Tuesday, August 21, 2012

Bye-Bye to Best Buy?


The Best Buy company is in big financial trouble these days. I can't really remember the last time I shopped there - it's been years. I never enjoyed the feeling of being in a big warehouse with loud music blaring. I'd rather be able to think straight while making purchases . . . but that's just me.

My kids were the ones who usually begged to go there to look at the latest video games, and we would indulge them. The problem is, we could get the same game for half the price at Target, and even less on Amazon. I figured out quickly that Best Buy "sales" weren't really sales.

Their dvds and cds are always overpriced and not stocked well, and when we had to buy a refrigerator we chose the local neighborhood appliance store where we could get a better deal, a good warranty, and same day delivery. Also, while I know they have great sales around Thanksgiving, I hate to get in line at 4 a.m. and fight with other shoppers, so I just stay home and get the exact same half-price deal on Amazon with free Super Saver shipping. And no loud music - just Christmas Carols.

To me this is a problem very much like Netflix causing Blockbuster to lose business. Convenience matters, and service matters. And greed is not that good if your sales are making customers walk out the door without buying anything. I can't tell you how many times we used to go to our local Blockbuster with money in our pockets around Christmas, but nothing was discounted except used movies, and those don't make great presents. I wasn't even surprised when our BB closed down - corporate jerks.

This is more bad news for cities across the country. Each Best Buy store provides lots of local jobs, and they are talking about closing down 50 locations (see story below). That's a shame. I'm sure the corporate overlords are preparing their golden umbrellas, while the kids that work at Best Buy have to go work at fast food restaurants or Home Depot. And the adult employees with families face an uncertain Christmas season with only unemployment pay. Sad.

From Wall Street Journal
Best Buy Co....may be running out of time to turn around its troubled electronics business after posting a 91% plunge in quarterly profit Tuesday and suspending its annual earnings forecast heading into the holiday shopping season.

The world's largest electronics chain reported second quarter earnings fell to $12 million from $128 million a year earlier. Its business eroded by almost every measure, from revenue to gross profit margins to same-store sales, as gains in smartphones and tablets failed to make up for computer and television declines.

Story from CNBC
Best Buy's problems have been compounded by "dinosaur (store) formats that we just don't need any longer," Widlitz said.

Critics have complained that Best Buy has become a showroom for Amazon.com Inc and other online retailers as shoppers go to its stores to check out electronics like high-definition televisions, then buy them elsewhere for less.

Ending the practice of showrooming is a top priority, Best Buy said in June.

The company has also said it is working to improve its online business and wants to reduce retail square footage further than a March plan to close 50 of its 1,100 large U.S. stores. Many investors were looking for deeper cuts to turn around the chain.

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