Best Buy Closes 50 Stores, Set to Open 100 Mobile Stores

[admin]

On Saturday, Best Buy slipped out that it's shutting down 50 of its retail stores. In an attempt to avoid the fate of Circuit City (which officially closed in 2009), the retail giant is trimming the fat and cutting 400 corporate jobs and nearly $1 billion dollars in costs. What was odd was that the company indicated it would try and find jobs for those being laid off (which would seemingly counter the effort to actually "cut" jobs). In any case what was even more surprising was the matching announcement that the company would open up 100 new Best Buy Mobile stores in 2013. The new stores will be smaller than their big box counterparts and based on the most profitable side of the business. mobile phones and accessories.

Discuss "Best Buy Closes 50 Stores, Set to Open 100 Mobile Stores" here. Read the article.

 

[runswithscisors]

My local mall has a Best Buy, and a few shoppes down, a Best Buy Mobile???

Seams to me like cutting out redundancies like this could help cut costs. I just hope that this isn't a sign that my Best Buy is one of the 50 getting the ax.

 

[BM1]

A more appropriate title would've been, "Amazon to close 50 showrooms nationwide."

People are finally figuring out it's a terrible place to shop not to mention they stock middle to lower tier products. The only thing I buy from them anymore is movies, music, and games. The last time I was there to buy some movies, I was being hawked by the DirecTV guy about "lowering my cable bills" even though I told him I wasn't interested and wasn't there to buy satellite service.

Customers don't like being solicited especially when they can walk out the door and purchase anything in your store online for less money and no hassle.

 

[Adam]

I'd be surprised, but Dan prepared us well.

 

[runswithscisors]

I'd still miss my Best Buy, nice place to hang out and play around with the electronics while the old lady shops for shoes. Besides, I have two years left on my Geeksquad protection plan on my laptop.

 

[sholling]

On Saturday, Best Buy slipped out that it's shutting down 50 of its retail stores. In an attempt to avoid the fate of Circuit City (which officially closed in 2009), the retail giant is trimming the fat and cutting 400 corporate jobs and nearly $1 billion dollars in costs. What was odd was that the company indicated it would try and find jobs for those being laid off (which would seemingly counter the effort to actually "cut" jobs).

I can only assume that they meant to say cut costs and plan to convert some employees' functions from cost centers (e.g. bean counters) to income producers (e.g. sales and marketing).

 

[Time_Stand_Stil]

The problem with large discounters is that they are like the airlines, cutting to the bone and even cutting off limbs so to speak. In the race to the price as well as lack of credible and professional service bottom only a few will be left standing.

Add the fact that customers can shop online for virtually everything a Best Buy and similar stores sells (incl. Best Buy and similar online service) well the stores do not offer much to draw cash paying customers. Yes, one can go to the store and buy with instant gratification and there will always be a market for that even in the discount sphere but not near as may outlets will be needed.

Since easily 8/10 electronics shoppers really could not bother to care to get any real quality of products and more so service they'd be just as happy buying their cheap electronics crap online for say $25.00 cheaper and ship to their door. C'mon we all have done it or do it, if not electronics then other consumer goods.

The discounters like Best Buy only make it worse for themselves by often having dull, lifeless stores, ill set up gear, no credible demo areas and very few staff who care and are paid well enough to care.

For the maybe 2/10 electronics shoppers who care to buy on value and to buy gear to appreciate we will see more of a return of the smaller, more specialized, goods and with better trained staff stores. Many of these stores will add online sales to their brick and mortar sales too. They do not need as large footprint which reduces costs, fewer low paid staff and staff they do/will have will ultimately be better paid, nor will they need as much volume sold through. The Hi-Fi/AV shop that will profit will connoisseur to shoppers and A/V fans who are not solely fixated on price but more so on value and enjoyment of the quality gear they will buy and use.

Larger electronics manufactures too will find it harder and harder to make viable profits as they chase the cheap buck to the ultimate drain pipe of nothingness. As I said 8/10 electronics shoppers haven't a care for quality, SERIOUSLY they don't. They will buy cheap crap and throw it out or see it break within 12-18 months to buy more cheap crap. The profit margin on this ideal for most electronics are maybe 5%-7% to even a larger retailer such as a Best Buy. A few bad months per year will put these larger stores behind the financial 8 ball.

As I said we will also see the failing of more larger electronics manufactures, that or merging as they have like airlines created a business model that will ultimately fail. The consumer will lose more in the end as less competition will see prices stabilize to a steady low point,which is not always a bad thing but the products get crappier and crappier. You will most likely have to buy more and more online as a shopper and to that I'm not saying it's a bad thing but only that it's a brick and mortar killer.

The smaller, better trained, better set up with better gear Hi-Fi/AV shops will again do better or well as long as they do not change from what will keep them profitable. Service the small segment of electronic buyers who care for value and/or enjoy the better quality gear. Endeavour to expand the say 20% if we are lucky segment of value orientated shoppers by educating more of the customers in the middle to be more discriminating and look for more value. Though that will only get you a few % more of possible shoppers. The rest of the cheap, throw money away on crap shopping society will keep gravitating to the few surviving box stores and online to keep buying low buck, crap. Not that all gear sold in these big box stores and online is bad, but too few of it is of better value.

Smaller more specialized electronics manufactures will do ok to even very well too as they will put out better quality products with good value and have a healthy profit margin to not have to sell as much in volume.

my 2 cents.

 

[Rubicon_Joey]

While I don't think my local best buy was on the list of 50 they plan to close, I have heard rumors that it will be closing in the near future. I'm not that upset about it either. It's not even a good show room any more. Last time I was there I set off an alarm on a cell phone and a lap top. I don't care enough about what the public thinks of me when I set off an alarm to run away, it's annoying enough that I don't hang around long enough for them turn it off. The time before that I went in to look at the Logitech remotes and they didn't even have a functional display. Most of their tvs are hooked up to some crappy low quality source that makes it hard to judge what they are capable of. Back when I was looking for an AVR I was let down again. None of their AVRs are connected to a tv so you could view the GUI. For me it's the easiest way to really see what a AVR has to offer besides amplification and without any type of display I'm stuck reading the manufacturers website, which is only a couple clicks away from authorized retailers with much better prices and basically the same customer service.

Between the lap top, router,cables,tv, receiver, remote, speakers and sub I have bought in the last couple years I could have spent several thousand at BB but, they simply either didn't have what I wanted or didn't have it at a reasonable price. I imagine I'm not the only one either...It's not a wonder they are having shut their doors....I'm surprised it's only 50.

 

[cpp]

The discounters like Best Buy only make it worse for themselves by often having dull, lifeless stores, ill set up gear, no credible demo areas and very few staff who care and are paid well enough to care.

well said.

 

[TLS Guy]

I'd be surprised, but Dan prepared us well.

Yes, he did. However there is a larger back story. It seems Brian Dunn has a rather well oiled fly, and had a distraction.

As you can imagine there is a lot of angst over Best Buy's problems in the Twin Cities. There have a lot of newsprint and TV coverage.

This page can link you to numerous articles from the Star Tribune. If you browse some of these articles you will get a good idea of the depth of the problem.

Rise and Fall of a Salesman is particularly revealing.

Yesterday, I had a good example of how the big box stores are not competitive.

In our Eagan home the Magic Chef gas range that was here when we bought the pace four years ago failed.

Now I'm not as able to recognize the junk out there in the appliance world as I am with audio. However with the likes of LG and Samsung in the market, I had a good notion there was plenty.

So I looked around for a good service man even though I was pretty sure the range was not worth fixing. I wanted to find out where the junk was. Service people find out about the junk pretty quickly! As I expected LG and Samsung were top of his list, and he had nothing good to say about them.

He made recommendations to go to a family owned business close by in Inver Grove Heights. He sells appliances and all American made. It is a mother father daughter business. They sell a lot of parts and also have an appliance recycling business.

So we found a range we liked. When I checked his price when you allowed for shipping his sticker price was better than the lowest Internet price. He was $1150 cheaper than Best Buy, who in any event could not deliver for three weeks. He was over $400 cheaper than the very large Twin Cities Appliance chain Warner's Stellian.

Now we bought and paid for the range at 11:00 AM.

By 2:00 PM it was being delivered. The new stove was installed and the old one out in less then 30 minutes. All for a delivery fee of $50.

The problem is that business is now just too big and they can't mind the shop.

Consumers need to be a lot more savvy. We never needed these Blue Shirts and their ilk to put honest hard working families out of business and still don't.

The Far eastern Junk by the way was about half the cost of the American made equivalent item. However I bet the American product is far more than twice the value of the Far Eastern product.

Best Buy and Warner Stellian really push that rubbish, and I bet there mark up is higher than on the American product. So I have a suspicion that the LGs etc are built down even more than is first apparent.

 

[bikdav]

Why doesn't Best Buy just buy the "remains" of Radio Shack?

 

[cpp]

Why doesn't Best Buy just buy the "remains" of Radio Shack?

Radio Shack mobile gear sales and consumer electronics gadgetry saw its stock shed more than 10% this month along with posting disappointing quarterly results. So Best Buy going after Radio Shacks crumbling share price and it's poor margins, well I say it's a bad idea following Radio Shack down the tubes in mobile.

The problem with Best Buy besides losing business to internet sites like Amazon and paying high operating expenses for the store they own, well there is almost nothing you can buy at Best Buy stores that isn’t cheaper and more convenient to buy online.

How to fix Best Buy # close the stores on the list, then shrink the sq footage of a lot to the bigger stores which reduces operating expense, inventory cost, headcount, benefits, taxes and insurance. Then Best Buy has got to meet the customers expectations and improve the customer experience which they fail at. And finally Best Best has got to train their people to be somewhat more intelligent than the customer and not read the back of boxes while "helping you".

 

[BMXTRIX]

I don't see, how in any way, this is good for consumers or the CE industry as a whole.

Best Buy may not be the favorite shopping place for those of us in the know, but for those who are just looking for a surround system to get started with, they may end getting relegated to Wal-Mart and Target instead. Hopefully we all know the type of true junk sold at those locations. So, instead of a mid-level LED/LCD Samsung, they will end up with a Funai display, or something worse because that is all they are able to look at.

Now, certainly, each Best Buy store has some good people and some bad people in it. Any chain, or even a store, with that many employees will have issues. Smaller places may do just fine when they know all of their employees very well, and fire, without regard, those who don't live up to certain standards. But, a store the size of a BB doesn't really have that ability. Not an excuse, just reality.

I've always liked Best Buy and I liked Circuit City, because, in our area, they had a lot of showcase. The Magnolia section offers some higher end stuff which is great to see, and they continue to bring in new stock. No matter how much you read online reports of different products, there is something far more appealing to getting in and lifting up a receiver to see how well it is built, how sturdy it is, how it has stood up to 10,000 people coming in and doing the exact same thing.

I won't cheer the downfall of Best Buy, and it certainly does NOT give way to a new generation of mom & pop retailers coming back into business.

I think the downfall of Blockbuster has shown us that once the Internet and automation has safely eliminated 100,000 jobs (Redbox/Netflix), then consumers are not interested in going back into a store. There is a huge pardigm shift right now from the B&M stores to online. People are getting far more comfortable with more and more of their purchases going through the PC.

Unfortunately, we are likely to lose Best Buy, and probably HH Gregg will follow. Then, if you want a product the ONLY way to purchase will be through online. Don't expect expert installation, or any support. Don't expect a place you can easily return it to if it breaks, or even if you just don't like it. Those are 'extras' and have 'cost' - and the average consumer clearly doesn't find that of any value.

I don't smile when I read stories like this and I truly wish BB the best of luck in getting through this and remaining strong for years to come.

As a small, custom A/V installer, I welcome Best Buy as a competitor and as a store to provide lower end solutions so that people can come to me later after they have been introduced to A/V.

 

[Adam]

Best Buy may not be the favorite shopping place for those of us in the know, but for those who are just looking for a surround system to get started with, they may end getting relegated to Wal-Mart and Target instead. Hopefully we all know the type of true junk sold at those locations. So, instead of a mid-level LED/LCD Samsung, they will end up with a Funai display, or something worse because that is all they are able to look at.

Nature abhors a vacuum, though. The mid-level gear would almost surely migrate into other stores if the ones carrying them now were to fold, if consumers showed an interest in it. That's my thinking, anyway. If there's a profit to be had in doing something, businesses will find a way to do it.

I can't argue with your reasoning on internet sales - being a huge fan of Amazon. I'm not against the natural evolution of sales, though (not saying that you are). When someone makes a product, they want to make it available to consumers. Consumers want that availability, they want selection, and they want a way to research the products - the internet provides a lot of that. Right now, the ability to see something in person isn't there on the internet, but that might be overcome soon with improvements in visual transfer of information. With images available on my mid-level display, I can already get a good idea of how something will look in person. Jobs are lost in some areas but gained in others, as has been true throughout time as technology and culture have evolved.

 

[cpp]

You know BMX you right on point, but what has happened Best Buy grew so fast, built such big stores and their operating expense got out of control, but as you noted, people are getting really comfortable with internet shopping. With a lot of 30 day return policies on audio equipment, camera equipment, computer equipment etc.. it's letting the consumer make the decision for 30 days without a sales person pushing a product. If the don't like the product they send it back. B&M stores need that same mentality to compete along with the internet price. But something else that will happen through out the US, in 2011, a lot of the larger internet sites like Amazon will start collecting sales tax, should the purchaser live in a state that houses the supplier like Amazon. It happens in California and SC, and other states.

"California tells online retailers to start collecting sales taxes from customers;
Beginning Friday, Amazon.com and other large out-of-state retailers will be required to collect sales taxes on purchases that their California customers make online."

I found these facts on 2011 internet sales

80% of individuals aged 32-44 buy products on the internet.

72% of people aged 55-64 and 71% of 18-32 year olds also purchase things through the internet.

With all age groups combined and overall 71% of all U.S. adults shop online.

Just pull up any site on internet statics and see the jump in internet sales
• Online Shopping - statistics and facts | Statista

 

[bikdav]

Oh.

You know BMX you right on point, but what has happened Best Buy grew so fast, built such big stores and their operating expense got out of control, but as you noted, people are getting really comfortable with internet shopping. With a lot of 30 day return policies on audio equipment, camera equipment, computer equipment etc.. it's letting the consumer make the decision for 30 days without a sales person pushing a product. If the don't like the product they send it back. B&M stores need that same mentality to compete along with the internet price. But something else that will happen through out the US, in 2011, a lot of the larger internet sites like Amazon will start collecting sales tax, should the purchaser live in a state that houses the supplier like Amazon. It happens in California and SC, and other states.

"California tells online retailers to start collecting sales taxes from customers;
Beginning Friday, Amazon.com and other large out-of-state retailers will be required to collect sales taxes on purchases that their California customers make online."

I found these facts on 2011 internet sales

80% of individuals aged 32-44 buy products on the internet.

72% of people aged 55-64 and 71% of 18-32 year olds also purchase things through the internet.

With all age groups combined and overall 71% of all U.S. adults shop online.

Just pull up any site on internet statics and see the jump in internet sales
• Online Shopping - statistics and facts | Statista

It sounds like I need to set up a credit card account just for internet purchases.

 

[oat07]

I don't see, how in any way, this is good for consumers or the CE industry as a whole.

Best Buy may not be the favorite shopping place for those of us in the know, but for those who are just looking for a surround system to get started with, they may end getting relegated to Wal-Mart and Target instead. Hopefully we all know the type of true junk sold at those locations. So, instead of a mid-level LED/LCD Samsung, they will end up with a Funai display, or something worse because that is all they are able to look at.

Now, certainly, each Best Buy store has some good people and some bad people in it. Any chain, or even a store, with that many employees will have issues. Smaller places may do just fine when they know all of their employees very well, and fire, without regard, those who don't live up to certain standards. But, a store the size of a BB doesn't really have that ability. Not an excuse, just reality.

I've always liked Best Buy and I liked Circuit City, because, in our area, they had a lot of showcase. The Magnolia section offers some higher end stuff which is great to see, and they continue to bring in new stock. No matter how much you read online reports of different products, there is something far more appealing to getting in and lifting up a receiver to see how well it is built, how sturdy it is, how it has stood up to 10,000 people coming in and doing the exact same thing.

I won't cheer the downfall of Best Buy, and it certainly does NOT give way to a new generation of mom & pop retailers coming back into business.

I think the downfall of Blockbuster has shown us that once the Internet and automation has safely eliminated 100,000 jobs (Redbox/Netflix), then consumers are not interested in going back into a store. There is a huge pardigm shift right now from the B&M stores to online. People are getting far more comfortable with more and more of their purchases going through the PC.

Unfortunately, we are likely to lose Best Buy, and probably HH Gregg will follow. Then, if you want a product the ONLY way to purchase will be through online. Don't expect expert installation, or any support. Don't expect a place you can easily return it to if it breaks, or even if you just don't like it. Those are 'extras' and have 'cost' - and the average consumer clearly doesn't find that of any value.

I don't smile when I read stories like this and I truly wish BB the best of luck in getting through this and remaining strong for years to come.

As a small, custom A/V installer, I welcome Best Buy as a competitor and as a store to provide lower end solutions so that people can come to me later after they have been introduced to A/V.

I agree. I use to work at BB ages ago and I hated the job but loved the electronics. Consumers do not realize how much we need these types of stores. Places like Walmart do not provide enough merchandise to compensate for the loss of a BB. Sadly, this looks like a oneway street for the industry. I like internet shopping, but almost all items I wish I could buy locally so that I can see them and test them first.

 

[bikdav]

That's the big point; to be able to try out a product first before buying it. Buying something sight unseen is not very comforting.

 

[LAB3]

I'd still miss my Best Buy, nice place to hang out and play around with the electronics while the old lady shops for shoes. Besides, I have two years left on my Geeksquad protection plan on my laptop.

I purchased Best Buys extended service policy on my Yamaha AVR so I would not have pay freight costs sending a AVR to be repaired and not have to deal with the factory that made it. I spent several hours dealing with Onkyo Customer Service several years ago when my AVR fried HDMI parts 3 times in 18 months. That got expensive and any money I saved by purcasing on-line was gone and boxing it up and going to the UPS store. I hope my local BB does not go out of bussiness.