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.
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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Can not wait till they have to shut ALL their doors. They are not a best buy in any terms, and they have not value of customers. I had a BB Credit card and wanted a limit increase. They told me I would have to apply for a new card and cancel my current card. I said fine. It came back with a LOWER line of credit. I have never shopped there since...just waiting for the Karma to return to them and have all the doors be closed.
Why pay a middleman? Sounds like consumers are just using good business sense.
Best Buy focused their whole game on paying high school and college kids a low salary, no commisions, with the promise of in-house discounts on electronics, all the while peddling useless Extended Service Warranties where 95% that goes directly to the bottom line.
The whole "showroom" thing will be an interesting evolution in the future. Most people still prefer to see something live and in person, especially things like televisions where picture quality can't be accurately reproduced online.
When I am bored or desperate, I go shopping at Best Buy. Unfortunately, Best Buy has neither a good stock of desirable products, their prices are some of the highest I have seen. The help is anything but help, other than trying to sell me extended warranties or phones.
I do not mind paying list price for a good product that I want, but Best Buy has to have it in stock for at least list price, much of the time that does not happen.
I found from a visit to the Best Buy in my area, that the models they are carrying on TV's was absolutely the worst selection of out of date junk at top dollar. This is not what I expected to see. Made me think that they were about to go out of business.
Not only do they NOT know the product they have on the shelf but they don't even know the people that work for them. My son had an interview with them and durning the interview he let them know that he was getting married in a month and gave them the date. They said "not a problem." They hired him and a week later they scheduled him on the day of his wedding. He went to them and let them know about the issue. They in turn told him that this was the second time he had been an inconvenence to them and that they had hired him to work, not to take off all the time. While he was "training" instead of doing the modules in the back and learning the products. They just put him on the floor and said wing it, that is how you learn. So when a customer comes up and asks a question about something, there is one of the reasons they look clueless. BESTBUY IS WEAK. And the only reason they are still up and running is because people want to have a hands on look at something before they buy it ON LINE.
I had the very best customer service experience at Best Buy. I was surprised and it was nice. I brought a windows 8 computer and had to returned it. not one hassle the customer service lady smiled and said ok. No problems at all including the software. She was nice, polite, and just did it right WOW. They had the best mix of new computers to pick from and the guy on the floor as in knowledgeable. I will go back to BB. Good stuff.
"Do I work for Best Buy or have any family or friends who work there? NO! Do I or have I ever owned stock in Best Buy? NO!"
Well, since nobody can verify these are truthful statements, we can only take your word for it. That carries as much as the integrity of the bozo now in the White House for the next 4 years. However, your point is true that all retail chains have their issues, but in fairness overall, they do NOT care about their customers. They hire cheap, don't care if you are satisfied, because there's someone right behind you that will take your place as a customer. Walmart, Target, and all of these store chains run the same exact way, and it will NEVER change skip.
A dis-satisfied customer and voter
Do I work for Best Buy or have any family or friends who work there? NO! Do I or have I ever owned stock in Best Buy? NO!
I just happened to be a very satisfied customer of them. No retail chain is perfect. Example I needed to match paint for the outside of the house. Home Depot and Lowes have a computer that can scan a chip and match the color. HD is closer than Lowes. 3 times I went to HD and their machine was broken although the clerk kept saying it was going to be fixed in a day., ended up at Lowes. But I will still shop at HD. Nobody including some of these commenter's are perfect. I know I'm knot.
Best Buy is just one of many store chains that will crash and burn late this year into next. Other stores WILL include the likes of JCP, Sears, K-mart, and others. With internet sales climbing, this only has a negative effect on ALL store chains, not just the ones in trouble. Also, for those bashing the wanna be prez just re-elected, realistically, he cannot be held responsible for the downturn of these stores. That blame goes right to the internet, and tech as it is growing. Store chains find it cheaper and easier to just go online with their sales. By going online, store chains avoid:
Having to pay salaries/bonuses
Having to pay for electricity/rent/gas/insurance for stores
Having to pay for security personel
This phase of shopping also adds to the swelling number of UNEMPLOYED in this country also. Bottom line: With things like TAXES ON THE RICH, TAXES ON EVERY TAXPAYER and LESS REVENUE expected right after Jan 1st, you can be assured that Best Buy won't be the ONLY store to lock it's doors...
A dis-satisfied customer and voter
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While the former looks to expand its snack and soda exposure, the latter struggles to stabilize management.
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