Best Buy to close 50 big-box stores, sets 'transformation' plan

By on March 29, 2012, 1:30 PM

When Circuit City went under in 2009, Best Buy seemed like the electronics superstore victor. But the same forces that hammered Circuit City are hurting it as well.

The company has announced plans to close 50 "big box" stores this year and eliminate 400 jobs as part of a new transformation strategy to improve operating performance. The giant consumer electronics retailer has seen sales erode as an increasing number of customers use its stores as a "showroom" while turning to lower-priced e-tailers for their actual purchases. The fact that music, movies, books, and other media are now being delivered directly to end users over the Internet hasn't helped matters either.

The company will make $800 million in cost reductions by fiscal 2015, including some $250 million in the next fiscal year. The store closures would reduce store square footage by 20% and pave the way for new so-called “Connected Stores” that will focus on selling cell phones, tablets and e-readers, as well as activating video, broadband, and other service plans not offered by Amazon and Wal-Mart. Best Buy plans to remodel several key stores following this format and will open 100 of these mobile-only stores in fiscal 2013.

The shift to smaller and more focused retail stores will help the company "provide a better shopping environment for customers across multiple channels while increasing points of presence," according to Best Buy CEO Brian Dunn. They'll also increase their focus on service with things like loyalty programs, price matching, free shipping for some items, and offering offer no-hassle returns.

Best Buy today reported a fiscal fourth-quarter net loss of $1.7 billion, or $4.89 a share, on revenue of $16.63 billion, up 3% from a year ago. However, that loss includes charges related to its decision to buy out U.K.-based Carphone Warhouse’s stake in a joint mobile-store venture for $2.6 billion. Excluding those charges, Best Buy actually earned $2.47 per share, a 25% increase from a year ago.




User Comments: 24

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TomSEA TomSEA, TechSpot Chancellor, said:

No shock at this whatsoever. It's simply cheaper to buy electronics online, no two ways about it. Can't tell you the last time I stopped inside of a retail store, much less bought anything (other than a grocery store). All my shopping is done online.

Vrmithrax Vrmithrax, TechSpot Paladin, said:

I wander into Best Buys once in a while, when I'm bored or looking for something specific that I might be able to get my hands on. Sometimes, there is nothing better than a tangible evaluation of a product. In fact, Best Buy helped me avoid making a huge mistake in buying a Razer Naga mouse. I was all set to snag one, stumbled upon a unit in my local Best Buy, and after 2 minutes of playing with it I realized it was made for hands about half the size of mine. Took hours for the thumb cramps to subside.

But, all that said, 95% of my electronics and media shopping is done online. No "hands-on" opportunities, but I suppose that's where a great return policy comes in handy.

Guest said:

While I do some shopping online, I still do the majority at local stores however Best Buy is not one of them. Best Buy has poor service, salespeople don't know merchandise and try to sell you an extended warranty on everything, is overpriced and has been a bad experience for years. MEI Microcenter is a great experience, has great service, good salespeople and good prices, so I will continue to go there for computers and electronics.

tonylukac said:

Yea, but if you shop the newspaper sales (in Chicago), the big boxers are cheaper. My brother just got an hp laptop for $300 this way, not a netbook. Disposable computers.

Trillionsin Trillionsin said:

TomSEA said:

No shock at this whatsoever. It's simply cheaper to buy electronics online, no two ways about it. Can't tell you the last time I stopped inside of a retail store, much less bought anything (other than a grocery store). All my shopping is done online.

Yup exactly, and I go in there often just to use their store as a showcase.... last I went in there to check out cell phones, and their ultra books, you know... to get all my fingerprints all over everything.

BestBuy should start a shipping company! hahahaha

MilwaukeeMike said:

Best Buy had this coming.... when I bought my home theater equipment I talked to a best buy salesman about what they were selling. He did little more than read me the tags because that's all he knew. Then I went to Flanners and I got a guy who could knew anything and everything about what I was looking at.

Techology is complicated now, far more than basic standard def with a DVD player, yet the salespeople dont' know jack. If Online is to blame, why aren't the camera shops out of business, why aren't the high-end home theater places having trouble. Best Buy is the Walmart of electronics. And don't get me started on their 300% markups on computer parts.....

inventix1136 said:

"new so-called ?Connected Stores? that will focus on selling cell phones, tablets and e-readers, as well as activating video, broadband, and other service plans not offered by Amazon and Wal-Mart."

So in effect, they want to become Radio Shack, since that is what radio shack degraded to, stores selling cell phones, tablets, e-readers, and activating other services...

Lionvibez said:

So much win in all these comments. The only thing I really want best buy to keep selling is TV. I cannot buy a TV online I need to see it in action I need to play with the menu etc. Big electronics like this is ok you need that personal touch. However anything else forgot get it best. They should actually hire knowledbge staff, cut out on the lame huge markups then maybe people will start to trust them more and shop there again. Really the only people i know that still go there are like my parents age. Anyone with any sense and under 40 shops online, cause no one likes having buyer remorse when you get home and see best ripped you off for $300 extra after you sat on the computer for 5 mins and found the same product cheaper.

soldier1969 soldier1969 said:

Yeh upgraded my cell phone with them cause they took my Iphone 4 as a trade in and gave me a $50 gift card on top of that so got a great deal when otherwise would have had to pay full price at a AT&T store on contract. Plus they offer great cell insurance if you get it from them. Otherwise I shop at Newegg.com for everything else, they cant be beat.

Guest said:

Good I hate best buy they have the worst customer service I have ever witnessed in my life and geek squad is a complete joke

RzmmDX said:

Well, I shop at frys... the only time that I buy at Best Buy is printer ink when I am too lazy to drive to staples.

9Nails, TechSpot Paladin, said:

I like BestBuy to grab blank CD's, an odd cable here or there that I want NOW, and maybe for browsing some games, movies, or music. They're also nice for TV shopping where you can compare the differences in picture quality yourself. Yes, I'll miss their stores.

I don't like the Fry's near me. A majority of the hardware there has been returned for some reason. Be it damaged, to troubleshoot a problem, steal internal parts, or maybe just the customer decided that they didn't want it. But I don't trust the products with my business.

So I'll need to rely a lot more on hardware review sites to help me make a purchase. Hopefully BestBuy is aware of this and starts to review their own merchandise. NewEgg's customer feedback has helped me make a lot of decisions in the past, combined with objective/professional hardware reviews. If BB can ship as fast as NewEgg, there just might be some worthy price competition in my future.

ghasmanjr ghasmanjr said:

The last time I was in Best Buy, I decided to take a look at the computer parts. I found a GTX 550Ti for $299.99. Now, forgive me if I've being ignorant, but isn't that SAME part available on Newegg for $150? Best Buy is killing themselves.

I buy 90% of my console games through Best Buy though. I have a Rewardzone Mastercard and I have premier silver status on the card. I pay all of the house bills for my housemates on my card and they pay me back before the month is out. I have thousands of rewardzone points that I use to make new release games dirt cheap. Modern Warfare 3 for $15? Why not? That's the only reason I bought that crappy, rehashed game.

TomSEA TomSEA, TechSpot Chancellor, said:

As a couple of people have mentioned Fry's, thought I'd toss this out. We have a guy where I work now who used to work at Fry's. He gave us the low-down on why Fry's is so cheap, but it seems like 50% of the stuff you get there needs to be returned as it's broken out of the box.

Apparently Fry's bids on damaged, palleted electronic goods (like from a semi or train wreck, or water damage) being sold by auction houses. Then they clean the boxes up, re-shrink wrap the items and put them out for sale as if nothing had happened to them. Now this isn't all the time, but from what this ex co-worker told us, it's common enough practice. That explains the high return rate.

So unless it's something pretty safe and generic like blank DVD's, cable's, etc., I'd stay away from buying any electronic components from them.

Tygerstrike said:

I will take a RadioShack over Best Buy any day of the week. Atleast at RadioShack youre going to get ppl who know what they are selling. I went into a Best Buy when the new xbox360 model came out. I started asking the sales person what was different about it from the old one. I got the worst answer ever.....Its slimmer. Thats all he said. Went a half a mile down the road and hit a RadioShack and the sales person there was able to give me all the specs and even gave me a print out detailing all the new changes. RadioShack may have had to adapt to the changing market but atleast the ppl there were 300% more helpful then at Best Buy.

Tekkaraiden Tekkaraiden said:

I do enjoy walking thought my local stores when I'm killing time, always enjoyable to hear their "experts" giving advice. I buy games and movies when they have them on for really cheap and the occasional cd. I'd hate to see them go out of business, it's great using them as a showroom to see what I'm buying elsewhere.

Guest said:

Less jobs and more clients for amazon and newegg. The future.

p51d007 said:

Most of the time, the only thing I need from BB is something that I have to have quickly. Dead hard drive, bad power supply, blank disks for a project. Otherwise, order online.

Also, the brick & mortar stores are good for "holding & feeling" something. Unless you can get a price match, it's just easier & less expensive to buy from online. Also, most times you avoid the tax man.

Other than that, just to kill some time, it's fun to wander around and listen to the BS coming out of a blue shirt.

Guest said:

People you need to understand that as theses stores close we lose jobs and revenue for our cities and states that these companies pay in taxes. Amazon and New Egg does not hire anyone in your community nor do they contribute to it. What will eventually happen when your state has to start raising taxes due to a lack of revenue that it used to get from these big stores the Government WILL impose an Internet tax to make up for those losses. Watch what I tell you. Enjoy the ride while its hot.

NTAPRO NTAPRO said:

There goes my employment opportunities lmao

treetops treetops said:

I miss circuit city, it was huge! I'd go there every so often and just browse . Wow they are gonna do price matching??? I doubt it. Best buys existence doesn't really hurt me any and its nice to check out the show case or get a quick cord or something. But I feel like its preying on people like my dad...

@guest thats a lie newegg and amazon hire people in the usa. Best buy is a rip off. Maybe we should all work with one hand to create more jobs?

edit cant believe someone came to techspot and tried to fear monger us into buying BB, probably a BB rep or fox news zombie

Guest said:

What I can't stand about BB is the blaring music as soon as you walk in! Can't hear myself think in there! And their sales people are a joke! They have NO idea what they're talking about. The last time I was in BB was to buy a memory card for my camera because it was the cheapest place at the time, and I needed it NOW. Otherwise, I do all my computer shopping at Memory Express here in Calgary.

Guest said:

Best Buy =Best Lie. High prices, uninformed sales staff. *hitty return policy. And oh yeah they think they can sell you a piece of paper for big bucks and claim it is a warranty. Then if your equipment does break they try their best to weasel out of the contract. And they want to try and charge you $100 for hdmi cables that you can get on line for less than $10. What goes around comes around. Screw the customer long enough and people will eventually wake up. All I can say for Best Buy is Good Bye.

DAOWAce DAOWAce said:

"The giant consumer electronics retailer has seen sales erode as an increasing number of customers use its stores as a "showroom" while turning to lower-priced e-tailers for their actual purchases."

And still they don't cut the costs. ******.

I miss Circuit City as well, one was a few minutes drive from here and I went there to try out peripherals before I bought them.

Once CC closed, that was it, I've had to blind buy things since then. Result? I haven't bought any peripherals since then! (My mouse is so worn my skill in FPS/RTS has deteriorated)

The closest best buy is 35 minutes away. I have to make an hour trip JUST to try out something before I buy it online, and now what? They're potentially going to close down the store near me and I won't have anywhere to go! Even if they don't, if they're going to change the products they're selling to be mobile based, then there really is no hope for me except buying blindly.

Sad days. Why is Microcenter and NCIX not more widespread? They are actually reasonable with pricing. (In fact, there's a ton of Microcenter deals all the time and the closest one is over an hour away in a bad town. *sigh*)

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