Print 88 comment(s) - last by namechamps.. on Apr 26 at 9:20 PM

Changes will come in next 3 to 5 years

The world of retail electronics has changed drastically over the years. It used to be that most people were going to retail stores to make a purchase. Today, many people go into a retail store to see how a device works and research an item, then go home to purchase it online. The reasons for this are many, but much lies with the lower price that many gadgets can be found for online.

The largest consumer electronics retailer left in the U.S. is Best Buy. Best Buy is still facing stiff competition on the market with Wal-Mart, Target and other discount chains selling more electronics than they did in years past. Best Buy currently operates a number of large stores that its calls “big boxes”. These stores range anywhere from 20,000 square feet to 58,000 square feet.

According to Best Buy, these stores have huge overhead and are "white elephants" in the industry. The retail chain is looking to cut the amount of space and overhead these stores have by about 10% over the next several years. This comes after three straight quarters of same-store sales decline and a forecast for more declines in sales. The blame is placed on the Best Buy’s ailing TV business.

Analyst Scot Ciccarelli said, "I do believe that a lot of their bigger box stores have to be downsized. If there was a disappointment, I was kind of hoping they would be even a little bit more aggressive than what they outlined." He continued saying, "It's [the size reduction] not that big for this company. What I think you really need to do is maybe downsize a little bit quicker."

Analyst David Strasser from Janney echoed Ciccarelli saying, "We believe the Street wants more. We look at this as a first step that shows us the company is looking at reductions."

While Best Buy is seeing same-store sales decline, it is trying to grow it online business significantly. Best Buy wants to double its online sales from the current $2 billion over the next three to five years. Best Buy CEO Brian Dunn said, "The online channel is our greatest growth opportunity."

Dunn did note that retail was a part of Best Buy and defended its retail brick and mortar presence. He said that stores augment online. While Best Buy is looking to shrink its big box stores, it plans to increase the number of small stand-alone stores like Best Buy Mobile offerings to between 600 and 800 within the next five years.

Best Buy also has plans to grow operations in China and is pressuring U.S. lawmakers to force the collection of sales tax to help "level the market".

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not suprised . . .
By legaceez on 4/15/2011 12:03:04 PM , Rating: 2
I can name so many reasons why best buy is going down . . .

- Poor service with pushy sales people always trying to shove accessories and service plans down my throat.
- Generally higher prices than on-line.
- Have to pay tax.
- Geek squad is so overpriced it's not even funny anymore.
- Online is just more convenient for some people.
- "Optimization Fee" on computers . . . really???

I could go on and on but i'm sure you guys get the picture.

RE: not suprised . . .
By M4gery on 4/15/2011 12:21:38 PM , Rating: 2
When I was a kid, and Best Buy first started opening up in my area, they actually were the "best buy" at the time. I was able to get video games and such far cheaper there than anywhere else. That only lasted about 2 years max though. The first part of the article is mostly correct, at least for me. I'll go into a retail store to try something out, then I will end up buying it online for a cheaper price. Some big ticket items though, like large screen TVs, I will still buy at a retail store, that way if they go tits-up I can immediatley return them without insane shipping costs and hassle.

RE: not suprised . . .
By M4gery on 4/15/2011 12:26:16 PM , Rating: 1
Yup, BBuy will end up being mostly a service company, since that's where the money is at. the ridiculous amounts that Dork Squad charges are nearly 100% profit, whereas profit margins on retail goods is much, much, much lower. And since Dork Squad's service is an absolute fucking joke, BBuy will eventually go the way to the dodo. And honestly, I cant wait for that. I hate how things like Dork Squad have sullied the IT professional field to the point where most people think that we are nothing more than retarded monkies with flash drives. And to give them credit, that's exactly what Dork Squad "technicians" (and I use that term *very* loosely) are.

RE: not suprised . . .
By JazzMang on 4/15/2011 12:38:29 PM , Rating: 2
I agree with some parts of this, but there are a lot of IT Pros who have sullied their own names by being lazy, inattentive, and not true 'professionals.'

As a former technician, I can tell you I saw the disasterous work of many IT 'professionals' when their clients had to end up coming to Best Buy (of all places) to get it fixed. Yeah, their prices are high, but having a consistent, professional IT guy is only a different type of gamble altogether...

And... really? Was it necessary to make your 'Dork Squad' joke in every single reference? No one laughed the first time. Just use their real name. Lets you sound less ignorant.

RE: not suprised . . .
By FITCamaro on 4/15/2011 12:51:08 PM , Rating: 2
I don't know where you think retail profit margins are low but you're wrong. Sure on many large items they are. But on accessories they're often 40-70%. You think those Monster Cables cost $100 for Best Buy? How about that $100 Sony PS3 HDMI cable?

RE: not suprised . . .
By lostvyking on 4/15/2011 12:30:24 PM , Rating: 2
Best Buy is making all the same mistakes that Circuit City made, and we see where THEY ended up. Every time I would go to Circuit City for something specific, I would walk past tons and tons of TVs, Computers, Laptops, phones, coffee makers, etc. Then when I would ask for the location of the items I was there to purchase, those items would not be in the store. I forget how often salespeople there would simply say "but you can get it online". To that my response was twofold: "If I wanted to wait the three days for it to arrive on my doorstep, I would have done that...I came here in person to get it 'now'." and then what ticked them off more: "If I have to get it online, I will skip your site and go to "othersitename" for a price that is 20% less than what your website shows." In the end it was a no-win situation for them and if Best Buy follows that path, HHGregg will be taking their place at the top of the consumer electronics food chain. Well, at least until they make the same mistake.

Have a great weekend, all!

"We are going to continue to work with them to make sure they understand the reality of the Internet.  A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis
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