Best Buy Faces Tough Going
It was accepted wisdom two-plus years ago when Circuit City
was closing its stores that Best Buy would be one of the biggest beneficiaries.
A RetailWire poll
in January 2009, for example, found that 48 percent thought Best Buy would "significantly" or "somewhat" better
benefit from the removal of a major rival compared to 21 percent who thought
Wal-Mart had the most to gain. The reality for Best Buy, according to a Wall
Street Journal report, has been quite different.
The consumer electronics
chain has lost share over the past couple of years and has been especially
vulnerable in the television and computer categories. While some may assume
that a rebound is just a matter of time for Best Buy, the Journal article
suggests that the growth of retailers including Amazon.com, Costco, etc. poses
a direct threat to the chain’s share of market.
Best Buy is hindered by two
basic facts: 1) The products it sells are available in many other places
and; 2) Prices on those items are easily compared online and through mobile
apps. Best Buy itself offers one of those price comparison apps.
of ISI Group told the Journal that Best Buy has become
Last month, the company revealed it was looking
at going to some form of every day low pricing to try and attract shoppers
without the need for a sale. Other recent changes have included dropping
fees on returns and launching a new product buyback program to encourage
consumers to trade up to new technologies.
Discussion Questions: Why does Best Buy continue to lose share? What must it do to reverse the trend?