Walmart vs Best Buy: Rice Studies Why Walmart's Kicking Butt

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Best Buy might become the next Blockbuster, Rice researchers say
Walmart is going to kick Best Buy's ass this holiday shopping season, and researchers at Rice say they know why.

And the stunning answer is.....prices.

Though they maintained equivalent levels of overall customer satisfaction (72 percent are satisfied with Wal-Mart and 73 percent with Best Buy), 80 percent of customers were satisfied with Wal-Mart prices and only 49 percent were satisfied with Best Buy prices.

Amazingly, those annoying Best Buy commercials with elves working Christmas and complaining about a "slushy economy" were not cited by respondents.

"Our consumer models show that pricing, product and staff satisfaction are the key drivers of overall customer satisfaction, which is the key driver of people's buying," said Rice marketing professor Vikas Mittal. "Best Buy excels in areas that, in this economy, just aren't driving overall customer satisfaction."

For instance, he says, people like the knowledgeable staff at Best Buy -- so much that they go there for information, then head online or to Walmart to buy.

"Best Buy gets stuck footing the bill for consumer-information search for the entire industry by providing product demonstrations and a knowledgeable sales staff," Mittal said. "It seems they're a victim of their success -- because of the product variety and knowledgeable sales staff customers use them during the information search phase. However, when it comes to actual purchase, they may seek out Walmart, which may be perceived as having better prices. In the current economic environment, it is not surprising that price-sensitive customers are purchasing at Walmart and Amazon, even
though they are using Best Buy's extensive sales system for information search."

The Rice researchers said that if Best Buy wanted to avoid becoming "the next Blockbuster," it should focus "on more high-end and premium brands, excelling in services such as product installation, technical help and after-sale services."

And get rid of those damn commercials.


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