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  (Source: Disney)
Best Buy is in a tailspin and looking for a new leader

The body blows just keep coming for “big box” retailer Best Buy. The brick and mortar electronics retail giant has outlived competitors like Circuit City, but has faced increasing pressure from companies like Walmart, Sam’s Club, and Costco which have greatly expanded their electronics offerings in recent years. In addition, Best Buy has been experiencing tremendous pricing pressure from online giant Amazon.
 
In late March, Best Buy announced that it would close 50 of its roughly 1,100 retail stores in an effort to save $800 million. In addition to the workers displaced by the store closures, Best Buy also announced that it would eliminate 400 "corporate" and "support" workers.
 
 
Today, we learned that the number of people getting the axe has increased by one. Best Buy CEO Brian Dunn announced his “resignation” today. In this case, resignation most definitely means that Dunn was pushed out due to the company’s poor performance (the company has lost roughly half of its value in the past two years).

For its part, in a statement, Best Buy concluded, “There was mutual agreement that it was time for new leadership to address the challenges that face the company.”
 
“I have enjoyed every one of my 28 years with this company, and I leave it today in position for a strong future. I am proud of my fellow employees and I wish them the best,” added Dunn.

Dunn's career started at Best Buy in 1985 as a sales associate and he worked his way up the corporate ladder over the years. Dunn has served as Best Buy's CEO since June 2009.


Former Best Buy CEO Brian Dunn [Source: Marketwatch]
 
The search is on for a permanent CEO, but in the mean time, Director G. Mike Mikan has been named as interim CEO. “The Best Buy team and I will be extremely focused on successfully managing this period of transition. I want to assure our employees, customers and other key stakeholders that we will work together to achieve our company’s growth and profitability goals,” stated Mikan.

A large portion of Best Buy stores are dedicated to physical media that is being ushered out and replaced by streaming/downloadable digital content. In addition, many of the digital convergence devices that Best Buy sells (smartphones, tablets, etc.) are being used by consumers to find much better deals on products online.
 
For many tech nerds (and the general populous), Best Buy has been “reduced” to simply being the physical showroom for online retailers like Amazon and Newegg.

Updated @ 6:16pm
While the miserable financial performance of Best Buy over the past year would be reason enough for Brian Dunn to get the boot, the Wall Street Journal reports that some other unsavory details are behind the resignation. The company released the following statement:

Certain issues were brought to the board's attention regarding Mr. Dunn's personal conduct, unrelated to the company's operations or financial controls, and an audit committee investigation was initiated. Prior to the completion of the investigation, Mr. Dunn chose to resign.

Sources: Best Buy, Wall Street Journal



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This isn't a Best Buy problem
By Reclaimer77 on 4/10/2012 2:54:35 PM , Rating: 5
It's a national economic one.

Roughly 70% of the US economy is consumer spending based. Unemployment, inflation, fuel and food price spikes etc etc, these are all leading to one conclusion: The 70% of our economy that depends on people going out and spending their money on consumer goods and services are in for very rough seas.

Everyone knows where I stand politically and economically, we don't even need to go there. Suffice to say, if things remain the same, Best Buy will be the least of our worries. They will be but one of the many casualties to come.




RE: This isn't a Best Buy problem
By Arsynic on 4/10/12, Rating: 0
RE: This isn't a Best Buy problem
By Dr of crap on 4/10/2012 3:49:38 PM , Rating: 5
No President or elected offical can control the price of oil! Period.
The fact that you think that's possible means you need to read up more on the subject.

And only those that think they can look like a fools, Ginrich & Bachman, when they say they can get gas down to $2. Like they could!

What they need to do is restrict oil futures trading and all prices will come down. But neither Dems or Reps are to BLAME for oil price. The govt in general for allowing open trading of oil futures is to blame!


RE: This isn't a Best Buy problem
By StevoLincolnite on 4/10/2012 4:09:18 PM , Rating: 2
I'm not sure about the U.S, but here in Australia petrol has some fairly heavy tax.
Sure the governments can't control the price of petrol... But they sure can reduce it by reducing the taxes on it.


RE: This isn't a Best Buy problem
By zephyrprime on 4/11/2012 5:58:43 PM , Rating: 2
The taxes on petro are far lower in the US than most all other first world nations.


By StevoLincolnite on 4/12/2012 1:45:29 AM , Rating: 2
The US Petrol/Gasoline taxes is 48.1 cents per gallon or 12.71 cents a liter.

That's a fair amount of movement the US government can do on the prices.

Yes, it may be lower, but that's not to say it can't be lower than what it is now.


RE: This isn't a Best Buy problem
By Iaiken on 4/10/2012 4:14:53 PM , Rating: 5
quote:
The govt in general for allowing open trading of oil futures is to blame!


The problem with derivatives/futures is that now the cat is out of the bag, you can't put it back in. The easiest fix is to restrict large companies from trading futures on margin. The average oil/gas future paper contract passes through 28 owners before maturity. Meanwhile the physical commodity is still only going through the same 4 hands it used to procurement -> refinement -> retailer -> consumer. That means that beyond procurement and refinement, 26 of the contract holders do nothing but add to the cost of fuel in the vain hope of making money on margin.


RE: This isn't a Best Buy problem
By Reclaimer77 on 4/10/12, Rating: 0
RE: This isn't a Best Buy problem
By tayb on 4/10/2012 5:14:51 PM , Rating: 2
How do the traditional laws of supply and demand account for the highly unusual price fluctuations in the market? If you are to believe that article then demand is NOT slowing down and has been outstripping supply since 2006. How, then, do prices go from $2 to $4 back to $2 and then back to $4 in the span of a few years?? Supply and demand would dictate prices go up up up and up until demand starts to decline, but the article states that hasn't happened.

Speculation, as even that article mentions, is the likely culprit for such huge swings in price. Speculators buying and holding oil contracts like they would hold a stock represents a departure from traditional supply and demand. And if it isn't hurting the oil market, why the big stink about stopping it?

quote:
In fact, global demand for oil products has surpassed supply in every quarter since the fourth quarter of 2006, according to the U.S. Energy Information Administration.


quote:
Even analysts who concede the laws of supply and demand are the most significant say that speculation can make price swings more volatile - and that's what's going on now, they say. "The fundamentals have been fairly firm, but speculation exacerbates the trends," said Tom Kloza, chief oil analyst with the Oil Price Information Service. "More and more money is going into buy-and-hold contracts that simply buy and roll into the next month."


RE: This isn't a Best Buy problem
By Reclaimer77 on 4/10/2012 5:31:28 PM , Rating: 2
Interesting that you ignore the IEA conclusions and only lend credibility to the writers counterpoint. Which reads more like an opinion than any backed up analysis. The article is just one source, I could find tons more, but it's pretty clear that the IEA - someone who knows more about this than you or I ever will - isn't blaming speculators.

Point still stands, exclusively blaming speculators and futures trading for increasing fuel prices is incorrect. There are lots of factors at work here, but conveniently ignoring others while blaming (yet again) the free market is typical.

quote:
And if it isn't hurting the oil market, why the big stink about stopping it?


You cannot be this naive. The "big stink" is partisan politics and Washington ass-covering, as usual. The current Administrations game plan, whenever anything threatens to make them look bad, goes something like this:

1. Try blaming Bush
2. Try blaming the banks
3. Try blaming the "rich"
4. Try blaming the CEO's
5. Try blaming the investors
6. Try blaming the Republicans
7. Blame the Supreme Court (Obama's newest tactic apparently)


RE: This isn't a Best Buy problem
By tayb on 4/10/2012 6:15:30 PM , Rating: 2
You completely ignored almost the entirety of my post.

The conclusion was "hey, this is what we think, but speculation still may be causing the wide shifts and a bunch of other people don't agree with us." You've latched on to just a PORTION of that and then ignored all of my questions pertaining to supply and demand, which is what the article stipulates is the real cause.


RE: This isn't a Best Buy problem
By Keeir on 4/10/2012 6:09:45 PM , Rating: 3
quote:
How do the traditional laws of supply and demand account for the highly unusual price fluctuations in the market?


Where do the "traditional" laws of supply and demand insist that market fluctuations should be smooth and gentle?

Market fluctuations is one of the main economic issues with free-market societies!

The "Traditional" laws of supply and demand would mean every new peice of information could drastically change the marketplace under certain senarios.

Both the Supply and the Demand for gasoline are relatively unflexible in the short run and seperate from each other. In such situations, small changes in news can make drastic price adjustments in the short run. Does speculation potentially make the problem worse? yes. Does speculation potentially make the problem better? yes. While I won't want to defend speculation, I doubt removing it will help that much... we might trade more stable prices for less stable supply.


RE: This isn't a Best Buy problem
By tayb on 4/10/2012 6:20:08 PM , Rating: 2
Market fluctuations occur when the typical rules of supply and demand are taking place. Namely, demand increases until prices get too high, prices fall, demands goes up, etc. This has not taken place in the oil market. Demand has increased every quarter for 6 straight years and EXCEEDED production. Please explain to me how prices plummet from $4/gallon to $2/gallon when there is no change in supply OR demand?


RE: This isn't a Best Buy problem
By Reclaimer77 on 4/10/2012 4:49:52 PM , Rating: 1
I love how suddenly oil futures trading is the catchall blame-all for oil prices. Can't be ANY of Obama's policies, nah. You know when gas was WAY cheaper there was oil futures trading as well, right?

Dr of crap, as usual, you have no knowledge of ANY subject you post about. Future trading, and speculation, is how the market sets the price for goods. You can pretend that "restricting" this system will lead to lower prices on goods, but that's nonsense.

It's really getting ridiculous how many scapegoats the Dems and Libs keep finding to explain why every one of their policies is failing. First it was prospectors, now it's oil futures or China's demand. Soon it will be the green men on Mars's fault.

Their ignorance of how markets work is breathtaking. When lawmakers blame speculators, you can be sure they’re covering for their own ineptitude. As economist Robert Murphy of the Institute for Energy Research wrote: “Blaming speculators for rising oil prices is like blaming thermometers for a heat wave.”


RE: This isn't a Best Buy problem
By tayb on 4/10/2012 5:20:12 PM , Rating: 2
Look at the 8 year chart here: http://gasbuddy.com/gb_retail_price_chart.aspx

That spike that you see there in middle? That's the end of the Bush Presidency.

You go ahead and keep blaming Obama for oil prices though and thinking that simple supply and demand can account for those outrageous fluctuations in prices. News flash, demand has increased every quarter for the past 6 years. Explain the drop in prices.


RE: This isn't a Best Buy problem
By Keeir on 4/10/2012 6:22:51 PM , Rating: 3
Well...

First off, Tayb, that chart also shows that during Obama's 3 years in office, he's presided over similiar drastic increase in oil prices... but without the economic growth of 2006 and 2007.

Second,
http://www.indexmundi.com/energy.aspx

Apparently worldwide consumption of oil fell from 2007-2009

http://www.indexmundi.com/energy.aspx?country=us&p...

US crude too... down by 2009 that site estimates crude use less than 1999 levels.

US gas prices also result from US gas consumption
http://www.calculatedriskblog.com/2010/03/dot-vehi...

WOW, a 5% reduction in miles driven over the first half of 2008

At the SAME time, mileage of the fleet increased, driving the demand down even further.

I am not sure how someone can not make the arguement that between 2007-2009 that the demand for Whole Wide Crude did not fall and the demand for US consumed gasoline did not fall. Or fail to see that in such a fixed industry that 5-10% unexpected demand changes can make.


RE: This isn't a Best Buy problem
By tayb on 4/10/2012 6:39:20 PM , Rating: 2
quote:
First off, Tayb, that chart also shows that during Obama's 3 years in office, he's presided over similiar drastic increase in oil prices... but without the economic growth of 2006 and 2007.


Or the economic meltdown of 2008 that led to the worst recession in 40 years and completely wiped out every bit of growth experienced in 2006/2007.

As to the rest of your points...

1. Either IEA or those figures are wrong. Not sure which.
2. Your data indicates that demand for crude has gone down along with consumption and driving mileage. Clearly supply and demand isn't effecting the price of oil. Demand is decreasing, supply is increasing, prices are rising. Please explain.


RE: This isn't a Best Buy problem
By Reclaimer77 on 4/10/2012 7:03:29 PM , Rating: 1
Nobody is addressing the real culprit of high gas prices, the destruction of the U.S. dollar, the currency in which gasoline is priced.

For that reason alone, I could easily blame this Administration for rising fuel prices. And I would love to see you refute that the dollar is hemorrhaging before our very eyes.

http://www.cnbc.com/id/20988001/

Notice how this was written back when Bush was in office. If we thought the dollar was weak then, we hadn't seen anything yet!

So when Republicans are in office, we acknowledge that economic policies impact fuel prices. When Obama is in office, it's the prospectors. Or the stock market. Or futures trading, the man on the moon, the Butterfly Effect, ANYTHING but the Government.


RE: This isn't a Best Buy problem
By Reclaimer77 on 4/10/2012 7:21:13 PM , Rating: 2
edit, should say "currency in which crude oil is priced"


RE: This isn't a Best Buy problem
By Dorkyman on 4/11/2012 1:29:55 PM , Rating: 2
Messiah's administration has TWICE decided to run the dollar printing presses full-tilt in order to flood the market with dollars. Oil is traditionally priced in dollars. Thus the price of oil keeps "rising" when viewed from a dollar standpoint.

The president is a disaster for this country. He has recently been pretty clear that he dreams of a socialist utopia and does what he can to drive that vision.


By Dr of crap on 4/11/2012 11:30:40 AM , Rating: 3
Recliamer77, once again you ignore what people post and only focus on one issue.

Maybe you don't know it all either.
Oil futures trading has been around for about 10 years now.
And if you go back 10 years ago we were paying under $2 for gas. So for many decades we were under $2, yet for the past 10 years we have more than doubled that cost.

Do your research. Speculators account for 80% of futures trading. Yes there needs to be speculation that HELPS the market, but when investment bankers are do the vast majority of the speculation, supply and demand don't matter.

The govt let this happen here, be it Dems or Reps. I blame them both, equally. The fact that you point out half of those groups tell me you aren't objective at all. No one political party is any better than another. They are all corrupt and do nothing to better the country.


By johnsmith9875 on 4/10/2012 5:16:01 PM , Rating: 3
Of course a president can influence the price of oil. War is a perfect excuse for investors collaborating to jack up the price on the markets. A warrior president who rattles sabers and invades nations is manipulating the price of oil.


RE: This isn't a Best Buy problem
By Nfarce on 4/10/2012 7:53:06 PM , Rating: 2
quote:
No President or elected offical can control the price of oil! Period.


That's not what Democrat voters said during the Bush years. But alas, there's their guy in the White House now, so no, it's not the president's fault. Nothing is, actually.


RE: This isn't a Best Buy problem
By Nfarce on 4/10/2012 8:00:40 PM , Rating: 2
Check out none other than Nancy Pelosi in July 2008, then House Speaker and #3 in line to the presidency on how bad it was for us, and Meals On Wheels (lol):

http://abclocal.go.com/kgo/story?section=news/loca...


By Reclaimer77 on 4/10/2012 5:05:14 PM , Rating: 4
quote:
Personally, I don't have any disposable income because it goes into my gas tank. I know millions of other people are in the same situation. In Best Buy's hey day, it took less than $20 to fill up your car. Hell, when I started college, I could fill my tank for $7. That was $28 a month. Now I'm spending close to $300. That's $3600 a year. Back in the day, at a console launch I would dump over $1,000 on a console, accessories and games. Can't afford to do that now.


This is the story of tens of millions of Americans. And combined, when they start spending less, it impacts our economy.

So far I haven't seen one single solution come out of Washington to help you and others that are in this situation. Aside from a $47,000 new car and a "let them eat cake" attitude that this is the "new normal", so just deal with it.


RE: This isn't a Best Buy problem
By maxxcool on 4/11/12, Rating: 0
RE: This isn't a Best Buy problem
By Dorkyman on 4/11/2012 1:32:56 PM , Rating: 2
Wow. The use of foul language really makes your comments hit home! You must really be smart!


RE: This isn't a Best Buy problem
By maxxcool on 4/11/2012 5:34:30 PM , Rating: 2
Thanks!


RE: This isn't a Best Buy problem
By Iaiken on 4/10/2012 3:58:06 PM , Rating: 3
quote:
It's a national economic one.


So you've either never been to Best Buy or you're just using this as an excuse to soapbox/doomsay. The retail game has fundamentally changed forever and their old winning strategy (everything under the sun under one roof) is now a losing one.

Consumer surveys in the US/Canada/EU have found that over 90% of consumers do extensive research online for all purchases over $50. Roughly half of those consumers researched purchases on a smart phone while standing in a store in front of the desired product. Further, consumers are looking at an average of 5 different products to compare features and an average 8 different sources to research pricing before making a decision.

A typical purchase now looks like this:

1. Consumer identifies the type of product they need/desire
2. Consumer researches various competing products (avg 5)
3. Consumer identifies which one they need/desire
4. Consumer searches competing retailers for price (avg 8)


RE: This isn't a Best Buy problem
By Keeir on 4/10/2012 4:02:09 PM , Rating: 2
quote:
Consumer surveys in the US/Canada/EU have found that over 90% of consumers do extensive research online for all purchases over $50.


Bull. Only ~75% of US citizens have ready internet access. (And only ~30% have Broadband access)

http://www.internetworldstats.com/am/us.htm

Best Buy's troubles start with poor fundamentals, but the low tide of the economy has hurt Best Buy significantly. Most of Best Buy's products are "luxury" products after all.


RE: This isn't a Best Buy problem
By Iaiken on 4/10/2012 4:29:45 PM , Rating: 2
Look, the Pew study sampled 1,059 retail consumers that made purchases over $50. The BIA/Kelsey studies sampled ~12,000 retail consumers that actually made purchases over $50. The Oracle study sampled ~6,000 consumers (regardless of making a purchase). Interestingly enough, all of their numbers are in the same ballpark (+/-3%).

Are there a lot of consumers that are not out there because of their economic situation? Sure! The problem is that the consumers that are still out there are shopping in a way that matches up consumer/commodity better than a Best Buy storefront can.


RE: This isn't a Best Buy problem
By Keeir on 4/10/2012 5:42:37 PM , Rating: 2
Please link to those studies, because there conclusions (as stated by you) do not make sense.

quote:
Consumer surveys in the US/Canada/EU have found that over 90% of consumers do extensive research online for all purchases over $50. Roughly half of those consumers researched purchases on a smart phone while standing in a store in front of the desired product. Further, consumers are looking at an average of 5 different products to compare features and an average 8 different sources to research pricing before making a decision.


Lets start at the top

A. In the US less than 90% of people have regular internet access. B. You imply 45% of consumers use smartphone IN stores. Yet in 2011, only 40% of the entire US mobile market was smartphones.
http://www.intomobile.com/2011/09/01/study-smartph...
And only 37% of consumers in the mobile sphere used a browser
http://www.comscore.com/Press_Events/Press_Release...

C. All purchases over 50 dollars in hi-lar-ous. I don't research 5 gas stations every time I need to buy a tankful (more than 50 dollars). Or grocery stores, where I do buy items more than 50 dollars at times (hey meat can get expensive).

Heck, as heavy internet user with a smartphone, I don't even research "ALL" my purchases over 50 dollars. I've bought multiple things in the past few months more than 50 dollars that I didn't research online... at all.

Those studies were either very poorly done or you didn't read them correctly. There is simply no way that 45% of US consumers use thier smartphone to compare prices in a store for ALL items above 50 dollars.


RE: This isn't a Best Buy problem
By anynigma on 4/12/2012 11:35:21 AM , Rating: 2
Lets start at the top:

"In the US less than 90% of people have regular internet access. B. You imply 45% of consumers use smartphone IN stores. Yet in 2011, only 40% of the entire US mobile market was smartphones."

His study cites RETAIL CONSUMERS. If you don't have regular internet access, and don't have a smartphone, your consumption is likely limited to food and toiletries, not retail big box items. If you can make a retail purchase greater than $50, you can afford a smartphone.

"All purchases over 50 dollars"

RETAIL Purchases.

"I don't even research "ALL" my purchases over 50 dollars."

Likely because you're intelligent enough to make enough money that the difference between $50 and $51 (like the difference between all purchases and all Retail purchases) doesn't matter to you, which is awesome, no sarcasm. People like you and me are good for the economy and keep Walmart from taking over.

Truly, no sarcasm (aside from in the parentheses :P).


RE: This isn't a Best Buy problem
By Reclaimer77 on 4/10/2012 4:36:55 PM , Rating: 3
quote:
The retail game has fundamentally changed forever and their old winning strategy (everything under the sun under one roof) is now a losing one.


In two years their net worth is halved because of online purchases? So in two years online retailers have seen a 50% increase in sales I suppose. Hmm let me look that up.

OOPS, wrong. For 2011 and the first quarter of 2012, online retailers reported less than expected sales. A lot of them posted losses. Do you even look this stuff up before you post?

If this was an isolated case you might have a point. But look at our entire economy! Again 70% of it depends on disposable income. Wages have been stagnant for years now, (true) unemployment numbers are shocking, the dollar is worth ever less and less, food and fuel prices rising. The interest rate is still low as hell, despite no significant growth in the housing market. And let's not even get into the inflationary response that's sure to come. Please, PLEASE show me one economic indicator that doesn't point to a consumer spending/confidence crisis!

The Consumer Confidence Index, maybe you've heard of it, is at it's lowest level since 2009. But yeah, that's just more of me standing on my soapbox and "doomsaying". Whatever, enjoy your willful ignorance.


RE: This isn't a Best Buy problem
By Iaiken on 4/10/2012 5:18:47 PM , Rating: 2
And yet Best Buys direct competitors in the online world are doing just fine...

I didn't say that consumer confidence wasn't at a four year low, I said that it wasn't the only thing to blame for the Best Buy failure. If anything, it has put the nail in the coffin of an outdated business model (everything under the sun under one roof).

Lastly, consumer confidence is outside of Best Buys control, but failing to compete online for the customers they CAN sell to is a lot more productive than hoping that the customers that can't afford to spend would come back to the market. You sell in the market environment you have, not the market you wish you had.


By Reclaimer77 on 4/10/2012 5:46:58 PM , Rating: 2
quote:
I didn't say that consumer confidence wasn't at a four year low, I said that it wasn't the only thing to blame for the Best Buy failure.


I don't recall saying it was the "only" thing to blame. What kind of all or nothing game are you playing here?

You spoke as if we had a roaring economy and Best Buy's "failed model", which was doing great just a few years ago, suddenly failed all on it's own. Don't try and backpedal now with an insincere acknowledgment of the CCI and economy. Your initial reaction was clearly to dismiss all other factors that don't jive with your leftist world view.


RE: This isn't a Best Buy problem
By Hakuryu on 4/10/2012 4:26:39 PM , Rating: 2
Wrong.

Circuit City closed about a block away from the BB in my area. Last year HHGreg took over the store (like BB but more appliance orientated).

HHGreg rarely has 1/4th of the cars BB has in their lots, but they are making money and hiring. This shows it is BB's problem; if it wasn't HHGreg would not be doing so well there.


By assemblage on 4/12/2012 9:53:08 AM , Rating: 2
That sounds like my town almost. HHGregg came in after CC closed and is across the street from Best Buy. It does ok. Their sales are different since they seem to work on a commission. At least they hover and follow a lot more than BB.

In my town, Best Buy's problems are their salespeople's lack technical knowledge, they overprice their periphials and service, poor warranty service, poor return policy, poor service in general. They just aren't trustworthy.

It's no different than buying online or wholesale club. I find the online buying experience to be vastly more enjoyable than Best Buy. In fact after being unable to return a Christmas present and leaving after 40 minutes in line and feeling ripped off and having a Christmas present ruined, I doubt I'll ever go into a Best Buy store again.

I could write a term paper on how Best Buy fails.


RE: This isn't a Best Buy problem
By tayb on 4/10/2012 5:04:05 PM , Rating: 2
Best Buy sells the same things Amazon and Newegg sell but neither of those companies are in dire straits. People don't have as much money for a multitude of reasons but those that do and are making smarter choices on where they spend it.

Just simply glancing at quarterly earnings reports for other consumer based companies shows that the sky is indeed not falling.


RE: This isn't a Best Buy problem
By mutatio on 4/10/2012 5:15:20 PM , Rating: 2
Yes, well, isn't this all reflective of, as you allude to, a country that has basically stopped making stuff to sell? Relative to other countries, our manufacturing is piss poor. So long as there is an extra penny to be made in having the work be done overseas I don't see how this can change. I'm not sure where you stand politically, but Solyndra, despite all its hype, is a case in point of what happens when a government does or does not get fully behind a given initiative. e.g., If the US floats $2 billion on the table for homegrown renewable energy initiatives and China responds with $30 billion (and the US basically responds with, "Meh."), guess whose solar products get sold en masse to whoever will buy them?


RE: This isn't a Best Buy problem
By anactoraaron on 4/10/2012 5:18:27 PM , Rating: 3
No, it's a Best Buy problem. It's their $2000 POS 3D TV's (Sony was their "premier" brand a few years ago and they don't even sell TVs anymore), their $150 HDMI cables, and their $5 more than walmart cd & dvd section.

This company has suffered from a severe identity crisis. Their name Best Buy doesn't accurately reflect the pricing in the store. Magnolia is just another word for "extremely overpriced items." What they were once known for years ago isn't what they want to do anymore. Don't even get me started on Geek Squad...

True it is as you say that consumers drive our economy but they dug their own grave by trying to maximize profits by increasing prices once Circuit City went under. People who never bought tv's etc. online were suddenly willing to do so to save $500. Their prices were just ridiculous. It was a best buy and a greed problem.


By assemblage on 4/12/2012 9:59:22 AM , Rating: 2
You're right. I had a brief stint at the Geek Squad in between better jobs. People would get soooo mad when they saw their bills. They'd come in needing their computer cleaned of the malware, and they'd get snookered in to the $280 deluxe package and they'd be livid about it. Or when the extended warranty took a month to fix because BB sent it back to the manufacturer or their regional fix it place.

With the cable, people trust the prices will be fair. When they realize they got ripped off for the cables, they won't want to buy from BB again.

They aren't trustworthy.


HA!
By Kurz on 4/10/2012 1:32:32 PM , Rating: 3
I just saw CNBC's Television Special on Best Buy Last week.
Lets start taking bets on how long Best Buy lasts.




RE: HA!
By Shig on 4/10/2012 1:45:17 PM , Rating: 4
TV's have become a commodity product, music is mainly digitally distributed, there aren't many PC games worth buying atm, and the ones that are you can download at your house. Appliances are cheaper and have better shipping options at places like Sears and ABT. As for console games, most people go to a gamestop type store, which is far cheaper to operate with a better selection. Plus the fact that a new console hasn't come out in ages hurts too.

As fuel prices continue to rise, big box store business models will continue to suffer and only the ultra efficient and massively vertically integrated will make it with razor thin margins.

And I won't miss the big box stores either.


RE: HA!
By MrBlastman on 4/10/2012 2:25:27 PM , Rating: 3
I admit I rarely go to Worst Buy, and when I do, I usually don't buy much or anything. Their prices are high (software) and their selection has been shrinking. I will though, miss them if they cease to exist as for certain items like monitors and televisions, I prefer to buy them locally as I can sample them on the showroom floor. I'm not one of the douchebags that go there to see what stuff is like, then try and find it online.

I don't though, buy stuff like that from Worst Buy, I typically go to Frys which is more Nerd friendly. I'll buy it there and if I have problems (I have in the past) I can swap it out or if I don't like the product I chose I can go swap it within thirty days for a different brand and try that one until I get what I like. You can't do that with online retailers at all unless you're despicable and swap items out til you find what you like and return even that.

quote:
there aren't many PC games worth buying atm


Sure there are. Stuff like Legend of Grimrock comes out this week. If you liked classics like Eye of the Beholder, Lands of Lore, Might and Magic etc., you should check it out. It's on sale for a 20% discount for another day or two on the publisher's website. I got it, but, it will have to wait until I finish playing through Might and Magic 4 and 5 (Worlds of Xeen). Such dumb games they were but, somehow, strangely addictive. Eye of the Beholder though, wasn't dumb at all.

Or, you can get free fan made games like Wing Commander Saga. It's A-List quality, for free. It just came out a few weeks ago, too. 8 Gig download--www.wcsaga.com .

The PC is alive and strong. :)


RE: HA!
By Reclaimer77 on 4/10/2012 6:15:21 PM , Rating: 2
You're pretty damn fortunate to have a Fry's nearby :( siiigh

I hope Best Buy sticks around because I need an emergency option. A place that I can go when I have to have something that I cannot wait to mail order online. Like a power supply blowing up or some headphones, whatever. Or god what if my wireless router failed? That would totally be a quick drive up the road to Best Buy.

I agree with you on pc games too. Why console kiddies proclaim the early demise of pc gaming, I do not know. Diablo III hits next month, finally. It will make billions of dollars or something, pc gaming is fine. And no, I will not digitally download that title. I will buy the collectors edition and do it justice :)


RE: HA!
By VahnTitrio on 4/10/2012 4:00:01 PM , Rating: 2
The easier way to some this up is that there is not a single item in their entire store where Best Buy is the best place to purchase it. I think Amazon, Sears, and Walmart alone cover every product and sell it for less. I mean why drive to Best Buy and load up a 50" TV and pay sales tax on top of the retail price when I can order online, pay no sales tax, and have it delivered to my door for free.


RE: HA!
By johnsmith9875 on 4/10/2012 5:16:56 PM , Rating: 2
I find it sad that even Wal-Mart gives a better shopping experience than Best Buy.


Who hasn't seen this coming?
By tayb on 4/10/2012 2:01:54 PM , Rating: 2
I worked for Best Buy 9 years ago and even then it was far cheaper to buy things online than it was to get them in the store. Who didn't see this? I said to my training manager half-joking half-serious that maybe Best Buy should sell groceries to get men into the store impulse buying. He laughed. I laughed. Maybe it would have been a good idea after all?

With 1,100 retail stores I don't know how Best Buy turns from the place where people go to look at things to the place where people go to buy things. They can continue to try and shift to an online offering but I don't know how they can compete with Amazon pricing without destroying the value of their retail stores. I can see a model where they downsize to much smaller stores and start to focus on smaller subsets of products but even that will be painful transition with lots and lots of layoffs.

Good luck. This country doesn't need more layoffs. Hope they figure it out.




RE: Who hasn't seen this coming?
By Keeir on 4/10/2012 2:38:22 PM , Rating: 2
What Best Buy management and investors need to understand is that it will be a long road down any path...

The dawn of the big box stores occurred because they could provide superior pricing and selection compared Radio Shack, etc. Now clearly, the internet has destroyed those advantages.

There must be some advantages to BM stores that BBY should be able to leverage into some kind of business model. Premium consulting, try before you buy, etc. If they are going to save thier retail stores, they need to stop competing on price and selection.

Maybe cut down the breath of offerings (who goes to best buy for an electric shaver or desk chair?), cut down the floor space while focusing on shopper experience. Heck, keep the inventory in a warehouse for next day delivery while operating local return areas. I know the only reason I would ever go to best buy is if my computer was broken. Even if I have NOTHING to do, I would rather sit in my car listening to the radio than browsing their store... thats a problem I think if you can't lure me in with prices.

Changing the focus will take time... I don't know if every party can be that patient.


RE: Who hasn't seen this coming?
By Dr of crap on 4/10/2012 3:43:52 PM , Rating: 2
If your PC was boken - don't go to the Geek Squad.
It is over priced at best.


RE: Who hasn't seen this coming?
By Keeir on 4/10/2012 3:57:35 PM , Rating: 2
Hahah, no no. I mean if my PC was broken so I couldn't buy directly from NewEgg, I might see if I could get some base components to fix it at Best Buy. They still sell things like graphics cards, ram, networking cards, etc right? (I don't know, its been years since I went to a store)


RE: Who hasn't seen this coming?
By Mitch101 on 4/10/2012 4:19:15 PM , Rating: 2
I think the stock value is a representation of how customer service treats you when you have a problem with a product. Especially Best Buy's return policy. Treat everyone like a criminal trying to one over you and you'll just go elsewhere. Plus the smalls are overpriced - Cables anyone?

While Ive had a problem with products from online stores. NewEgg Ive never had an issue with returning an Item to NewEgg sight unseen. My friend who got a HDTV from Paul's TV through amazon took back a cracked screen HDTV at no cost to ship back. Online places that have quality return policies make waiting a few days worth it.


RE: Who hasn't seen this coming?
By jeepga on 4/10/2012 3:27:47 PM , Rating: 2
It's not just the retail stores that are going to lose. Other local businesses like restaurants will be in danger by losing the foot traffic that retailers generate. Communities need to work together. I could see one example incentive being a restaurant that offers a discount partially subsidized when the customer presents proof of purchase from the retailer.


Not so sure...
By HoosierEngineer5 on 4/10/2012 2:52:49 PM , Rating: 2
There is a small regional chain in my area (brick and morter) that is across the street from Best Buy. Not only do their prices and customer service blow them out of the water, they can often come very close to on-line prices (especially when shipping is added), or even beat them.

I suspect Best Buy just marks their prices up too much
- there, I said it.




RE: Not so sure...
By Arsynic on 4/10/2012 3:30:34 PM , Rating: 1
Suspect? You sir, are correct. A 6ft USB cable for $30? A network cable for $20? I literally can go to New Egg or Amazon and get it for half the price with shipping included. No, taxes have jack and shit to do with anything. I don't care about taxes, I'll pay it. It's the fact that I'm being charged out the ass at Bust Buy's B&Ms and even online.


RE: Not so sure...
By Brandon Hill (blog) on 4/10/2012 3:34:36 PM , Rating: 2
Not even half. My local Dollar Tree sells 4' USB A-B printer cables.


RE: Not so sure...
By johnsmith9875 on 4/10/2012 5:18:26 PM , Rating: 2
They're all made in China anyway. The dollar store USB cable comes from the same anonymous factory in the Shenyang province, assembled by migrant workers as the expensive Monster USB cable. The only difference is the plastic is thicker.


RE: Not so sure...
By metalhead004 on 4/10/2012 4:35:37 PM , Rating: 3
Same thing here. In the area I live there is a small chain of computer stores that sells computer parts for around the same price range as online. The prices aren't quite as good, but are pretty close. The retailers have to mark up those cables because they don't make any money off of electronics. I know because I work for a big box retailer (not Best Buy) that sells computers, printers, etc. We sell all that stuff at zero margin, and often times at a loss (especially when it's on sale) while trying to get people to buy crap with it that they don't need. It's a losing business model.


Showroom
By chmilz on 4/10/2012 1:47:40 PM , Rating: 2
quote:
For many tech nerds (and the general populous), Best Buy has been “reduced” to simply being the physical showroom for online retailers like Amazon and Newegg.

Yup. Someone should tell Indigo/Chapters the same thing. I go in there, find books I like, buy them on Amazon for half the price and they're at my door in two days.




RE: Showroom
By The Raven on 4/10/2012 2:01:18 PM , Rating: 3
lol

And someone should tell my local library that too. I go there, peruse the books and then get on Amazon... oh no I don't ;-P


Best Buy is a mixed bag
By GatoRat on 4/10/2012 2:42:34 PM , Rating: 2
I've gotten some great deals from Best Buy; arguably too good (I got a Canon camera at such a discount, I didn't believe it was true until I held it in my hands and saw the correct amount on my credit card statement.)

I got my HDTV from them for cheaper than anywhere else (they were clearing out the 2010 Samsung models.)

I've noticed that they've become much more competitive in several areas. I've also noticed that they'll often have a weird mish-mash of models, often lacking the higher end ones.

Regardless, Dunn was a disaster. He clearly had no idea what he was doing and to me came off in his commercials as an arrogant jerk, especially after the fiasco of last Christmas. One thing I've learned in all my years is that the attitudes of the executive generally trickle down to the employees. A company with a very arrogant CEO will likely have very arrogant support and sales staff and that is very bad for business.




RE: Best Buy is a mixed bag
By Chapbass on 4/10/2012 3:27:02 PM , Rating: 2
When I was a BBY employee several years ago (before he was CEO), I had the opportunity to sit down and talk with him quite a bit on two separate occasions. Honestly, I don't feel he is arrogant, however I do feel that he wasn't a good fit as a CEO. He was an excellent person for behind the scenes work, not as much in the spotlight of everything. Employees enjoyed working for him and he definitely had a workers mentality. Unfortunately, I agree, that in the commercials and such he came across very differently.


Bad Buy has a history...
By Beenthere on 4/10/2012 4:27:50 PM , Rating: 3
...of corruption and mis-management. They are doing a good job of going out-of-business, as they should. Unfortunately their employees and suppliers will bear the cost of this unscrupulous operation.

Do a search for BB lawsuits and see for yourself how many state AG's have sued them.




Lack of understanding
By wmkconn on 4/10/2012 4:53:02 PM , Rating: 3
Best Buy. This store name couldn't be further from the truth. I have a new Best Buy within one mile from my house. I was excited when it was being built because I consider it my "toy" store.
It seemed for a short time that Best Buy was starting to "get it". There prices were in site of the Amazon's and NewEgg's so that I could justify my impulse buys. However, they seem to be trying to fix their problems by raising their prices. There thinking must go like this: If I sell 10 widgets at $X then if I sell them at $2x I will get twice the money. Obviously that thinking is way off base.
Many people mention Amazon and NewEgg. Why? Because they have optimized their businesses to offer awesome prices backed with exceptional customer service. To have any hope of survival Best Buy must copy this mentality.
I make buying decisions on several factors but my thinking generally goes like this: Price and service. By service I am including the ability to easily return or exchange.
I am willing to pay "a little" more for the ability to touch and feel and return but not DOUBLE!!
This is an easy fix. Look at Amazon, NewEgg, Fry's and click the COPY button.




By michael2k on 4/10/2012 1:47:34 PM , Rating: 2
Can the survive by focusing on premium products and support, ala Apple Store?

I think they can, essentially by focusing on self branded Android or Windows phones, tablets, and computers.

In other words, expand the Insignia lineup, take a cut of the HW margin, and partner with someone like Amazon for AppStore and Content. Of course that probably also means the possibility of merging with Amazon!

If not Amazon, they can try to forge an alliance with TimeWarner, who happens to have a large content network but no retail or HW presence. The real hard question is how BB is going to gain expertise in SW and services without a company like Amazon.




I Appreciate can BB, but...
By The Raven on 4/10/2012 1:58:22 PM , Rating: 2
It seems that they have not adjusted to the trends fast enough. For expample, I would never buy a CD/DVD there...I would buy it on Amazon/Half.com etc. So what is the point of half of their showroom space being full of this? I appreciate their HT setups (even plain old TV displays when done properly) wash/dry, fridge car stereo displays. They should drop the fluff.




And yet...
By Motoman on 4/10/2012 2:09:22 PM , Rating: 2
...they'll blame the lack of online sales tax collection and "piracy" for their problems, like they always do. As always:

1. The collection or not of sales tax is irrelevant - prices online are so vastly cheaper that the inclusion or exclusion of a POS tax makes not the slightest difference to the fact that you're still saving large amounts of money. X plus 10% sales tax is still more costly than 0.75X plus 10% sales tax.

2. Piracy...please. Just stop with that BS already.

The undeniable truth is that online vendors have vastly greater selection, incredibly better pricing, and invariably better customer service, than B&M retailers. There's nothing that a B&M can do about those things. Nothing.

And it also can't be denied that online shopping is infinitely more convenient than going to a B&M. Especially when factoring in the time you spend going there and back, and these days even fuel costs. The widget I want to buy isn't simply $X plus 10% tax...it's $X plus 10% tax plus 2 hours of my day plus $15 in fuel cost. Or, I can order it online without moving from my chair, having spend a couple seconds doing it, spent no money on fuel, and maybe even got free shipping on top of all that.

Having said that, while online streaming of movies, music, games, etc. certainly takes a bite from BBY's sales, remember that there's ~20% of the population of the USA that lives in rural areas - where internet access can be hard to come by. After moving recently, to a house where Centurylink told me they could give me DSL but we later discovered they couldn't, we're getting by on a cellular wifi unit - with a 10Gb cap each month. Streaming *anything* is a laughable concept for us. Someday hopefully we'll get cable and/or DSL out here...but until then, like millions of other Americans, if we want to watch/listen to/play something, we're going to be buying it on disk.

...probably from an online retailer. So maybe the moral of the story is that BBY needs to focus on competing online with Newegg and Amazon. Because really, they don't right now. Their selection is pathetic compared to the other 2, and their prices are generally nowhere near as good.

You wanna keep some B&Ms around that's great...there will always be some segment of the market that will shop there. But if you want to actually *compete* in the real world now, you have to compete online, head-to-head with Newegg and Amazon...and if you don't want to be competitive with their selection, prices, and service...don't even bother.




By Arsynic on 4/10/2012 3:39:26 PM , Rating: 2
It's no secret why BB is failing, it's footprint is too big and it's prices are too high.

I guess when you have to support a legion of sales zombies, you can't cut prices to compete. If I owned Best Buy I would consolidate stores and warehouses into one building--the store is the warehouse kinda like Lowe's and Home Depot. Most of my staff would be warehouse personnel and a few experienced sales people. The datacenter for the online store would be on the second floor. The front of the store would be a beautiful show room where you can test before you buy. It would look just like the regular stores. The warehouse would be at the back.

So instead of having multiple warehouses and stores, we would have just a few hundred Costco-like warehouse stores with prices that undercut the online retailers. Secondly, Geek Squad would be repurposed as an IT-services company targeted at Small to Medium businesses--a high margin business.

Best Buy is another example of what happens when a company believes in "slow and steady" and doesn't take chances like a start-up. They are reactionary and reactionary companies die a "slow and steady" death.




greed
By Gunbuster on 4/10/2012 4:00:51 PM , Rating: 2
I remember the good old days before BB got greedy, for a while a big selling point for their extended warranty was that certain SKU's were flagged for vendor return/credit. You could bring a broken camera in and get a new model AND the warranty continued on.

Then they made it so you had to buy a new warranty if they did a swap and that totally killed it.




By johnsmith9875 on 4/10/2012 5:19:58 PM , Rating: 2
The capitalist economy is weeding out the corporate idiots like its supposed to. Unfortunately his golden parachute will be bigger than your yearly salary 1000 times over.




By Trisped on 4/10/2012 6:49:37 PM , Rating: 2
quote:
In addition, many of the digital convergence devices that Best Buy sells (smartphones, tablets, etc.) are being used by consumers to find much better deals on products online.




By KOOLTIME on 4/11/2012 6:31:13 PM , Rating: 2
Blockbuster went doomed, tried to covert to online but to late. Its not really that the store cant compete itself vs online. Its commercial real estate that kills the bills to make it affordable competition.

Take a look a 1500sq foot home will cost 2k a month mortgage on average. Same space for retail is 10K+ its crazy, especially the larger size store fronts just to keep the doors open the operating expenses in the last 5 years have quadrupled due to the recent inflation's.

Everyone thinks home mortgage is bad, commercial real estate is killing our country, as 90% of businesses need a foot print some place to hold products, and the cost of such spaces today is simply criminal and nobody is even noticing it.




That Brian Dunn?!
By M Farkus on 4/12/2012 11:06:54 AM , Rating: 2
At the lowest point of my 30 year technical career after the mainframe industry went bust, I worked at the Best Buy store in Edina, Minnesota selling pc's, phones and cassette Walkmans (read 1991). That a-hole was my manager! He ruled by intimidation and embarrasment. No wonder the company is sinking. This man was a poor excuse of a human being with a complete lack of sensitivity to anyone or anything.




"And boy have we patented it!" -- Steve Jobs, Macworld 2007














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