The Fall of Best Buy
Whether it was to get a new PlayStation game or just to gawk at the newest big TVs, I used to love going to Best Buy. I even worked there for a while when I was in school. It paid pretty well and had a sweet discount too. These days I can’t even remember the last time I was inside one of their stores. I’m not alone either; net income has fallen from $1 billion in 2009 to a loss of $1.2 billion last year, and the company’s share price has dropped from $47 in mid 2010 to below $20. Yesterday Dick Schulze, the man who founded the company, was its CEO until 2002, and its Chairman until June, announced he is seeking to buy out the company. Aside from the challenge of arranging at least $9 billion to complete the deal, is there even then is there anything that can be realistically done to bring Best Buy back to its former glory?
It used to be you had to go to Best Buy (or Circuit City, or others) if you wanted a computer or a nice TV. Wal-Mart, Target, and other stores didn’t sell them, and if they did the selection was poor at best. Best Buy’s differentiating factor was that its employees were supposedly more knowledgeable and that it had the installation and after-sale services the others did not. This was also when a 42-inch TV was $2000+ and weighed 50 pounds. Now you can just do all your research online and throw a new Samsung LED in your cart on Amazon while sitting at home half naked taking pulls of Sailor Jerry. And if it breaks, you just buy a new one.
If you walk into a Wal-Mart and Target now, the electronics section even looks like a small Best Buy. And who cares about getting it installed? Most stuff now basically hooks itself up.
Best Buy’s turnaround strategy to date has essentially been to become more like RadioShack and to double down on the strategy of trying to convince people they are too stupid to plug in their own electronics.
Best Buy's retail store strategy is to increase points of presence, while decreasing overall square footage, for increased flexibility in a multi-channel environment. The company intends to remodel key stores with a new Connected Store format in fiscal 2013, and to continue to build out the successful Best Buy Mobile small format stores throughout the U.S.
Geek Squad, Best Buy's 24-hour tech support task force, and AARP today announced the launch of a new program that provides millions of AARP members nationwide access to advice and special discounts on Geek Squad services.
Aside from being able to see and touch new toys before we buy them, do we even need standalone electronics stores like Best Buy anymore? If Best Buy is to stick around, what can it do to keep from going the way of Circuit City, CompUSA, and others?
Comments
I go to BestBuy when I buy
I go to BestBuy when I buy stuff like phones and laptops. There are certain products that you have to try in-person.
I think they should ditch the
I think they should ditch the brick-and-mortar stores, fire 90% of employees, and focus on the Geek Squad part of the business. If I buy a laptop or tablet from Walmart, Amazon, or eBay, there's really nowhere to take it for repairs (ie: A motherboard swap). They have the resources to compete with all the mom and pop computer repair stores, but their retail business is dead. It's time to focus on the consumer service side of the firm.
"A man generally has two reasons for doing anything. One that sounds good, and the real one." - J.P. Morgan
I go to Best Buy to try out
I go to Best Buy to try out potential gadgets...and then go to Amazon and get them for a cheaper price with less bloatware.
Went into Bestbuy yesterday
Went into Bestbuy yesterday to buy a pair of iPhone headphones. I assume Bestbuy is only earning a couple dollars off the $40 purchase, since it's an Apple product. For the first time, I questioned getting the 2 year insurance not because of the price ($9), but the likelihood of Bestbuy being able to honor the insurance two years down the line. Insurance policies are the first to go come a bankruptcy.
I agree with previous posters that Bestbuy needs to become a services firm. Bestbuy needs to find a way to improve margins on Geeksquad services, because there's no way I'll pay $320 for a motherboard replacement when new laptops are $800. Laptop sales and TV sales have no shot in the future, especially when you can test them in store for free and then buy them for less online. I fear the day when Bestbuy goes out. The last thing I'd want to do is to buy a laptop/TV online and hope that it looks like the photo online.
Best Buy is the internet's
Best Buy is the internet's showroom. I used to love to go there, but we live in a different consumer-era compared to the one of 15 years ago.
I used to like browsing thru DVDs. Nowadays, anyone can get a movie from Netflix, or ITunes and they can get it from their couch.
I used to like to see all of the different computer games at the store, but nowadays, there are tons of game review sites on the web, and once again, you can get these game over the net.
I used to checkout the different computer configurations, but today most people have moved to a narrow range of laptops, and desktops are primarily used in offices only.
It used to be a big event to travel 40 minutes to a Best Buy, and I lived in suburban DC. Now there is one a mile from my old house. They have sprouted up everywhere. I live in Virginia Beach, and there are two Best Buys, both of which I could get to in 10 minutes.
Best Buy tries to push too many products. Most people don't go into what I would call "the back left corner", but there you will find outdated vacuum parts, nylon rope, and auto supplies. They tried to become the retailer of EVERYTHING that passes an electron through it. Washing machines and car stereos are things I would never consider going to Best Buy to purchase, and to the core electronic tv/computer enthusiast, this shit just clutters up the store. The stores are increasingly disorganized, and the staff is rarely knowledgeable.
It was a good ride, but I think Best Buy is going the way of Blockbuster. They will try to kid themselves into thinking they can make a store like Apple's, but it will just delay the inevitable.
It's kind of sad that most of
It's kind of sad that most of us guys grew up thinking this was the greatest store ever, and soon, we will have no where to go to shop.
- eBay killed pawn shops and garage sales
- Apple killed music stores
- Zappos killed shoe stores
- Amazon killed Best Buy, Barnes & Noble, and Circuit city
- Netflix killed Blockbuster
- Walmart killed pretty much everything
"A man generally has two reasons for doing anything. One that sounds good, and the real one." - J.P. Morgan
I worked at Best Buy during
I worked at Best Buy during the fall of Circuit City and, honestly, I could see the change in culture occur in front of my eyes. It was like they were the proud victors and decided to just 'take over' the market. Became significantly more aggressive, abused their employees IMO, and pushed Geek Squad and other useless, rip-off services ever harder.
Geek Squad is stupid and useless for the most part. 'Laptop Optimization'? Please. Studies have actually found those to be - at best - useless. Oftentimes they are detrimental to computer performance.
And don't even get me started about the usurious rates on the financing plans, and the way we were forced to push them onto customers who had plenty of cash anyway.
And I remember how they told us to take pride in the fact that we weren't paid commissions on sales, unlike the people at Circuit City. But the way they pushed us to sell useless software made many customers think we were completely on commission - a friend of mine literally begged a customer to buy anti-virus software once because he was scared of his manager. I would accept their 'no commissions' policy if they actually paid their employees a decent wage. But salespersons ten years my senior were making maybe a dollar or so more than me, a high schooler. What a joke of a company.
best buy is falling bc they
best buy is falling bc they hire young high school idiots who have no clue wtf they are doing
waaaaaaaaaaaaaaaaaaaay over staffed, period.
BTbanker: It's kind of sad
It's kind of sad that most of us guys grew up thinking this was the greatest store ever, and soon, we will have no where to go to shop.
- eBay killed pawn shops and garage sales
- Apple killed music stores
- Zappos killed shoe stores
- Amazon killed Best Buy, Barnes & Noble, and Circuit city
- Netflix killed Blockbuster
- Walmart killed pretty much everything
who killed JFK
This is stupid. You can
This is stupid. You can technically get anything you ever need from amazon, ebay, and whatever grocery site you want and it'll be cost effective. Obviously god's given me two legs to walk outside my house and enjoy fanboying in a tech store. I like to see cameras in person and buy video games myself. Hard copies of discs are the best and looking at the back of video game covers are cool too.
Best Buy is now totally
Best Buy is now totally dependent on the technologically illiterate...any young/tech-savvy person will be on Amazon, Newegg, etc.
Margins suck on big ticket items like TVs. So they need to push add-ons, e.g. the $100 Monster Cables, warranties, computer "optimizations". Again, tech-savvy people don't fall for this stuff. They also don't pay for installations, most of which now involve plugging a device in.
The people I know who still shop at Best Buy are members of the 50+ demographic who thought, "This internet thing is just a fad," and have resolved to eschew technological progress. If they aren't part of this demographic, the consumer is unusually docile, and will go ask a Best Buy salesman, "What computer should I get?"
The consumer base is shrinking. These people are dying off. The new generation isn't tied to the idea of buying electronics from an electronics store.
And this is why I love amazon
And this is why I love amazon prime.
I can get just about anything on earth in one or maybe two days at about the cheapest price possible.
What store? I literally buy EVERYTHING (toothpaste, lip balm, computer hardware (after checking the usual other places), etc.) on Amazon.
I still believe the majority
I still believe the majority of young people are technically illiterate. There are ads all the time for shit like mycleanpc.com and doublemyspeed.com. Go to a high school and ask what operating system their computer uses and 80% of the guys and 95% of the girls will give you a blank stare. Same kids that can't do math I did in 6th grade.
Best Buy had a serious leadership problem for a while. I personally knew the now-ousted CEO (affairs with multiple women covered up with company money) and he was a total idiot. Like fat white guy who gets ghetto rims and a chrome grille on his Escalade stupid. Didn't even go to college. When you hire people like that to run your company you've already screwed the pooch.
"I'm the luckiest guy in the world, and when I die I want to come back as me."
-Mark Cuban
ChrisHansen: I still believe
I still believe the majority of young people are technically illiterate. There are ads all the time for shit like mycleanpc.com and doublemyspeed.com. Go to a high school and ask what operating system their computer uses and 80% of the guys and 95% of the girls will give you a blank stare. Same kids that can't do math I did in 6th grade.
I honestly think this is the key to Apple's success. It removed need for technical knowledge needed to operate technology. No manual patching. No defragmenting. No antivirus/malware. Closed garden design so that everything works when you plug it in. No need to upgrade parts- just buy a new one.
But I think people have at least gotten cynical enough to avoid Best Buy's high margin traps. Even my grandparents know that it's cheaper to pay a kid on their block to connect their blu-ray player than it is for a Best Buy tech to come out. So maybe the new customer's aren't tech literate- they are just more skeptical.