Best Buy Achieves Price Parity With Amazon For First Time: SunTrust By Teresa Rivas

Best Buy (BBY) turned in an upbeat second-quarter earnings report, which has some analysts believing that the company can handle difficult comparisons through the end of the year.

One factor that might make it much easier to do so is the fact that it’s closed the pricing gap with main online rival Amazon (AMZN). That’s according to SunTrust Robinson Humphrey’s David Magee and his team, who write that recent price checks show that Best Buy “has essentially achieve pricing parity” with Amazon.

Magee and team write that this dovetails with Best Buy’s second quarter results, which demonstrated the retailer’s ability to take market share thanks to an improved competitive position.

From their note:

Subsequently, we conducted a series of price checks (accessories as well as larger ticket items) between Best Buy and Amazon…over a basket of 50 items. In the past, we’ve seen a gradual tightening of the spread between the two retailers. This time, the basket totals were essentially at parity.

This is important given BBY’s other advantages: the retailer’s upgraded customer experience with better trained sales personnel and an increasing number of vendor shops, as well the ability to test and easily return products.

Moreover, Magee writes, Best Buy and peers are benefiting from secular tailwinds. A stronger housing market is providing a positive backdrop while the prices of ultra-high definition televisions has come down enough to appeal to the mass market and wearables are becoming more popular.