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.