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
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.
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".