Will Best Buy close more stores?
The beleaguered retailer, hit hard by 'showrooming' and fierce online competition, has few cards to play and may make an announcement Tuesday.
The question isn't whether Best Buy (BBY) CEO Hubert Joly will announce more store closings and layoffs during the beleaguered retailer's analyst day Tuesday but how many and how soon. He has little choice.Best Buy, based in Richfield, Minn., has announced two rounds of store closings, and influential retail analyst Stacy Widlitz argued on CNBC.com Monday that "investors would simply like to see more on the way." It's easy to see why. Best Buy has about 1,062 U.S. stores, up from 923 in 2008. Same-store sales, a key metric, have slumped in eight of the past 10 quarters. The retailer recently said comparable sales would continue to fall in the next quarter.
According to Reuters, Best Buy generates about $302,800 per employee in revenue annually, well below the industry average of more than $132 million. The company employs about 170,000 people. Of course, this trend is unsustainable. The question is what can Best Buy do about it.
Best Buy and other brick-and-mortar chains are trying to combat "showrooming"-- shoppers who look at merchandise in physical stores and later buy online at a discount. Investors have to be concerned about whether the retailer will "give away the store" with free shipping offers and by slashing prices to compete against rivals ranging from Amazon (AMZN) to Wal-Mart (WMT) to hhgregg (HGG).
Investors were heartened by the company's new chief financial officer, Sharon McCollam, who is credited with helping turn around Williams-Sonoma (WSM) by shrinking the company's store count. Though McCollam is confident Best Buy can improve its fortunes, skeptics abound. For one thing, its rivals can easily cut prices to match or exceed whatever Best Buy may charge. Then there's the buyout being pushed by company founder Richard Schulze.
Whomever runs Best Buy will be tasked with improving the company's ecommerce business. Last year, the company said it would double annual online sales in five years. Even under a best-case scenario, that's going to a tough goal to achieve. Turning around Best Buy will be even harder.
--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
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Best buy and other electronics retailors are dying thats all there is too it. Just like antique shops in the early 2000's. When Ebay came out antique shops died simply because that item that was rare and expensive now is on ebay for 10 dollars and there are thousands out there. Its the same with best buy. Amazon,deep discount and other online stores are killing them. So what can best buy do about it ? Here is the answer
1.) Shrink the products, nobody really buys car audio anymore so get away from that it was cool in the 90s but not many people buy speakers and subs anymore. Keep some product but really cut it down. Get rid of the musical instruments its not worth the cost and its losing money.
2.) The tvs and home audio are fair priced they are comparable to walmart and online sites ( ive done the research) So push that forward.
3.) Re-organize the stores- Bring the Tvs and audio upfront make it the forfront of the store. Have couches and tables let people enjoy. Give demonstrations of the tvs with audio differences etc.
4.) Move the Blurays and dvds to the side of the stores not the front.
5.) make it known that you price match online stores !! Most people dont know this.
6.) Stop wasting time on selling 75 types of laptops cut it down.
7.) Nobody is going to spend 500 dollars on beat audio headphones demand cheaper yet quality items. Beats are not worth what they cost.
Best buy- You are the best electronics store around. You have to get back to what you were good at. Offer the same options that you used too. Best buy used to let you literally bring a defective product in and exchange it out for a new one on the spot. I loved that. That is why I would buy from them. Not walmart who takes a month to send it off. You know what I cant keep going I give up. I could fix Best buy but they wont listen to avid consumers like me. I go there twice a week and thats down from 4 times years ago.
I purchased my entire kitchen full of appliances through them a few years back. After paying them off ahead of schedule, I bought 2 air conditioners due to my central A/C failing.
I was never late on a payment, always paid mre than the minimum, and had no prior problems.
They decided to change my monthly due date a few days ahead, without my consent, and made me late on ONE payment. When I questioned them on it, they claimed they "can not reverse a late fee".
I paid off the balance immediately and never did business with them again.
They are failing due to their own practices, and I could not be happier!
Best Buy, YOU SUCK!!!
Personally, I haven't had any real bad problems or business with Best Buy!
I'm not gonna try and remember some very minute slight or snub and make a mountain out of it. Some sissy folks on these comment pages just can't wait to go into their "victimhood whine", so as to have something to cry about. I hope BB adjust to the economy, and stay relevant enough for me to keep coming back.
I've bought a desktop, computer securities, 3 Dynex TVs, a great printer, inks, and many DVDs from Best Buy.
Gonna go there on Black Friday and maybe buy a new 50+" TV, and more DVDs! They have some great prices, products and good service at their West Paterson, NJ store-- where I've gone for about 8 years.
America, quit your imaginary whining...!! Example: Some idiots bringing up POTUS Obama's name, so as to get their infantile, political talking point in. Pathetic!
I was shopping for a new radio/CD player on my birthday a few years ago and I went all over town, checking every price, trying to find the best deals.
Guess what? Best Buy was not only not the best deal, they were the worst! They oversold the other stores by over $15. I ended up buying it at Sears instead.
And as if that's not enough, their employees are rude and annoying. Seriously, I can't spend more than 5 minutes in a Best Buy without, like, 3 different employees rolling up asking if I need help, as if I'm about to start stuffing phones in every orifice and running out of the store.
They're so suspicious and really obvious about it.
That's why they're crashing. They're expensive and annoying.
I have not shopped at Best buy since 2000. I purchased a car stereo for my wife's car and it died within 2 month's. When I took it back, I was told I would have to pay to have it taken out and shipped to be repaired. When I told them that the salesperson assured me that anything wrong would be taken care of in house, the person told me that I was misinformed and there was nothing he could do. The kicker is when I told them to just put it back in the car (he had already removed it) he put the cd that was causing the problem back in the player! Poor customer service will kill any business. I am not sad to this poor excuse of a retailer go by the wayside.
They don't have enough people to help the customer, not to mention, opening the doors at 10 am seems a little late in the day. The prices are high on many of things they have to offer. However, it is one of my favorite stores to shop for tv's, printers and other electronic toys. My suggestion would be for them to open the doors at 8am, pay the sales people commission on sales, cross train all employees to handle the entire store,
Wait a minute is that a correct figure?
"Best Buy generates about $302,800 per employee in revenue annually, well below the industry average of more than $132 million"
So what they are saying here is each employee in the big box stores genrates 132 million in sales and most are working for 8 bucks an hour!
Wow just wow.
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