Best Buy's decline shows need to evaluate online strategies
Heath E Combs -- Furniture Today, September 17, 2012
The changing future furniture retailers face will be tough. Namely because of the Internet. Best Buy's struggles warrant looking into. A recent visit there really surprised me.
Seems like only yesterday - it was late 2008 - that Best Buy wiped out the old heavyweight electronics champion, Circuit City. Back then its stock topped $50 a share. More recently, Best Buy posted a $1.7 billion loss in March and said it would close 50 stores, then later said it would lay off thousands. During the last three months its stock has hovered between $22 and $17.
The bottom hasn't completely fallen out, but the stock of online retailer Amazon - where many of Best Buy's former customers have turned - is up more than $60 in the past six months to about $257.
In August, Best Buy hired a new CEO with no prior retail experience to replace former chief Brian Dunn, who took $6.6 million in severance, Forbes reports, including a bonus. Shares promptly plummeted about 10%.
My recent 1 p.m. Best Buy visit was in stark contrast to prior visits at the bustling store. Now, dim lights shone and crickets chirped.
I shuffled through poorly organized compact discs looking for treasured hip-hop albums from my youth, searching for dated values. Discs were not only overpriced, but in some cases, the exact same products appeared to have different pricing. It was almost like shopping in another decade in parts of the store.
Internet retail and comparison shopping moved Best Buy's cheese before the online retailer could even cut the rind. Best Buy is adapting to the new reality.
Times are changing. In March, Minneapolis-based market research firm ClickIQ noted that 29% of respondents to a smartphone research survey looked at product in stores before purchasing online. Also, 26% of respondents age 30 to 39 and 25% of those 18 to 29 used a mobile device to research a product in a brick and-mortar store. Those numbers fall drastically for ages above 40.
As this up and coming under-40 generation hits its buying peak, it's more important than ever to have some kind of relevant online strategy that appeals to how they shop - rather than looking at online as competition for brick-and-mortar stores.
A friend said the Internet is not a static advertising brochure for your store - it is a store and should be treated like one. He even suggested shopping the High Point Market an extra day for items you'll just sell online.
If Best Buy can go from the top of the heap to struggling to compete in just four years - and it's selling the devices that may be putting it out of business - we should all take a look at our online strategies more.
- Jan 10, 2012