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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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Sooner would be better
By Beenthere on 4/15/2011 3:24:56 PM , Rating: 2
Bad Buy is an unscrupulous operation as many state AGs can confirm. Hopefully they'll shutter all of their stores this year. The sooner the better IMO.

RE: Sooner would be better
By vazili on 4/15/11, Rating: 0
RE: Sooner would be better
By Beenthere on 4/15/2011 4:26:20 PM , Rating: 2
You must be young and naive...

If every Bad Buy closed no one would even notice and it would be better for consumers.

RE: Sooner would be better
By vazili on 4/15/11, Rating: 0
RE: Sooner would be better
By Kurz on 4/15/2011 5:50:25 PM , Rating: 2
At least those employees will be doing something more usful to society.

RE: Sooner would be better
By vazili on 4/15/2011 8:03:41 PM , Rating: 2
Being arrogant IT guys for instance?

RE: Sooner would be better
By Beenthere on 4/16/2011 12:26:09 AM , Rating: 2
No one wants to see people lose their job but it would actually be good for Bad Buy employees to find scrupulous employment. If they all lost their job tomorrow it would not significantly impact the unemployment rate which varies ~ 30,000 weekly and is currently in excess of 30 million people in the U.S.

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