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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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RE: Wow.
By StraightCashHomey on 4/15/2011 1:49:04 PM , Rating: 3
I feel for anyone that loses their job, but it IS the nature of the beast. Survival of the fittest. You put your trust into your corporate executives that they'll make good decisions and keep the company going strong, so that you and all of your colleagues will have a job.

Unfortunately, one man's loss is another man's gain. If people are no longer shopping at retail stores, then they have to be shopping somewhere. Money is exchanging, but it's not at a Best Buy retail store. The job security will then be handed off to the jobs that assist in online purchasing, either through Best Buy, Amazon, etc, and the job security at the retail stores is destined to go away.


"I want people to see my movies in the best formats possible. For [Paramount] to deny people who have Blu-ray sucks!" -- Movie Director Michael Bay

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