FORBES: Why Best Buy Is Going Out Of Business...Gradually

[Red Storm]

I go to Best Buy all the time. I check out the TVs, projectors, laptops, tablets, phones, you name it.

... I don't actually buy anything though. That's what Amazon/Newegg/Microcenter/Fry's are for lol.

 

[Exterous]

This is part of the issue. Best Buy claims it has higher operating costs due to having retail outlets. Then why can Microcenter and Fry's (for those of us lucky enough to have them) absolutely destroy BB in prices? Hell Microcenter gives Amazon and New Egg a run for their money too (price wise).

It looks to me like they use completely different operating models. Frys and Microcenter have a very small store base and are very selective about where they place new stores. Most decent sized cities have a Best Buy while the ones that have a Frys or Microcenter are few and far between. While I haven't been in a Frys lately Microcenter is much more of a warehouse than BB is. More stacked products cramed into smaller spaces. BB is a 'show room' store with larger display areas for highlighting specific products and vendors purchasing display spots.

Honestly IMO thats where things are going but BB has the problem of already purchased/contracted space to contend with. They do need to par down the number and size of stores though. Hopefully they know it. I don't know how difficult those existing store commitments would be to change. I think you will continue to see a large number of sales drones backed by one or two people that actually know something.

 

[Exterous]

Actually that's my theory as to why Circuit City went under. I went in there several times to buy something, would wander around trying to find someone at a cash register, failed, and would end up leaving. It was impossible to find anyone to take my money at that store! Not sure who's brilliant idea it was to have random unstaffed cash registers everywhere

If you want to know the real reason its because the brands that did business with CC didn't want to extend more contracts* Panasonic, HP, Sony etc were all hurting (esp Panasonic at the time. they were already closing plants and laying off large numbers of employees). They needed the money from liquidation now more than they needed money off of sales from another store. CC had a buyer that submitted proposals for buying all the stores, the top ~200 stores and finally tried buying just the top 25 or so stores but he could never get the vendors to agree on new purchase orders. The response from the vendors was so unflexible that the judge actually moved up the liquidation date

*The big reason they were in this position to start with the was ill advised store expansion policies and the hourly wage policy shift. They went on a store expansion banaza right before the economic crisis hit. Cash reserves were low from the expansion and there wasn't much cushion left.

As for the hourly wage shift there was technically a cap for certain positions but you could be granted a wage above it. This got to be seriously abused by certain stores in order to pay friends more than they were worth. The response was draconian. Fire all employees that made more than their cap. No wiggle room. What ended up happening is that the people who had stayed with CC for years and years and gradually got past the cap simply because of their tenure were cut with no recourse. No transfer to other posistions just cut.

Those registers actually did get used but only on busy days (All of our registers were open during peak holiday shoping times) but the disparity in number of shoppers on those days to regular days means that you will usually see large number of unused registers

 

[oogabooga]

I have Amazon Prime as well and I still find deals in Best Buy that are cheaper than Amazon...

While it does happen, it happens so rarely most people probably don't even bother checking best buy anymore for their prices. Everything is retail. I only bother to look if I need something right away in a store and am willing to pay full retail price for the convenience/need of having it right away.

 

[Wyndru]

While it does happen, it happens so rarely most people probably don't even bother checking best buy anymore for their prices. Everything is retail. I only bother to look if I need something right away in a store and am willing to pay full retail price for the convenience/need of having it right away.

They still run weekly ads, I think a lot of people read these and make impulse buys without even looking online. I know my mom does this a lot. Also, if their ad has a competitive price on something I need, I'm sure as hell not going to order it online and wait for shipping when I can just go pick it up in 10 mins.

 

[HumblePie]

They still run weekly ads, I think a lot of people read these and make impulse buys without even looking online. I know my mom does this a lot. Also, if their ad has a competitive price on something I need, I'm sure as hell not going to order it online and wait for shipping when I can just go pick it up in 10 mins.

Many times Best Buy does ads but doesn't always put only sale prices in the advertisements. Actually people here have posted with screen shots here before of this. They'll have a sale on a item one week and the next week remove it off sale and THEN put it in the ad. They put it next to items that are on sale to trick people into thinking the price listed is a sale price. Many times it is actually over MSRP. They do this because they know people are usually stupid and rarely actually pay attention to prices of items. They see a price in an advertisement and assume that since it is an advertisement then it must be on sale.

 

[randomrogue]

I haven't seen that. What I've seen is that their sale items are limited in stock to maybe half a dozen pieces and then they won't want to sell the item to you unless they can upsell the crap out of you.

 

[HumblePie]

I haven't seen that. What I've seen is that their sale items are limited in stock to maybe half a dozen pieces and then they won't want to sell the item to you unless they can upsell the crap out of you.

Endgaget article about it.

http://www.engadget.com/2010/05/24/best-buy-advertising-higher-than-regular-prices-as-sales/

 

[rsutoratosu]

I hate this place with passion, I only go to use up the gift cards thats given to me..

Last time I went, xbox 360 controller not available. PS3 controller not available, ps3 remote not available.

Online best buy prices were better than the store, i didnt even want to argue with the sale kids. Was easier to buy from their online store and use the gift cards than going to the store

 

[Stuxnet]

Endgaget article about it.

http://www.engadget.com/2010/05/24/best-buy-advertising-higher-than-regular-prices-as-sales/

Best Buy is bundling 6 months of its Ask an Agent and Virus and Spyware Protection packages into the offers. Each would normally cost you an extra $20 ($40 in total) which Best Buy is now giving away for "free" with the inflated price tag. Hey, we're sure you were going to buy those anyway, right?

The most asinine aspect of that practice is that they're banking on the stupidity and ignorance of their most stupid and ignorant customers. If I was stupid and/or ignorant (i.e. a Best Buy customer) I'd be rather insulted.

 

[Reckoner]

Fry's should expand (come to Mass damnit) and perform a death knell on best buy

 

[HumblePie]

The most asinine aspect of that practice is that they're banking on the stupidity and ignorance of their most stupid and ignorant customers. If I was stupid and/or ignorant (i.e. a Best Buy customer) I'd be rather insulted.

They've done it with other items as well. When the Xbox 360 and PS3 were first released they REFUSED to sell the items except as a bundle. So unless you were willing to dish out an extra $200+ on a bundle you weren't able to buy from them. A little lawsuit filed later made them change their tune, but not after defrauding a few people over it. Same thing cable companies and phone companies used to try to do with internet service. Oh you can't POSSIBLY have internet service alone. It HAS to be bundled with all this other stuff for us to even turn it on!

They've also just raised prices without doing bundles before. They list those items on the shelf as "As advertised" instead of "Sale" so to get stupid people to pay more when they think they are paying less. Again I worked at BB and saw it happen bunch of times.

 

[Kroze]

It's a love and hate relationship with best buy but it's the only game in town.

 

[jhansman]

I got a 32" HDTV online over Black Friday from BB for $200, shipped free. It has proven to be a tremendous value, one that Amazon comes nowhere near offering. Granted, this was a one-time deal, but a deal nonetheless. A couple of years ago we got all new kitchen appliances through them, financed interest free for a year. Couldn't find a similar deal through Sears or Home Depot, our only other B&M options. So, while I understand why many dislike them, I have to say "Thanks, Best Buy."

Oh, and my closest Frys is a hole, plain and simple. Shitty service, trashed aisles, low or no stock on far too many items. No thanks.

 

[RPD]

I got a 32" HDTV online over Black Friday from BB for $200, shipped free. It has proven to be a tremendous value, one that Amazon comes nowhere near offering. Granted, this was a one-time deal, but a deal nonetheless. A couple of years ago we got all new kitchen appliances through them, financed interest free for a year. Couldn't find a similar deal through Sears or Home Depot, our only other B&M options. So, while I understand why many dislike them, I have to say "Thanks, Best Buy."

Oh, and my closest Frys is a hole, plain and simple. Shitty service, trashed aisles, low or no stock on far too many items. No thanks.

You are comparing a Black Friday deal to normal prices as if thats the norm. MMMmmk.

 

[Blitzvogel]

The BBs in my area are all pretty nice, decently staffed, and as far as prices go, I've bought many good deals. In fact, I think every laptop I've ever bought was from BB. Of course, Fry's, CompUSA and Microcenter are where it's at for components.

I will agree that BB staff tends to be quite average, but so is the local Fry's. CompUSA's staff is like a ravenous pack of wolves, because they are overstaffed and obviously don't make the money needed to pay them, so competition between employees is probably fierce. Microcenter is pretty awesome though, but it's a far drive, as it's in north Dallas, and I live in South Arlington. It's certainly not a trip to make in the afternoon when traffic is hell.

 

[jhansman]

You are comparing a Black Friday deal to normal prices as if thats the norm. MMMmmk.

No, not really. What I'm saying is, when I was ready to buy, BB had the best deal going among all the online offerings I could find[I/] for BF. I didn't have to wait, freezing in line all night (although I could have). Again, they also alone offered me a deal on thousands of dollars in appliances no other store would. Don't get me wrong, I love Amazon, Newegg, etc. for the deals I get there. For these purchases, however, BB outdid the competition, and I'm glad.

 

[RPD]

Using Black Friday to justify any pricing is lunacy, your above statement or clarification doesn't change that.

Almost any store offers 0% financing on most big purchases these days, that seems to be the norm.

 

[JimKiler]

Best Buy should be more like their neighbor Target. Both are Minnesota based companies. Target used to push credit cards when you walk in, then asked at checkout if the register promted the cashier to do so, then stopped all together. I finally got my Target card when they offered 5% off purchases.

I had friends who worked BB 15 years ago and it was the same back then with one exception, they still pushed the warranties but without the internet BB prices were cheaper than the other stores. I used to love BB but now I only go there on blue moons.

Also Ultimate Electronics was in our area for a few decades and predicted to go bankrupt and it them 10 years so I would say BB will take longer assuming then don't make a turn around which we all would prefer.

 

[0roo0roo]

amazon/newegg/frys....... best buy is unnecessary.
best buy doesn't even have lower prices to make up for their lack of product variety.

but yea the article breaks it down very well, going to best buy is a hassle. either employees bother you with bs or you stand in lines to fix things...staffing for lines..always a minimum even when there are plenty of employees standing around doesn't jackshit. a lot of the time, like it was at circuit city before they fell, it feels like they think they are doing you a favor letting you buy their stuff.

 

[spacejamz]

While it does happen, it happens so rarely most people probably don't even bother checking best buy anymore for their prices. Everything is retail. I only bother to look if I need something right away in a store and am willing to pay full retail price for the convenience/need of having it right away.

There are numerous deal sites out there that let you know IMMEDIATELY if they have deal worth checking out.

Why do you assume that most people shop like you do??

 

[senseamp]

BB will have to change their business model. Instead of taking a huge margin on product they sell, they will need to take upfront cash for displaying the product, and a smaller margin for selling it. Otherwise they will simply be displaying devices for free to people who then go buy those devices somewhere else online for less. They need to align their profit centers to the value they add. The main value of a B&M store is allowing the consumer to touch and interact with the device. The actual delivery of the product to the customer is a much smaller value add, since the customer can get the product from anywhere. Best Buy needs to charge manufacturers more marketing money for making their devices available for consumers to touch. That way they will profit even if the consumer then buys it from a competitor online. That increased profit can then be used to lower product costs and increase actual sales volume at BB.

 

[JimKiler]

BB will have to change their business model. Instead of taking a huge margin on product they sell, they will need to take upfront cash for displaying the product, and a smaller margin for selling it. Otherwise they will simply be displaying devices for free to people who then go buy those devices somewhere else online for less. They need to align their profit centers to the value they add. The main value of a B&M store is allowing the consumer to touch and interact with the device. The actual delivery of the product to the customer is a much smaller value add, since the customer can get the product from anywhere. Best Buy needs to charge manufacturers more marketing money for making their devices available for consumers to touch. That way they will profit even if the consumer then buys it from a competitor online. That increased profit can then be used to lower product costs and increase actual sales volume at BB.

That is a good idea, isn't that what grocery stores do? Charge for shelf space since there is more demand than supply when it comes to shelf space at the store. Do other stores charge for space?

 

[vi edit]

If Best Buy goes down it will be a hit to many online businesses. I really wonder how many people actually go to Best Buy first to look at a high priced TV or laptop and see what they think about it and then go home and order it for less on Amazon? People still want to physically inspect large dollar purchases before buying. And truth be told, the last several high dollar items I've bought at Best Buy were all cheaper than I could get at any other retailer.

My Panasonic Plasma was on sale for over $100 less than Amazon offered. My Macbook Air was less than Macmall was offering it. My Xbox for $199 for the 250 gig Holiday bundle was actually more like $140 after I applied the reward zone points I got from the earlier two purchases mentioned. Many appliances in my house were hundreds less than any other retailer I could buy from after hitting up their recurring stacking appliance discount sale.

I've bought dozens of Disney movies from there as their price was the same as Amazon and I could apply the Disney coupons in store there.

As more and more states start getting cutthroat about online retailers collecting use tax, the built in 5%-9% discount that places like Newgg and Amazon have will phase out. Take away that physical preview that B&M retailers have and consumers are actually losing value. Plus it's presence helps keeps online retailers honest. If they have nothing physical/instant gratification to compete with, who's to say their prices won't creep up?

It's not a perfect store, but losing it wouldn't be the blessing that many think it would be.

 

[randomrogue]

It's not a perfect store, but losing it wouldn't be the blessing that many think it would be.

You might be right overall. I'm all for as much competition as possible. However those of us that live near a Costco, Frys, Target, etc might be pretty comfortable with Best Buy going out of business.

When I bought the TV mentioned above I checked consumer reports, went to Costco, went to Best Buy, and a few others like Walmart and Target, and then finally checked Amazon. The TV was $100 less at best buy than Amazon and they didn't have the same model at Costco but I could have gotten something similar for about the same price as Amazon. Walmart had some decent options. It's not like I had no place to go to see a TV and no good price options.

If you live in small town USA though and Best Buy is your only B/M well that's another thing altogether but I really wouldn't be surprised if the lot is filled by someone else in short order. If your town can warrant a Best Buy them I'm sure they can warrant a Walmart.