Why Best Buy Can't Survive

The following video is part of our "Motley Fool Conversations" series, in which consumer-goods editor/analyst Austin Smith discusses topics around the investing world. In today's edition, Austin discusses one of the biggest reasons Best Buy can't survive in its current form: a dated business model. Best Buy has historically sold you low-margin items like TVs and stereos as a segue to high-margin items like cables and accessories. This won't work in the modern age of retail. Overlay big red flags from management, and this is a business headed for the garbage heap without a fundamental business-model shift.

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Austin Smith has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Amazon.com, Best Buy, and RadioShack. Motley Fool newsletter services recommend Amazon.com and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 15, 2012, at 6:01 PM, gtbohrer wrote:

    This is actually the first BBY analysis I've heard that I've liked. I've been a proponent of BBY peddling Geek Squad service to other retailers for some time now.

    That process is actually in train...for several months, Geek Squad service has been available at some Toys'R'Us stores.

    Personally, I think the mall store multicarrier mobile outlet can work; I jut don't think Radio Shack executed very well around it, and were about 7 years to early in doing it. There just wasn't the mobile market then that there is now.

  • Report this Comment On June 17, 2012, at 6:27 PM, Strayjax wrote:

    Every single bby video this guy puts up that I have seen is full of flawed logic and outdated or incorrect information.

    Every apple employee in an apple store gets incentives for sales. If you go to a Verizon or AT&T or other cellular company to buy a phone employees get a direct commission off of selling you plans and whatnot.

    Every book I have ever read about retail and sales has said that the employees need to be on some type of incentive or commission based program if you want to maximize sales and get employees that are actually professionals.

    Further more I would like to see one thing that isn't opinion that says the founder is selling his shares. It is ridiculous to state something like that as fact in a video like this. Straight up misinformation. Losing trust for this website with the constant bogus postings for hits. When I can type bby into yahoo stock news and literally almost every single article that is negative about the company comes from this site, and there is about one a day, I know something is up.

  • Report this Comment On June 17, 2012, at 9:56 PM, bullsbears2012 wrote:

    MF is in the bag for AMZN - BBY sells as much and can do anything AMZN can do with instoree pickup to boot. AMZN is the one who will die wih sales tax laws. Wy will people want to wait for shipping days to get product when they can most likely go to store next day for pick-up?

    Watch out AMZN

  • Report this Comment On June 17, 2012, at 10:57 PM, gtbohrer wrote:

    AHHHHH...Ya know, that makes sense....they DO have a vested interest in making AMZN look like a buy/hold, don't they?

  • Report this Comment On June 18, 2012, at 8:16 AM, gazzzan wrote:

    EVERY ARTICLE WRITTEN BY THIS SITE IS SHORT BBY. KEEP UP THE NEGATIVE ARTICLES IT MUST HELP YOU GUYS IF YOU OWN SHARES OF AMAZON LOL

  • Report this Comment On June 18, 2012, at 12:30 PM, BBYstock wrote:

    Best Buy can save themselves, The question is, will the company do what needs to be done? The company really likes being the number retailer in the world.. Will pride get in their way

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