hadn't warned Farb, as everyone called the CEO, miss it? Those that don't have stores would. So Best her about this. But as ever, she kept had prepared a presentation. But the Buy is creating value. How do you capture it? Ask the her expression neutral. "I'll skip over projector was balky, and Ben took manufacturers to pay a fee for showcasing some of the lead-in, but here's a short advantage of the pause to share his report I had my team prepare," Farb own views. "It's obvious that we need off the products. There are consul- said. "As I see it, we can't beat Amazon to play both offense and defense. tants that specialize in this. The costs on range, and when we try to match Offense should include providing are relatively minor and well worth it. prices that are, on average, 8% lower more-aggressive discounts through I think this tactic is a no-brainer." than ours, we're in the red on most the Benjy's app and matching online Farb caught Bertice's eye and sales. But what if we shifted away prices. We also need to get more sup- signaled that the projector was now from big-box retail to a more boutique pliers to impose minimum advertised working. Realizing that prices on their online retailers so that she'd allowed her father to Benjy's there's a price floor for every product, dominate the conversation, online or off. she turned the floor over to "As for defense, it will be a process. the CEO. Some of the basic tactics, such as "As you all know," Farb altering our bar codes, are now moot, said, "I spent my early career because the newest price-comparison HBR's fictionalized in the hospitality industry, and one of experience? Fewer and smaller stores apps incorporate object-recognition case studies the reasons you hired me five years with fewer but better-motivated software. That means shoppers don't present dilemmas faced by leaders ago was to improve our customer ser- and better-trained employees-the even have to upload bar codes. All in real companies vice. That starts with respecting our baristas of electronics retail." they have to do is point a smartphone and offer guests and how they like to shop." Ben sputtered: "We're not running at a product." soludons from "The way they shop is killing us," cafes, Farb!" experts. This one There was murmuring around Is based on the Ben interjected. Bertice spoke up: "Let's hear him the table. Apparently this was news HBS Case Study Farb hesitated but continued: out, Dad." to some of the directors. 'Showrooming at Best Buy" (case "We have to acknowledge that the Farb gave her a grateful look. "TVs But there are ways to thwart no. 9-515-019). by world has changed. Showrooming is and laptops may seem like commodi- object-recognition software," Ben Thales Telxelra and a fact of modern life, and if shoppers ties that people will buy only at the continued. "We've begun creating dis- Elizabeth Anne sense that we're trying to stop them lowest prices, but so did coffee before Watkins, which play structures within the stores that s available at from doing it, they won't even walk Howard Schultz made Starbucks confuse the apps while still showing HER.org through our doors. So with all due destination. Why shouldn't Benjy's dothe same-sell only the highest-value it would also be useful to have more but people say they don't want to go products and educate customers detail on those countermeasures you through the hassle. Seems they just LED about them, instead of letting them mentioned. So let's table this discus- want to hear our spiel, try out the get overwhelmed in an uncurated sion for now and get through the products, and go online. And often OTHER retail landscape?" other items on our agenda. Farb can not to the Benjy's site." READING "You're naive, Farb," Ben said. send around his deck, with plenty of That was extremely discouraging. Learn more about "People will still showroom if they find supporting data, and we can all take "What spiel?" Bertice asked showrooming better deals online." some time to review the information. "Lately we've gotten a lot of train- "Facing Digital "We could still match prices," the if everyone is amenable, I'd like to ing, so we can tell you everything Disruption" CEO said. Sunil Gupta arrange a conference call next week you ever wanted to know about the Mint, June 10, 2015 "How could we afford that?" to discuss only this and decide on a sound system in the Sony Bravia TV, Bertice asked, keen to break up the course of action." for instance. We're full of information. "How Pinterest Puts People In back-and-forth between the two men. People tap into that, get educated- Stores" "I'm glad you asked," Farb said New Ways to Make Money and then go buy from Amazon." David Sevict and He paged ahead to a different slide. The next day, Bertice was in 'But I can't imagine everyone does Alexandra Samuel Harvard Business "You'll see we've done some modeling. Huntsville, Alabama, to join in the the showrooming thing," Bertice Review July-August 2013 Of course, fewer and smaller ribbon cutting for a redevelopment said. "Don't some of your customers stores would cost less to staff Benjy's project. Several big-box super- really appreciate your knowledge and "Make Customers Want to Buy and maintain. But I'd like us stores-including a Benjy's-had purchase from us as a result?" offline" to think more creatively too. been closed and replaced by a The employee laughed nervously. sohrab Vossoughi Before I was in hospitality, I worked mixed-use residential-retail com- "Honestly? I think service scares HBR.org June 23, 2014 for a supermarket chain. Do you know munity. Benjy's still had a presence people-especially people who are how those companies make money there, but a much smaller one. longtime Benjy's customers," she said. "Brick-and- Mortars (still) while cutting prices? By capitalizing "Welcome to Benjy's," a store "Scares them?" Bertice asked Can't Beat the on their position as sales platforms. employee said when Bertice walked "They assume good service equals Web on Price" They charge their suppliers fees for in. "Did you come here today looking higher prices. It's not true, but I've Rafi Mohammed HER.org promotions and access to prime shelf for something specific?" seen people turn around and walk out June 3. 2013 space. Everyone thinks Amazon is all- That was a nice touch-prob- when we try to engage them." powerful, but look behind the curtain ably Farb's doing. He was no doubt So customers weren't respond- and you'll find vulnerabilities. For piloting his ideas about more helpful ing to price matching, and they were one thing, it's a pretty poor marketing and attentive employees here in this being chased away by excellent platform. Benjy's is a great marketing smaller-store format. The previous service. All this put her in mind of Oz platform. If we curate the best and let evening she had gone over his and again. This time she didn't feel like the customers experience the products, her father's proposals, analyzing the Wicked Witch; she felt like Dorothy, why shouldn't suppliers support us?" business cases. Ben's plan seemed a thrown into an unfamiliar world. But There's no precedent for that in short-term but low-cost and poten- no ruby slippers were going to help electronics retail," Ben countered. tially effective solution. Farb's was her get back to the old predictability "It's a nonstarter. You'll ruin relation- more costly and risky but possibly of retail. She would have to figure out Tell us what you'd ships that we've spent decades build- much better in the long run. herself how to move forward. do. Go to HBR.org. ing. And you're talking about huge Instead of responding to the business-model changes that, even young woman's question, Bertice if we wanted to make them, would explained that she was in corpo- take months-maybe years!-to rate management at Benjy's. Then Should Benjy's fight implement. We need a solution now!" she asked about the showrooming the showroomers or Several board members nodded phenomenon. welcome them? in agreement. Bertice could sense the The woman's cheery expres- see the commentaries on the next page. tension building between Farb and sion faded. "Oh, yeah. That's a big her father. "Farb, you're proposing a problem. We've changed the displays pretty radical change, and it's a lot for to make showrooming harder. And us to digest," she said quickly. "Dad, Iwe've tried matching online prices, September 2015 Harvard Business Review 719