1/9/2012 6:18 PM ET|
Why Best Buy is destined to fail
Disappointing earnings and a falling stock price show the big-box retailer is in serious trouble. Here are some of the reasons.
Consider a few key metrics. Despite the disappearance of competitors including Circuit City, the company is losing market share. Its last earnings announcement disappointed investors. In 2011, the company's stock has lost 40% of its value. The forward price-to-earnings ratio is a mere 6.23 (industry average is 10.20). Its market cap down to less than $9 billion. Its average analyst rating, according to The Street.com, is a B-.
Those are just some of the numbers, and they don't look good. They bear out a prediction in March from The Wall Street Journal's "Heard on the Street" column that "the worst is yet to come" for Best Buy investors. With the flop of 3-D televisions and the expansion of Apple (AAPL, news)own retail locations, there was no killer product on the horizon that would lift Best Buy from the doldrums. Though the company accounts for almost a third of all U.S. consumer electronics purchases, analysts noted, it remains a ripe target for more nimble competitors.
But the numbers only scratch the surface. To discover the real reasons behind the company's decline, take this simple test. Walk into one of the company's retail locations or shop online. And try, really try, not to lose your temper.
I admit. I can't do it. A few days ago, I visited a Best Buy store in Pinole, Calif., with a friend. He's a devoted consumer electronics and media shopper, and he wanted to buy the 3-D Blu-ray of "How to Train Your Dragon," which Best Buy sells exclusively. According to the company's website, it's back-ordered but available for pickup at the store we visited. The item wasn't there, however, and the sales staff had no information.
- Related: MSN Money columnist Michael Brush asks, "What's the problem at Best Buy?"
But my friend decided to buy some other Blu-ray discs. Or at least he tried to, until we were "assisted" by a young, poorly groomed salesclerk from the TV department, who wandered over to interrogate us. What kind of TV do you have? Do you have a cable service, or a satellite service? Do you have a triple-play service plan?
He was clearly -- and clumsily -- trying to sell some alternative. My friend politely but firmly told him he was not interested in switching his service. I tried to change the subject by asking if there was a separate bin for 3-D Blu-rays; he didn't know.
The used-car style questions continued. "I have just one last question for you," he finally said to my friend. "How much do you pay Comcast every month?"
My friend is too polite. "How is that any of your business?" I asked him. "All right then," he said, the fake smile unaffected, "You folks have a nice day." He slinked back to his pit.
As a sometime business-school professor, I could just imagine the conversation with the TV department manager the day before. "Corporate says we have to work on what's called up-selling and cross-selling," the clerk was informed in lieu of actual training on either the products or effective sales. "Whenever you aren't with a customer, you need to be roaming the floor pushing our deal with CinemaNow. At the end of the day, I want to know how many people you've approached."
But this is hardly customer service. It actually gets in the way of a customer who's trying to self-serve because there's no one around who can answer a basic question about the store's confusing layout. It's anti-service.
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I went to the local BB to purchase the new Ipod touch. After getting the product pulled from the locked cabinet the the saleskid tried to sell me on the extended warranty. He began by telling me all the things that go bad with the iPod and how all of that is covered by the warranty. I handed the ipod back and thanked him for telling how bad the product was and that i didnt want to buy a piece of crap. I told him that i was under the impression that BB carried quality merchandise. He gave me a very surprised and dumbfounded look as I walked out of the store and went to HH Greg for my ipod. the author hit this on the head. If i remember correctly, Circuit City's down fall began when they decided to charge a restocking fee for returned products. by the time they realized how much business was being lost it was to late. Customers werent coming back. Sound familiar Netflix? It all comes down to service...or lack of
Too bad for my jerk managers who staked their whole lives on this money hungry company. They dont give a crap about whethter or not customers really appreciate your knowledge or effort. They only look at percentages and numbers. Credit cards and warranties...
Seriously.... if you people only knew what employees are forced to sell you. if you only heard some of the career "used car salesmen" bragging about selling over-priced warranties on blu ray players to elderly people
Yes... true story
I work for Best Buy now. It's a joke. It used to be about "Meeting the Customers unique needs, end to end!" Now it is about "How far can we dig into the customers pockets before they get pissed." I have been here for 5, going on 6 years now. In the beginning it was amazing! Had a great discount, selling was about what the customers wanted/needed, and working here was fun. Now, Customers come in and get destroyed when they walk in door. I do installs now and there hasn't been one day where I haven't had 2 customers ask, "What did I buy?" Sales man are telling customer what they won't rather than showing them different options so they can pick for themselves. I deliver to 70 and 80 year old people who get the whole 3D package and say, "I just want to watch regular TV. I won't use the 3D ever. I just got it because that is what I was told I needed." That isn't selling. That's forcing. I could have sold the customer a basic TV without 3D or Smarthub or all that other crap and he would have been more than happy with it. Not to mention, he would have saved thousands. But can I tell him that? NO! Because my boss said, "You were hired to sell and that's it!"
It's not just this store that is doing this. I have worked for 4 different Best Buy stores and they all operate the same way. It's getting old. Customers aren't happy and eventually will stop coming back. There are other places that sell electronics for way cheaper, so it's not like we have it made like Walmart. Best Buy can get buried fast. I do agree with what the Phoenix0901 said about the Saleman actually being a Direct TV Rep. We have a COX rep at our store now and he hounds customers left and right.
I think the worst part of being at Best Buy is the lack of care from the managers. Time is NEVER set aside for training. I have a new Manager in my department that has been here for 6 months and can't reschedule a delivery. Simple 2 step process and she can't do it. When she goes to another manager for help, she gets "Figure it out. Play around with the system a little. or I'm sales Floor leading." and then they go back to standing around doing nothing. I too can run circles around the employees here. They hire a bunch of High School kids who don't know how to wipe there own a$$, let alone sell product. Why do you think Best Buy has Reps for each Brand we sell? Because we need someone who knows what they are talking about. Stores all over in other countries are shuting down because Best Buy has changed for the worst.
I know we change to keep up with the times and economy, but I think going back to the basics would really help this corp out a lot. Make it about the customers again. Make the customers happy so they keep coming back year after year. Don't take all there money and kick them out the door. I don't hate Best Buy, I hate the way they are treating customers. those customers are the reason I have a job. The Motto for Best Buy used to be "Have Fun while being the Best." Not anymore! I've seen business drop drastically in the last year or two.
I hate to say it because I love Best Buy, but i am looking for a new job because I don't feel the job security here like I did when I started working 5 years ago.
Needed iPad accessory. Look online, go to store. Loud doof-doof music playing. Place is a mess. People everywhere. No staff to be seen. doof-doof... Walk around, walk around. doof-doof... No staff. Find item in wrong location tossed on shelf. doof-doof... Walk to checkout. doof-doof Security thug eyes me off paying for item. doof-doof... Pay for item while security thug watches. doof-doof... As I try to leave security thug wants to see my receipt. WTF, he just stood there and watched me pay. doof-doof...
Someone is marking down all the posts that are critical of BB. That's pretty funny.
It is not just in retail any longer either. Because companies see their employees as an EXPENSE rather then an asset, they attempt to manage that expense the way one would try to manage and electric bill or any other annoyance they may have to pay.
And what the consumer end up doing business with is not "Best Buy" or "Place you name here" ... they end up doing business with a disinterested, lazy, poorly groomed, meat head moron who was forced out from in front of his video games & bong or her mirror and cell phone and made to go to work.. So while you are forking over $2500.00 hard earned bucks on a TV you HOPE will last for at least 10 years and a $400.00 surround sound you need because the TV companies place lap top speakers in their TV, along with $175.00 worth of cables and other paraphernalia needed to just make the damned thing work.... They are standing in front of you... smacking their lips as they chew their favorite flavor of Bubblishious looking ever moor annoyed since your questions are eating into their break time so they can go call Mommy and ask for money to go out tonight and make certain that they are more worthless at work tomorrow then they are today....
So..... Until companies start treating their employee's as extensions of the company and not just an expense. And thereby attracting better people group at a better age to serve the public..... I say good riddance and let them fail.
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