Best Buy Still Doesn't Get It

Best Buy (NYSE: BBY  ) laid out its road map during this morning's Analyst Day.

It knows where it wants to be, and that place is somewhere else.

The meandering consumer electronics giant is looking to scale back its big-box presence in the coming years, realizing that consumers have moved on. Back-to-back quarters of cascading revenue, comps, and earnings can be as sobering as a cup of coffee rimmed with smelling salts.

In an effort to regain relevance before it becomes the second coming -- and going -- of Circuit City, Best Buy is spelling out four paths for growth.

  • Best Buy will begin opening more stand-alone small-box locations, targeting hundreds of new Best Buy Mobile stores selling the latest smartphone gadgetry within the next five years.
  • Everyone knows that Amazon.com (Nasdaq: AMZN  ) is eating the chain's lunch in cyberspace, so the retailer plans to double its online sales to $4 billion in the next three to five years.
  • China? Who doesn't love to play the China card? It wants to double sales in China over the next five years through the Five Star appliance chain it hooked up with five years ago.
  • Best Buy also wants to grow its video game and appliance sales.

It sounds great on paper, but reality is already snickering in the corner.

A small-box chain that specializes in selling wireless plans? That sounds a lot like RadioShack (NYSE: RSH  ) , a chain that also isn't doing so hot. Wal-Mart's (NYSE: WMT  ) also in the process of taking over mobile kiosks within its warehouse clubs, so it too may jump into the fray. In short, this may not be the growth opportunity that Best Buy is hoping for here.

As for the online push, every bricks-and-mortar chain wants to beef up online sales. Getting there is the problem. In this dot-com age of information, where price checks and rival checkouts are a click away, pricing is everything. Until Amazon.com is forced to tack on sales tax in most states it will be hard for Best Buy to compete with true e-tailers.

Consumer-facing American companies outside of KFC parent Yum! Brands (NYSE: YUM  ) have had a difficult time cashing in on the economic boom in the world's most populous nation. Best Buy's doing this the right way with a local partner, but there are political risks and cutthroat competition that will keep this from moving the needle.

Beefing up the retailer's presence in video games makes sense. GameStop (NYSE: GME  ) is growing in this iffy climate, and the shares hit a new 52-week high this week. Best Buy is now even dabbling in GameStop's sweet spot of video game trade-ins. However, video games are the next major media form to follow CDs, DVDs, and books into digital delivery. Best Buy may not want to hitch itself to that console controller.

I applaud Best Buy for refusing to stand still, but it's either too late to make some of these moves or it's just moving into areas that won't be as great tomorrow as they were yesterday.

It's too late, Best Buy.

Let's say that you're tapped as Best Buy's new CEO. What would you do to get the chain back on track? Share your thoughts in the comment box below.

Best Buy and Wal-Mart are Motley Fool Inside Value picks. Amazon.com and Best Buy are Motley Fool Stock Advisor recommendations. Wal-Mart is a Motley Fool Global Gains choice. Wal-Mart is a Motley Fool Income Investor selection. Motley Fool Options has recommended writing covered calls on GameStop. Motley Fool Options has recommended a diagonal call position on Wal-Mart. The Fool owns shares of Best Buy, GameStop, RadioShack, Wal-Mart, and Yum! Brands. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz doesn't shop at Best Buy as much as he used to. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On April 16, 2011, at 1:18 PM, daleaelspas wrote:

    Sell out to Walmart! open mini Best Buys in each Walmart location. Walmart's "Best Buys"

  • Report this Comment On April 17, 2011, at 7:51 PM, colinnwn wrote:

    Whether Amazon or other etailers have to tack on sales tax has little to do with BestBuy's lack of competitiveness. When I'm comparison shopping, I never consider tax. I consider the advertised base price and the reputability of the company.

    BestBuy is rarely competitive on the base price of the item. I'm sure this is because of store overhead. If they want to be competitive online, they're gonna have to lower their prices to within 10% of the lowest price available anywhere online.

    This may mean prices are higher in-store. It is an open question whether consumers will accept this. In-store does mean no shipping cost and immediate gratification. If consumers aren't accepting of the price difference, perhaps they could make up for lost revenue with in-store volume if they equalize the price and market based on being able to go to a BestBuy store and get a comparable price to the best available online (with price guarantee that is redeemable online too).

  • Report this Comment On April 17, 2011, at 7:53 PM, jsnms wrote:

    Whoops! Advertise more. Boost up sales and brand name.

    Have teaser ads (limited quantity) on items sold at a slight loss just to get more traffic in the store. Keep margins on unadvertised things.

    Try to get exclusive marketing deals with wireless networks to introduce hot new devices.

    Offer free videos over the internet to frequent customers like NetFlix and Amazon.

    Reduce stock on electronics and technology and (yikes!) add a section for convenience store items and maybe groceries (like a Walmart SuperCenter?).

  • Report this Comment On April 17, 2011, at 9:02 PM, rarelyfollowing wrote:

    Best Buy is dreaming about online sales. It can never do it.

    10% difference in sales tax(if you are in ca etc.).

    Absolutely crappy systems, they are never linked to each other. try buying at bestbuy.com and it is just so awkward to talk to the customer rep on phone.

  • Report this Comment On April 17, 2011, at 9:08 PM, extraspecial wrote:

    BestBuy's revenues aren't low because of what they're stocking, or because of their big-box format. And they could conceivably compete with brands like Radio Shack or Walmart, who are also seeing declines. In fact, all the retailers are seeing declines in every sized market. It's not the format, people. Large corps can mix-and-match groceries and big-screen TV's until they all go chapter eleven, but they won't figure out what Amazon is doing right.

    Here's a hint - it's not "online retailers" who are edging out the bricks-and-mortar places. It's Amazon. Buy.com? nope. overstock.com? not really.

    When CC went under, their liquidation company sold off their stock at 40% off. I could STILL get their electronics and media cheaper on Amazon. The 40% discount brought their prices down to equal that of their competitors.

    Circuit City wasn't the loser in a bricks-and-mortar deathmatch. That would imply the existence of a winner. Circuit City is just the canary. Radio Shack and Best Buy are still digging away in that mine. All of these retailers have hitched their wagons to intolerably high prices ($40 for a $2 USB cable. This is not an exaggeration), dependence on the Music and Movie Industry's dead model of old media sales ($30 for a DVD movie. You are completely kidding, right? If DVD's cost $4 each, the MPAA member studios wouldn't be going bankrupt right now, they'd be rolling in their money piles), and spurious "service contracts" that are so useless that people pass on the worthlessness of warranties as a form of folk wisdom, passed down from parent to child and among groups late at night by the campfire. Best Buy habitually wiggles out of their warranty obligations, and everyone knows it.

    THAT'S why the big boxes are going under, not because their box was too big, because Amazon can achieve magic price reductions that customers can't resist, or because they didn't have the right groceries-to-TV's ratio.

    As long as retailers are more interested in cheating the customer than they are in providing customer service, they will go under. Unfortunately, almost all of the big-corp retailers subscribe to the same screwy business philosophy. Amazon doesn't, and that's why it looks like "online retailers" are killing in-person sales. But it's not an online-offline split, it's a customer-service vs ripoff split. If you're lucky enough to live near a Fry's Electronics, you'll see how a big-box retailer can thrive: customers feel comfortable buying from Fry's because the prices are only a little higher than online, the staff is actually trained in the technology (as opposed to being trained in how to tell you whatever it is they think will make you buy something), and they will take returns without argument or grief. They will honor their service contracts without hedging. And business is booming.

    In short, it's not the format. It's the service, stupid.

  • Report this Comment On April 17, 2011, at 9:17 PM, extraspecial wrote:

    And jsnms, yeah, they totally SHOULD boost up the brand, but the only way to do that in the 21st Century is to not, in reality, suck.

    Advertising just does not work anymore. Your actual performance is your advertising. Look on Google Maps for "Best Buy" and then check how many stars reviewers give individual locations on average. This is a good gauge of the consumer emotional climate. People who shop at Best Buy are sorry they did so, and they freely talk about it.

  • Report this Comment On April 17, 2011, at 9:51 PM, dancingcricket wrote:

    Competing against internet prices just isn't going to happen. The only things the brick and mortar currently offers thats really valuable is A) convenience and B) service. A is a non-issue, as for the things you need right now, you can go to walmart, or any super store for the things you need right now. Service is where they need to concentrate. Boost up their geek squad support. Help people build customer computers, home networks, sound systems/entertainment systems for their home, and install them. Expand into doing the same thing for businesses. Offer solution packages where you provide the equipment for a office, including network, AV equipment, desktops and laptops, mobile equipment, install it for them, make sure it works, and offer a maintenance plan.

    Consider reducing the size of the store, but have it be a convenient place to pick up ordered items so that customers have a secure place to pick up their internet orders, as opposed to having their new laptop they just ordered sit outside their front door. On that note, if they're looking at getting into being more gamer friendly/oriented, perhaps have hosted tournaments for various games at some of their locations. Build up a community of people who will be coming in and out of the store, walking past the merchandise, and who become somewhat attached to the store due to familiarity.

  • Report this Comment On April 17, 2011, at 11:27 PM, nobamaexpress wrote:

    Best Buy's distruction was years ago.

    they used to have good prices, and sale prices were competative.

    they got greedy right before circuit city crashed and burned.

    I was a die hard best buy shopper, I stopped opening the ad in the Sunday paper. all of my friends did the same.

    It just took years to show up in revenues.

    Last time I was in a best buy store, the music was so loud I could not shop. It was so loud I believed it to be a hazard to the workers. I pointed this out to a store manager, who turned the music down, but was still to loud.

    Sorry to tell them, the 50+ inch TV that I buy make up a lot more revenue than the teenagers video game.

    may they rest in peace, it over for them since they jacked up the prices.

  • Report this Comment On April 17, 2011, at 11:34 PM, nobamaexpress wrote:

    they have the worst internet sales site. A friend of mine in Chicago area got an empty box from them, and they would not fix the problem. He called the local news, and got on tv to complain how bad they handled the issue. After bad pr they gave him a new shipment, it was a two hundred dollar item.

    lets see how much we can charge for a hdmi cable. What a bunch of fools, do they think that after somebody pays ten times to much for a cable that the person will come back to shop at their store again.

    The pricing strategy for this store is foolish. Come on maybe the should walk into a costco, the prices may not be the lowest compared to internet, but the return policy is great.

  • Report this Comment On April 17, 2011, at 11:43 PM, EmilyFinn wrote:

    1. Way better customer service. Go to Nordstrom or the Apple store for examples.

    2. Generous return policy.

    3. Free support- see Apple store

    4. Keep track of what I buy so returns and support are in your system and I don't have to keep my silly receipt.

  • Report this Comment On April 18, 2011, at 2:09 AM, fantoozler wrote:

    Why does Fry's Electronics (privately held) appear to be succeeding? It is similar to Best Buy in that it has big box stores, weekly multiple page pull out ads in newspapers (e.g. San Jose Mercury-News).

    They have an internet presence, but I don't know how well that is doing. It has an ok return policy (I've used it). Their prices are reasonable, not always the cheapest but I don't feel I've been taken.

    The key seems to be real estate. They don't occupy prime _retail_ real estate; going to Fry's is a separate trip. The San Jose, Sunnyvale, Campbell and Palo Alto stores are not part of any retail mall. The Las Vegas store is well off the Strip, but the Strip will eventually reach them.

    In contrast, one Best Buy here is in $antana Row, a high end retail space.

  • Report this Comment On April 18, 2011, at 3:05 AM, dalet5772 wrote:

    What I would do if I were Best Buy is nove their profile into auto dealerships and get a tie in from say Simon Cowells new X factor - It would bring excitement into the car buying experience and they could re-ignite their installers to features that are not available in the standard Automobile.

  • Report this Comment On April 18, 2011, at 6:07 AM, iminok wrote:

    Best Buy had a predators goal. Everywhere there was a circuit city store, a best buy popped either across the street or within a mile. They lowered their prices to put Circuit City out of business and offered more merchandise most under their own brand name Dynex. When Circuit City was bankrupted Best Buy raised their prices substantially. I hate going to best buy, so I shop online at Amazon, always comparing and choosing free shipping. I still shop at my local Radio Shack because the have merchandise that Best Buy does not carry. It is a blast back into the 70's and 80's when Radio Shack sold computers.

  • Report this Comment On April 18, 2011, at 6:51 AM, hellerhighwater wrote:

    I used to work at best buy in the late 90's early 2000's. You know why people shopped there? Because of the people... Employee training was excellent, employees were paid well so the job market was competitive, there was a single manager for every department so employees were constantly getting the attention they needed to make sales, and the customer benefitted from a knowledgable and well trained sales force. '

    By the time I left the company in 2005, the entire ethic had changed. There were at most two managers at any time, any issue took forever to resolve, employees were getting paid less, had less incentive to work hard (no supervision and reduce possibilities for advancement), and training became a joke. They cut their store management, and soon after began hiring line-level people at reduced rates. Bad idea.

    Best Buy's greatest resource was its people. Not its CEOs, CFOs, and the like, but its line-level employees. Think about it; what does BB have that Amazon does not? The answer is people!! It's great to have someone there to answer your questions, guide you through your purchase, and make sure you've got the things you need. Best Buy lost their edge when they decided to save money on labor costs, effectively eliminating the one thing it had against its most vital competitor.

    You know why I shop at Amazon? Better customer service. I'd rather deal with a web page than your average BB employee.

  • Report this Comment On April 18, 2011, at 7:05 AM, Intuos wrote:

    Back before the internet came into play I was initially looking forward to Best Buy building a store here because no other store chain for 100 miles carried what they had.

    That was really their niche - making higher tech items available for hands on purchase in often rural areas. I remember driving 120 miles to visit one of their stores to marvel over the stuff not carried by local stores.

    Now, they have come and gone and have no niche. I find they overpriced compared to online and other local retailers. Why pay $30-40 for a USB cable when I can buy one at the $1 store.

    Their local "mini" store concept also does not work because its missing two essential things that would actually cause me to at least visit the local store - appliances and Apple computers.

    I find their Geek Squad to be more like a Idiot Squad. I took one of my Mac G4 computers in to see if they had a replacement hard drive as I didn't want to wait to order one online. When I got it home I found that the guy had broken the latch and the drive would not actually work. They then lied & denied they had broken it.

    I don't like the way they treat you like a criminal upon entering and exiting the store by having a typical rent-a-cop guy standing at the entrance.

  • Report this Comment On April 18, 2011, at 7:06 AM, cbmtrx wrote:

    1. Price, price, price. I've never bought anything at Best Buy simply because I can get it cheaper online, most often with free shipping.

    2. I don't want to become a best buy special club member just to get BB dollars on some future purchase. Get more discounts/coupons going on a regular basis (like newegg.com).

    3. What does "best buy" mean? It means the best buy I'm going to get. So then why not institute a group-buy setup where customers interested in a certain product's arrival can get first dibs--and a lower price--by buying into the group price. Guaranteed profit for BB, moving merchandise and happy customers.

    Fly you fools!

  • Report this Comment On April 18, 2011, at 9:50 AM, icantknow wrote:

    Is there "any" play to this stock? At what point does the P/E matter? Thx

  • Report this Comment On April 18, 2011, at 4:23 PM, Shamwow wrote:

    Best Buy doesn't get a lot of things. It has no idea what customer service is. I hate going to Best Buy because all they want to do is push their products on you and it takes an act of Congress to return something if you're not happy with it. And forget about complaining. They will never respond and they will never do anything to change or help you out. If Best Buy goes the way of Circuit City, it won't surprise me in the least.

  • Report this Comment On April 18, 2011, at 4:26 PM, CanadaDreamer wrote:

    I ONLY buy from Best Buy when I need something immediately - I buy only what I can buy online (checking Amazon to make sure) and then return for a refund once my online order arrives a few days later. Doesn't take more than one trip to realize that BB is usually the worst buy, with terrible customer service (however, their return people are probably the best in the store - no doubt from lots of practice). That said, I'll be mildly irritated if they go BK like CC and all the rest, as I'll have to drive a bit farther and put up with Fry's herds and their lousy customer service (which is only fractionally better than BB).

  • Report this Comment On April 18, 2011, at 4:34 PM, walkerpercy wrote:

    I have walked into a BestBuy store maybe twice in the last two years and did not buy anything.

    Why?

    1) I can buy the "easy" stuff online: games, music, movies, etc. Why go to a store for that stuff anymore?

    2) Cell phone plans: prefer working with the provider directly.

    3) Cameras/Video Cameras: better deals online after you've done your research on some really really good review sites.

    4) PCs and other computer hardware: Again, online.

    5) Home Applicances: Sears. Better stuff and far better customer and warranty service.

    6) TVs: This was indeed the last item I looked for at a BestBuy store. Maybe the only reasons why I would walk back in. Why didn't I buy? My family has been TVless for 1.5 years now. Catch what we need to watch over the Internet.

    What reason is left to walk into a BestBuy store anymore?

    A new CEO will have to find a reason quickly.

    If they remain focused on consumer electronics here is one possibility:

    You know how in pre-school these days they have "centers"? Kids go from one activity to the next and each activity has its own place or "center".

    Change the store concept to centers. A center could be a simply kiosk or area of the stuff that caters to a particular BRAND. Thus, they will need to create better partnerships: Apple, HP, etc. So when I walk in the store, the question I am seeking to solve is: What can Apple do for me today? What can HP do for me today?

    Maybe a crappy idea. Hence the reason why I am not a CEO :-)

  • Report this Comment On April 18, 2011, at 4:40 PM, arkbiz wrote:

    In my experience, BB is likely to fail less from a defect in its grand strategy than from a poor attitude toward customers.

    Before I gave up on them, I found that they frequently didn't have what I was looking for (though Amazon did), sometimes gave poor advice, didn't respond at corporate level to customer complaints, and even lied once, at store level, trying to avoid a bad report from being channeled up the chain.

    Their attitude toward customers (insofar as I have seen it manifested) is unsustainable.

  • Report this Comment On April 18, 2011, at 4:41 PM, NeverBuyRetail wrote:

    I go to Best Buy to try a product. Touch it, use it, and go home and buy it from Newegg or Amazon.

    Best Buy prices are silly and absolutely ridiculous if you're near a Fry's.

    Can't stand the the service at Best Buy. When you need help, there's no one around. When you don't need help they pester you like a car's salesmen. None are trained properly and most are below average with product knowledge.

    The internet has given customers the tool to do their own homework and educated themselves with products, competitors, and pricing. All bad news for Best Buy.

    Fedco, Zody's, Kmart, Toyrus, Circuit City, CompUSA, all bit the dust.

    It's not Amazon or Walmart that's killing them. It customers learning they can get killer deal delivered to their door with few clicks of the mouse.

  • Report this Comment On April 18, 2011, at 4:45 PM, robt55 wrote:

    I agree with extraspecial 1,000%. The reason CC imploded was because is was run by the same thieves that ran Radio Shack. Fleece for all you can was the company moniker.

    Way too much information floating around on the net for it not to become common knowledge how customers are treated.

    That svc agreement scam can not be emphasized too much. I was dumb enough to buy one (and only one) 15 years ago for a business computer. Come service time - sure, all we have to do is send it to Miami. Yeah, hold on while I close up that department until I get it back.

    So that $100-$200 from the phony svc agreement cost them a business and consumer ( I have 5 kids ) customer for life. I won't even begin to think of how many people I have shared this with. Now I can gleefully add all of you to the list.

  • Report this Comment On April 18, 2011, at 4:47 PM, callie183 wrote:

    If I were the new Best Buy CEO I would lay off 1000 staff, increase my own salary proportionately, and award myself annual company-paid vacations in both Europe and Barbados.

    I would then lay off another 5000 staff, and immediately start using that money to make contributions to politicians.

    Why work hard to sell a $120 camera and actually be required to provide service? You could sell the same camera to government for $15 000 and nobody will even care if it works. When it breaks you can charge the government $5 000 to diagnose the problem and then another $5 000 to fix it.

  • Report this Comment On April 18, 2011, at 4:57 PM, liveoilfree wrote:

    I used to walk into Circuit City, seeing the staff scurry from "sign in station" to the next, wondering WHY it still existed. Now, I get the same feeling in Best Buy: it isn't the price, nor the rude staff, nor the obsolete inventory, nor the bad policies and somnolent management.

    It's the cloud of doom that haunts the joint.

  • Report this Comment On April 18, 2011, at 5:01 PM, mosbos wrote:

    Much like hardware manufacturers (e.g. Dell, HP, IBM, etc) realized that there was a need to diversify its revenue stream with services offering, BestBuy needs to understand that it is and will continue to lose in a model that pegs earnings from selling heavily margin sensitive electronics, that consumers want for the lowest price, taxes notwithstanding. It will need to shrink the footprint of its stores as it simply cant pass the overhead to the consumer, the way Amazon's, etc dont need to. Nevermind it will never compete with the likes of Walmart, since it doesnt offer one stop shopping for anything other than electronics, and Walmart has more stores. Did I mention Costco, Sam's and BJ's??

    Where I think BestBuy can add value is beefing a services and support business, much like what it's doing with Geek Squad. The services margins are way higher than selling electronics and if anyone who owns a Mac can attest, its convenience and experience dealing with Apple way outways anything offered by Microsoft.

  • Report this Comment On April 18, 2011, at 5:08 PM, gotanmba wrote:

    Best Buy is in a phase of identity crisis. They are the biggest dogs on the block and are not sure where to go now. They are desperate for growth and are headed toward implosion unless they can recognize the same issues Starbucks went through a couple years ago, which was growth for growths sake. This utilitarian perspective will only cause self-induced retraction while alarmist upper management flounders to present honest and viable solutions to C-level management. Howard Schultz was quoted as saying, "We were looking at growth as a strategy, when it should have been an outcome." (Interview with Katie Couric from CBS news)

    So we know Best Buy believes they can open more stores and enter more markets to create revenue, but the problem with this mentality is maintaining brick and mortar is expensive no matter how large or small. There was a time when people entered Best Buy for advice and to see new electronics. But it's hard to compete with the likes of Newegg, Amazon, Apple, and the new Microsoft Stores.

    Perhaps sensible contaction of the organization is what is needed. Back to the basics of what made it successful in the first place:

    - Lose the high margin accessories.

    Everyone knows they can get a cable, or switch, or just about anything cheaper online. Only the uninformed purchase a $99 HDMI cable from Monster.

    - Understand your market.

    Carrying 100 flat panel TV's looks good in the store, but why carry the inventory? That's cash that can be used somewhere else. I purchased my Samsung 40" LED at Sams Club. They had 10 to choose from. Washers and Dryers? They take up valuable (and expensive!) floor space. Leave this to others. Companies that offer a few items and DO IT WELL are very successful.

    - Focus on the essence of Best Buy.

    Insignia? Dynex? Time to grow up and sell/service the products that customers love. If I wanted to generic electronics I would by items from Coby at Toys R' Us.

    - Boost the online presence.

    When I search Google for "Buy a TV" Best Buy is not visible to me, I have to scroll down. The word "electronics"? Best Buy is positioned in the top of the page with Amazon (who is #1) and RadioShack. "Buy a computer"? Best Buy is there, along with Newegg, CDW Warehouse, TigerDirect. How can they charge more then these discount retailers and expect to maintain a large brick and mortar presence as well?

    Learn from GM Best Buy. They had to cut some of the dead weight from their lineup, streamline their operations, and innovate.

  • Report this Comment On April 18, 2011, at 5:13 PM, gruntboyx wrote:

    1. Best Buy needs to improve their customer service. They need to take to heart the Customer is always right. When people think of best buy they equate it with High prices, high pressure, and rip offs. They need to improve their image to compete with Amazon.com. Amazon will return anything, and pay for the shipping if its an error on their part. Amazon will post more information about a product to allow comparison shopping. Best Buy puts up a 3x5 post card with the price taking up 25% of the real estate. Then they fill the card up with random facts that are half the time incorrect. Amazon allows the customer to review the product. Why go to a best buy when you can get a better customer experience and do better research on a product from the comfort of your own home. Not to mention you don't get harassed for credit card offers. Also, it is easier to check out a shopping cart at Amazon, then it is to be harassed for warranties and magazine subscriptions by the sales clerk at Best Buy.

    2. Improve the shopping experience. I am tired of walking into a warehouse with the decibel level at 100db from car stereo going off.

    3. Utilize your brick and motor experience to allow the shopper to touch and hold the product in ways an online experience cant. Dont lock the device down to a shelf and expect no one to touch it. I want to see if the product fits my needs. Which means let me hook it up to my smartphone, run a different cable, load a different software tool, whatever that I need to do to evaluate the purchase. This may mean fewer staff, but more knowledgeable staff.

  • Report this Comment On April 19, 2011, at 3:00 PM, Carney3 wrote:

    While Best Buy might not be able to compete with Amazon in things like DVD sales, I disagree that physical media are doomed.

    Ordinary people (OPs for short) are very comfortable with sticking a disk in a player.

    But the limitations, requirements, and steps involved with non-physical media (DRM, getting content onto the TV, moving content from one device to another, updating software) that are fun to figure out or second nature to tech-savvy web commenters (TSWCs) are tedious or daunting to OPs.

    While Amazon or e-tailers are OK for physical media, OPs prefer to personally and physically see and hear other items, especially TVs, computers, and speakers, before they buy them. Same with appliances. That's where Best Buy can shine.

    As for whether high-margin accessories (Monster Cables, etc.) will continue to sell well among OPs, I'm not sure. A DVD is the same regardless of where you get it. Monster marketing may be able to give the brand enough cachet. Plus, it can serve as a lead-in for the cheaper in-house store brand cables, so Best Buy wins either way. Few will bother buying cables separately online; they'll want their new Blu-ray player up and running when they get home.

    Best Buy can also do well with service, especially installation help. It was very smart of them to do the Geek Squad (I note that Staples is trying to make a big play in the service area now). I advise taking up whatever floor space is necessary to do away with lines for products than need service. Make it fast and easy to get to the desk, with positive and helpful service.

    By the way, contrary to the complaints, I have had to have multiple items serviced or returned and have never had a problem. Angry people are heavily disproportionately represented on the web.

  • Report this Comment On April 19, 2011, at 3:39 PM, icantknow wrote:

    HEY BEST BUY -

    HIRE A FEW GAMERS IN EACH STORE...

    have them wearing BRIGHT YELLOW POLO SHIRTS ON THAT SAY

    "GAMER" on the back.

    Pretty simple solution.

  • Report this Comment On April 21, 2011, at 2:43 PM, SpeleoFool wrote:

    As both a longtime Fool and (uh, extremely) avid gamer who has given Best Buy a lot of business this year, the single biggest problem Best Buy needs to fix is to make the online and B&M experience consistent, uniform and SIMPLE.

    The day before the Superbowl I jumped on deals for two flatscreen TVs for 40% off retail plus 3 years no-interest financing. Well, it *would have been* a great deal if I had been able to get everything I went in to buy. I'll spare the gory details, but the experience was a bait-and-switch comedy of errors that ended with me paying hundreds of dollars more than I had planned for two totally different TVs. The source of the problem seemed to be Best Buy sold me a TV they didn't have, then Samsung canceled their order, then Best Buy corporate told the store to deal with it.

    Fast-forward to this week: Portal 2 (a sequel to a landmark video game, in case you've been living under a rock) was released on Tuesday, and I have heaps of "Reward Zone" certificates (basically, store credit with a 6-month expiration date) left over from my botched TV purchase experience. On the plus side, Best Buy has some pretty good deals. On the minus side, it's DEALS not DEAL.

    First, Portal 2 was on sale for $55 (online only), later reduced to $45 for a few days. Second, being a member of the "Rewards Zone Gamer's Club" (free to join) entitled me to 500 bonus points ($10 value) for pre-ordering. Third, Best Buy's circular advertised a $10 gift card this week with the purchase of Portal 2. Add to this the wrinkle that I own two XBoxes and bought two copies of the game so my fiance and I can play it together without the confusing splitscreen.

    Now, in the case of Portal 2, I actually got a fantastic deal--that is, I paid less than I would have if I'd ordered from Amazon, Walmart, Toys R Us, K-Mart or any of the several other retailers offering deals on the game this week. However, I still had to spend a couple hours trying to make sense of all the deals, which could be combined and which could not, etc. For example, I got an email from bestbuy.com stating that they couldn't add a $10 gift card to my order, so they issued a $10 digital coupon (with a *1-month* expiration). And I only got one, despite the fact that the circular has no "one per customer" or "one per title" restrictions on the deal. I even asked at a B&M customer service person if I'd get two gift cards by buying in the store, and the answer was yes.

    Yes, I like saving money, and Best Buy came through on that front. But my TIME is worth something, too, and that's where they are failing miserably. I'd gladly pay $5 more for a video game for the convenience of being able to order it online in a few clicks and get some kind of deal I can understand. As soon as I get rid of all these Rewards certificates (that aren't bringing in any significant new revenue to BBY anyway), I'll be looking for a better shopping experience.

  • Report this Comment On April 22, 2011, at 4:48 PM, Blenvid wrote:

    People are saying service will make BB better. Service? You guys expect Apple store service from a store which sells washing machines and car stereo and wants to sell more washing machines?

    I, for one, don't want a noob who thinks he knows what a router is try and sell me what he thinks is the best router, or best computer, or best home theater amplifier.

    BB is a store which offers two things: Selection and Price. It's lacking more and more in both areas.

    They need to get back to these two premises, or dump the washing machines and just sell car stereo. But then that wouldn't be a BB would it?

    Selection and Prices. Period.

    Is Costco, Sam's Club, and Wal-Mart struggling? Exactly.

    Selection and Price. As long as service isn't laughable, which it may be for some people but not for the BB in my area, I'll be there.

  • Report this Comment On April 23, 2011, at 3:26 PM, edgecase wrote:

    Best Buy as a concept is over, expect for one thing - they have physical stores where you can touch things.

    I would trust the guy asking for change in front of the store to fix my computer before I'd let someone who would accept a job at Best Buy go anywhere near my digital hardware. From time to time I ask the roving sales people questions, but I *always* somehow find time to get the answer myself using my iPhone, while I'm trying to patiently wait for them to wander around between aisles, re-telling me what I already figured out and told them when I gave up and asked for their help in the first place.

    But every time, it's a waste of my time. Every time. So fire all the sales people, and fire all the so-called tech people. It's a place to use products you'd normally buy online, and a set of satellite Apple Stores.

    Maybe if they stopped supporting the insultingly overpriced HD cable industry and sold them for $5 each, like websites do, I'd go there from time to time and they'd have the beginnings of a Fry's model.

    But since that's unlikely, their best bet is this: Sell their resources and get what they can now while the value hasn't yet declined to zero.

  • Report this Comment On April 24, 2011, at 5:38 PM, ejkarl wrote:

    It's a shame because Best Buy pays its employees several dollars higher than its major competitors. The Best Buy in my area does more for the local economy than Walmart or any other store. Its employees volunteer in local schools and at events and really create a sense of community here. Amazon doesn't do that, trust me. There is no local Amazon group supporting local business the way the employees from Best Buy are. People just don't associate how beneficial these stores are, they just care about saving as much money as possible, but in the long run this will be detrimental to our communities.

  • Report this Comment On April 26, 2011, at 1:04 PM, macgrad wrote:

    Best Buy needs to improve customer service to retain customer loyalty. We always bought through Best Buy until last year. We bought an in-home customer service contract for our new 27 inch iMac. The sales people promised help with any issues we had--even software problems or trouble figuring out how the Mac o/s worked, even though the contract excluded these services. The sales people also told us we would never have to bring in or courier our iMac--"because no one will make you do this with such a large screen", even though the contract said we might have to use a courier service. We usually are not gullible, but in the past, Best Buy had always exceeded their contract parameters, so we trusted them. We paid a lot for this extended warranty because our disabilities made it easier for someone to come to our home. After using it for a few months and noting where we had software issues and problems figuring out some aspects of the o/s, we called and asked for someone to come to our home, thinking to take care of everything in one visit. They refused---"the contract says your issues are not covered" and if it were a hardware problem we would have to courier it to them "because we can't send someone out to everyone's homes because it would cost us too much". We wrote to corporate office and were totally ignored. We subsequently bought our new iPod touch at an Apple store. We will buy our new iPad and MacBook Pro at an Apple store. Anything else we will buy anywhere but Best Buy. I'm sure some readers will point out it was our own fault for expecting services excluded in the contract, but when someone tells us that the contract doesn't matter because they WILL provide those services anyway at the local level, and this has proven true in the past, we stupidly believed them.

  • Report this Comment On April 27, 2011, at 1:09 PM, lmb2011 wrote:

    In an era of high-tech competitive shopping and price matching, a company needs to create and foster customer loyalty.

    Best Buy has product range, reasonable pricing (and matching), physical and online presence and usually a knowledgable staff.

    What they lack, and where they lose customers, is in customer and service support. The customer is NOT king at Best Buy. The customer is NOT in control.

    If I were Best Buy's new CEO, the first thing I would do is cancel the fee on the extended service contract. Make it standard. Tell the customer that they are so important to them, and their satisfaction is so important, that we will do anything to keep your purchase running great. They say that the extended contracts is where BB really makes their money and the sales reps get their commission. But it might be better to increase all sales than rely on extra revenue on limited sales.

    The second thing would be to initiate hassle free returns (okay, maybe not on tvs during football season...) because customer service has become a serious factor in deciding where to purchase big-ticket items. Right now, I tell everyone to learn from my experience with Best Buy and buy their electronics from a store that will exchange or refund their purchase.

    Best Buy lost me as a customer when they refused to refund me for a video camera that stopped working after 6 weeks or allow me to exchange it for a different brand. Walmart had the same camera, for less, but, snob that I am, I thought it would be best to buy it at Best Buy, who matched the price. Unfortunately, BB didn't match Walmart's customer service. They couldn't fix the camera themselves and opted to send it to the company's lab in Europe - and still would not exchange or refund the camera. I got it back after almost 2 months. Three years later and the camera is in its final death throes, which I wouldn't expect after such a short time and light usage. And yet, even after three years, Walmart would still exchange it for me today, no questions asked.

    Bed Bath and Beyond also has a liberal exchange policy - they *offered* to refund my mother when she told them that an inflatable mattress that she had bought from them a year before deflated after only 3 uses. That kind of attention creates customer loyalty.

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