Best Buy to follow Circuit City's demise?

By on March 7, 2011, 7:31 PM
With former heavyweights like Circuit City out of the game, industry experts are questioning the future of remaining electronics superstores. Wall Street Journal reports that retailers like Best Buy have taken staggering losses as online rivals rise to dominance. Although there are less brick-and-mortar competitors than a few years ago, Best Buy's stock has plummeted some 19% on-year. By comparison, Amazon's shares increased 31% in the same period.

The transition from retail to etail consumption is especially apparent in electronics-related departments. Amazon's electronics and non-media revenue rose 66% to $18 billion last year, which included a substantial market share increase in segments including LCD TVs and portable audio devices. The shift is mostly attributed to the obvious: shopping online is often cheaper, easier to compare products, and it's simply more convenient to shop from your home or mobile device.


Despite its losses, Best Buy isn't exactly sinking -- or at least not yet. The store still represents a third of US consumer electronics sales and it's actively pursuing more competitive prices -- but lowering prices in itself could spell doom. The WSJ report notes that BJ's Wholesale Club also decided to cut prices in 2002 in an effort to maintain its market presence, and while sales improved, gross margins tumbled for eight consecutive quarters and shares fell more than 70% on-year.

Greg Melich of ISI Group made an amusing but accurate comment, noting that shoppers often use Best Buy as Amazon's "showroom." In other words, people frequently visit physical stores to test products before purchasing them online -- something the TechSpot staff is admittedly guilty of doing. Do you visit Best Buy solely to window-shop, or do you actually break out the credit card occasionally? Personally, I haven't been to a Best Buy in about five years, perhaps longer.




User Comments: 44

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mrtraver said:

I most definitely use Best Buy as a Newegg showroom, but I rarely make large purchases there. I did by a $230 camera there recently that I could not find cheaper online or in any discount stores, but I usually don't spend more than a few dollars at a time. I do like the convenience of taking home a CD, recordable media, etc. on the same day rather than waiting for it to be shipped, sometimes smaller items are cheaper since I don't have to pay shipping, and occasionally they will have a good sale or clearance item.

p51d007 said:

I hope BB doesn't go anywhere...where else can I waste a few minutes, listening to the blue shirts lie to people that are wanting help LOL

spartan948265 spartan948265 said:

BestBuy is always over pricing all of their inventory. They also slap on ridiculous sales taxes and after fees. Lets say a TV costs $599. After their taxes and sales the tv now costs $799. Source? Personal experience.

Also, NewEgg for the win. ALWAYS

BlindObject said:

I worked at Circuit City when they closed down..sad times. PC Richards now owns the place. Anyway, I kinda wanna see BB go down the same hole, Geek Squad alone is ridiculous.

BrianUMR said:

"The shift is mostly attributed to the obvious: shopping online is often cheaper, easier to compare products, and it's simply more convenient to shop from your home or mobile device. "

Shopping online is often far far cheaper. It is easier to compare products because typically Bestbuy only has one product to look at. I really don't think shopping online for many things you would get at bestbuy is more convenient online. However if I need a new network cable I would rather wait a couple days than have it now and pay over twice as much. For most things like cables and other accessories the Bestbuy brand is way lower quality and costs over twice as much money.

matrix86 matrix86 said:

The only use I got out of BB was that it gave me something to do when I needed time to kill, and it gave me a chance to try out laptops to see if I liked them or not. Other than that, i've never actually bought anything from them. Part of the reason they are so expensive is because they run a website and physical stores. That means they spend more money, which results in us having to spend more money.

Newegg...FTW.

DokkRokken said:

I buy stuff from Future Shop (BB owned) and BB somewhat often, but only if it's something on sale like cheap headphones that I can buy a couple of and trash during my commute.

3DCGMODELER 3DCGMODELER said:

By By

Best Buy ...

Guest said:

PC Richards doesn't own CC online. Systemax owns CC online which owns TigerDirect and CompUSA.

Raswan Raswan said:

Worked for Best Buy for four months, which is about six years in retail years. They jack the price of everything up, upsell worthless extra crap, and provide weak customer service. As the fear of buying online continues to erode (it's all but gone, though still lingers for the over-fifty-five crowd) and Best Buy loses their "credibility" with the consumer, Walmart will be the only retailer selling electronics to be left standing. And that will only be because the rank and file will go there to shop for everything else already.

Guest said:

Best Buys down fall will be their poor customer service and worthless managers in most of its stores.

Even if you do find someone to help you, most of the time they dont know the product at all.

Guest said:

I bought a pair of speakers at Best Buy two years ago for $59.99 regular price. Now they are $149.99. a 150% price hike! Ridiculous.

Guest said:

I tried to make a purchase at BB a few months ago. Ordered online for in-store pickup. I did NOT receive a confirmation 'till 3 or 4 days later and when I went to the store a couple of days later, I was told my ordered was cancelled and there was nothing that could be done about it.

No more BB for me.

Nima304 said:

I hope BestBuy dies. I feel sick listening to their tech staff talking about things they barely understand themselves. NewEgg is a lot simpler, cheaper, and all around better than BestBuy and all stores like it.

gwailo247, TechSpot Chancellor, said:

While I don't usually shop there, I wouldn't exactly cheer when a big chain closes down. They don't seem to be replaced these days by anything other than a Wal Mart.

mccartercar said:

Newegg:

Documented and not biased Customer Reviews-check

Low Prices-check

Best Goddamn customers service of any supplier of goods in the industry- double check

Wide selection of products with broad ranges of variety-check

Accurate factual descriptions and technical specifications easily sorted-check

Bestbuy:

Mismanaged,Understocked, Highest prices with lowest qualtiy, Bs spewing loudmouths with blue shirts

-check

Guest said:

BB employees are morons and shouldn't be giving anyone advice on buying anything they sell. I love going there to hear them talk BS to a clueless customer. Yes, Maam, this GOLD PLATED HDMI cable with look signifigantly better..........for only $79.99. But the truth is, all those customers who refuse to educate themselves on products they may spend thousands of dollars on, deserve what they get.

Sarcasm Sarcasm said:

I shamefully admit that I used to work for Best Buy (many years ago) and I'd have to add that not only is everybody correct about their comments on Best Buy, but it's also a terrible place to work. Any employees that actually "knew" what they were talking about were under paid, under scheduled, and over managed. Then the managers were power abused mindless pricks who didn't know jack about any of the products. I still remember those crap meetings about "oh we're not pressuring you." but as soon as I didn't mention those service plans or upsell, I get in trouble. What a load of crap these places are. Now of course that was my experience a long time ago, but walking into these stores it doesn't look much different.

Today though, I admit I do just window shop for certain products and "test drive" them. I find that the prices are over priced compared to everywhere else but the only time I actually make a purchase is sometimes they have their deals in which in a rarity it's cheaper than other places. Even then they're poor customer service is also terrible.

Xclusiveitalian Xclusiveitalian said:

Best Buy overprices everything, and i hate how they never have games on release dates. I wouldn't want it to go anywhere because i do sometimes buy there when there is an actual sale.

Guest said:

IMO, only electronic noobs go to bestbuy whenever Fry's is available locally. Price is most of the time much cheaper at fry's (since BB always has much better/pricier locations)

But yeah, tigerdirect and newegg usually beats most of the local stores prices and works when you can wait for the shipping.

oh btw, fry's is now matching online prices!! at least in my area. :)

Guest said:

I never shop Best Buy because their price is rediculous. For online shopping, I choose Amazon over Newegg, because:

1. They offer free shipping on most item

2. NO TAX (almost 10% now)

3. Usually cheapest price I can find for any item

4. Return policy is wonderful. Anything happens, you got full refund, and they even pay for return shipping

5. With prime membership, you get 2 day shipping free, next day for 3.99!

Check them out. I used to shop at Newegg, and now, Amazon only.

Guest said:

No kidding about Newegg's great support. I got a defective drive from them once and emailed them about returning it, and the phone rang five minutes after I had sent it. I couldn't believe it. Anyway they sent me a paid mailing label and everything and I got my replacement in a few days.

mailpup mailpup said:

2. NO TAX (almost 10% now)
Unfortunately, that is true in California where I live but Newegg doesn't charge sales tax for most other states, just a few.

Scshadow said:

Lol, having a physical retail store isn't the problem. The problem is best buy sucks. They lie, they cheat, they steal. If Best Buy were to go under, then it might be some sign that people realize that they were getting robbed blind. I'll drive 2 hours to a microcenter. Thats where my business is at.

Tekkaraiden Tekkaraiden said:

I only buy the occasional Movie, Video Game or CD at Best Buy. I do enjoy killing time there when I have time between appointments.

stewi0001 stewi0001 said:

Wait they are called Best Buy? I thought it was Worst Buy...

Guest said:

When you buy at "Best Buy" you are paying for their rent, electric, water and their so called expert in each department.. But you do get the option to return certain items. And their losses on that gets reflected in their retarded prices..for most items.

madboyv1, TechSpot Paladin, said:

I must be the only one who has not had a problem at Best Buy, aside from the occasional one store not having an item in stock when I get there and having to go to another one near by. Granted I buy a lot of things online simply because Best Buy does not offer the kind of things I am buying (as far as electronics are concerned), but the few times I HAVE gone recently, I haven't had issues. Likewise, aside from prices it is easier to buy large or big ticket items from brick and motar stores, Best Buy included. If something DOES go wrong with the product you can take it back for refund or exchange, no dealng with sending an item back through mail.

And that "same day" receiving from 10AM-8PM (ish) can't be beat, since you're picking up an item. I've never ordered online for pickup, but I always call ahead to see if they have it in stock, usually saving me time and effort if it is not.

Granted most of these statements are directed at Brick and Motar stores in general, but yeah, I haven't had issues and I knew three people who have worked there over the years who other than the regular "damn the manager" banter never said anything completely damning, so I guess I'm just missing out on the "whole experience."

Ultimately, I'm waiting for the whole Transmetropolitan deal, where you can order a product off the TV and get it delivered in 10-20 minutes. *rolleyes*

LightHeart said:

I have never liked Best Buy even when there wasn't all this online competition. I only ever went to BB as a last resort. Their customer service is lacking and the prices are too high.

Guest said:

If Best Buy employees didn't make stuff up when they don't know an answer (and they rarely have correct information, if any at all), I would shop there.

ddg4005 ddg4005 said:

I haven't had any problems with in-store pickups at Best Buy for games I've purchased. I also occasionally buy Blu-ray movies but nothing else. The thing is they own Napster-whose service I subscribe to-so if they were to die I would hope they'd sell them first (or maybe someone would make an offer before that happened).

That said I think it'll be a while before Best Buy, or any electronics retail chain, disappears completely (if it ever happens).

DriverJ said:

I've bought many of my larger electronic purchases at Best Buy, but there are somethings I just wouldn't go in the store to get. However for the most part I do hate walking into the store and being pestered by their employees all the time, for the most part though this doesn't differ from MOST retail stores, with the exception of Wal-Mart, but it doesn't seem most of their employees give a crap if you find what you want.

I've used Best Buy as a test warehouse on some occasions, but mostly will make larger purchases there (usually waiting for then to drop to a great sale price).

CS there has actually improved at Best Buy since I have started shopping there, but not that much. Granted I'm from Minnesota and they are Headquartered here, so the threat of management dropping in at any minute could make that all the more a reason.

Like other retailers, Best Buy will have to adapt to a world with a digital market place or die out, like the others who haven't.

MrAnderson said:

There are people that will always need the instore experience. BestBuy might have to close stores and beef up it's online experience to stay in the game. But stores are not going away, as a large part of the population needs a sales person or a friend to help them pick out a product.

In my experience instore purchases will not go away overnight, as I have tried to convence many a friend to buy online and save big. In spite of my efforts, they want to go to Best Buys and the J&Rs because they have a perception of having the product now and seeing it in person.

So I don't think that kind of consumer is going anywhere in the near future. That is not to say that the online competition could take away enough customers to influence future sales tactics in the marketplace.

Staff
Rick Rick, TechSpot Staff, said:

spartan948265 said:

BestBuy is always over pricing all of their inventory. They also slap on ridiculous sales taxes and after fees. Lets say a TV costs $599. After their taxes and sales the tv now costs $799. Source? Personal experience.

Taxes are a good argument to shop outside your state (this may not be the case forever), but Worst Buy doesn't charge you random, mysterious fees. The exceptions being extended warranties, protection and anti-theft plans etc... They'll push them on you, but they don't automatically sign you up for these things by default. If someone did, they made a mistake.

What probably happened is you live in a state (Read: CA) where there is a state-mandated "eWaste" fee of about $30 for LCDs screens larger than 34". Add local and state tax from the upper end of taxes in the US (10% or higher), then you've got yourself about $100 extra. Definitely not $200 though. If you were charged $200 extra, then you should definitely figure out why and get a refund for the difference.

Guest said:

Without a Best Buy there wont be a New Egg or a Amazon... I need them to be around so the others can keep being better.

Guest said:

i personally work at best buy, and yes some of the prices are over priced but we do not charge extra "fees" for a tv that is $599. Depending on your state and your source, he or she may want to check with the states sales tax as that is not a fee, its a tax.

Vrmithrax Vrmithrax, TechSpot Paladin, said:

I'm one of those "on the fence" guys with Best Buy... I tend to go check out stuff at the local store, have some hands-on time with products, controllers, etc. But the big purchases usually end up online, since the pricing is just outrageous on some items when compared to online. Still, I would hate to see the chain fold, because sometimes you just can't beat the touchy-feely physical inspection of a product (case in point: I was really intrigued by the Razer Naga, until I put my hands on one at Best Buy, and found it was far too clumsy to use with normal to large hands).

Would love to see someone like NewEgg snag up Best Buy, and use their stores as show fronts and shipping/support centers. Best of both worlds there, as long as NewEgg's pricing stuck, not Best Buy's inflated ones. But, alas, can't really see that happening, as the overhead costs to keep a Best Buy store running are typically a big reason for the higher costs. They tend to be in prime locations, which means huge leasing fees, among other things.

matrix86 matrix86 said:

I forgot to mention that I had a friend who worked at BB. He had 3 or 4 computer certs and actually knew what he was talking about, yet he was underpaid and under scheduled. He was fired one day when his manager was helping a customer and giving out the usual bull crap when my friend stepped in and pulled the manager to the side and asked his he could make the sale as the manager was giving out incorrect information. The manager said he had no problem with that, and my friend ended up selling a cheaper computer to the couple because they didn't need what the manager was trying to sell them. I guess the manager was thinking my friend would close the sale or sale a more expensive computer. My friend was later fired. Get this...for "insubordination." The manger claimed my friend rudely interrupted him and down talked him to the customers. And did the head manage even check to verify it? Nope. Even despite my friend requesting the cameras to be checked and to ask surrounding associates what happened.

Luckily, my friend got some common sense and realized he was stupid for trying to get his job back. He now makes about 50k a year at a company that actually respects him.

God forbid you work at Best Buy and actually listen to your customers needs to figure out what they NEED as opposed to what they WANT.

Vrmithrax Vrmithrax, TechSpot Paladin, said:

IMO, only electronic noobs go to bestbuy whenever Fry's is available locally. Price is most of the time much cheaper at fry's (since BB always has much better/pricier locations)

But yeah, tigerdirect and newegg usually beats most of the local stores prices and works when you can wait for the shipping.

oh btw, fry's is now matching online prices!! at least in my area.

Man, I miss Fry's... I used to live in range of the Oregon store, and hit the Vegas and Chicago stores whenever I'm in the areas. But I really wish there were more of them peppered throughout the country, rather than mainly clustered in Texas and Cali.

freythman freythman said:

It wouldn't bother me in the least if Best Buy said bye bye.

whiteandnerdy said:

unless they hire people who actually know technology and have competitive prices with online stores, BB is going to go the same route as CC. but i will miss being able to go and waste some time if needed if they do go under.

example1013 said:

I was about to say I found a CD that I'd wanted there the other day for cheap, but then I realized I actually bought it at FYE...

TorturedChaos, TechSpot Chancellor, said:

Only thing I use BB (and Vann's) for is a viewing room for Newegg and Amazon - for things like monitors or TV's. I wan see them before I buy them. Then I go home and order it online.

Is kinda amusing to listen to the BS they try to pass off their tho - but sometimes they take it so far its really hard not to step in and point out all the BS they just spouted out. I have done it once or twice now and I now am not liked much at BB :P.

captaincranky captaincranky, TechSpot Addict, said:

unless they hire people who actually know technology and have competitive prices with online stores
Well Whitey, why you do think you're entitled to online pricing, WITH free tech support, plus walk in convenience? Let me guess, because you just are, right?

Newegg, specifically states that they DON'T give give tech support, and even that the parts in their own combo deals may not be compatible with each other. That said, their prices are great.

After a certain period of time, and with some software, tech support costs, big time. If you don't believe me, call "Answers by Gateway" and boor a** them for a while.

You might try telling them the you're "whiteandnerdy". See if they recognize the importance contained in that title. If I were CS in India, I'd tell you that being, "whiteandnerdy", you should already know the answer as I was hanging up on you.

As for the rest of you, need, greed, and impatience, make poor shopping companions. Any brick and mortar retailer will screw you when you walk in, pick something up, and take it to the register. It's not BB's fault that YOU didn't do your homework.

I could go on, perhaps about the convenience of not having to deal with having to ship RMA merchandise.

And cut BB's sales force a break. Sometimes it's hard to determine if you actually do know more than somebody else, or you just think you do. And just suppose that you actually do have a degree in IT, would salesman at BB by your first choice of entry level positions?

I only go to BB once a year. That would be at around 5:00 AM, Black Friday. I hope they stay around just for that. And yes, I realize that I don't fit in to their "preferred demographic", since I have no intention of trying to help keep them afloat the other 364 days a year.

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