Best Buy (NYSE:BBY) has been beaten up by online competition in recent years and now it may have to fight off quick delivery from Wal-Mart (NYSE:WMT) as well. Wal-Mart announced yesterday that it would test locker storage for goods people order on the Internet. This would allow Wal-Mart to combine the ordering ease of Amazon.com with the quick delivery of any item while still eliminating the headache of shopping in the store.
Best Buy is the one retail stock that's down on the news today, falling more than 3% for a short period in the middle of the trading day, because it is affected the most by these retail innovations.
Losing the one advantage it has left
Best Buy used to rely on people coming into stores and turning knobs, testing TVs, and eventually buying something and walking out the door. But the comfort of online shopping has become more popular and the need to physically test items is diminishing. This has taken away Best Buy's biggest advantage.
To make matters worse, it is also fighting growing electronics footprints at Target and Wal-Mart, where you can also pick up bread and milk. If Wal-Mart is now combining the ease of online shopping with the speed of drive-thru shopping it puts Best Buy in an even further hole. In time, there's no reason Target couldn't do something similar.
Another hit to Best Buy
Best Buy can't seem to out-innovate its competitors, allowing them to eat up sales with a more convenient shopping experience. Meanwhile, management has been spending time fighting off takeover bids instead of finding ways to improve the business. I'm rooting for Best Buy to survive but Wal-Mart's latest innovation is another reason it might not.
More on Best Buy
Travis Hoium is short shares of Amazon.com. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. The Motley Fool recommends and owns shares of Amazon.com. 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. The Motley Fool has a disclosure policy.
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