Best Buy to Reduce Store Sizes, Expand Services

I give BB 18 months at most to survive. They are a day late and a dollar short in the game. How do you reduce a store footprint without moving to another building? I am sure that transition cost is more than the footage they are currently paying for. As long as Amazon, Newegg and the like don’t have to charge sales tax (and they should!), BB cannot continue in the traditional A/V sales game. They are constantly chasing the latest technology and by time they catch up, the tech changes again. They will Double their online sales to $2B? what magic had did they steal from Frosty to claim that? They should hire Trump to run the Company (into the ground)  because he is the self-professed best executive he has ever met!

@FunHouse

Online retailers have helped to set a new expectation for buyers (low price, ease of purchasing, relatively fast delivery).  Ironically, BB’s model (not just BB, but other large, big-box retailers as well) was the precursor to what we have at the moment.  Consumer Electronics (the majority of what we’re talking about here) was, at one time, dominated by brick-and-mortar, mom-and-pop shops.  BB-like companies sprouted up and used “buying power” and low overhead to make low-priced selling profitable.  This, of course, lead to commoditization of CE.  BB, and the like, have to adjust their model.  Note that I didn’t list “knowledgeable sales staff”, “technical proficiency” or “professionalism” as one of the expectations of today’s buyers.  The same people buying CE online are the same people buying clothes and beer at Costco.  They have low expectations.  They have even lower standards of what they call good service.  They don’t want to talk to anyone that knows anything, and they’re certainly unwilling to pay for that.  They want what they think they want, and when they get what they want and determine they didn’t want that, they want to return it.  No questions asked.  Costco.  Home Depot.  Best Buy.  It’s all the same.  They provide little to no pre-sales decision-making help, but provide all of the post-sales “service” (returns).  Again, it’s all about low expectations:  low price, low service, quick delivery.

Now, we know that there is a segment of the population who can discern the difference between online purchases and brick-and-mortar purchases.  But this segment is shrinking and BB knows it.

Then, there’s those who can discern the difference between big-box warehouse retailer and locally owned custom integrators.  These are the people we as custom integrators have to find.  They are fewer in number than they were a month ago, a year ago, a decade ago. 

I’d love to blame the economy.  But the reality is that we’ve been seeing this trend for an awful long time now.  We allowed commotidization to sneak into our world and now we’re paying the price for it.  Even the big guys like BB are paying the price for the same passive attitudes.  We allowed commoditization, they allowed online retailing to beat them…

I know some of you will be shocked to see this come from me, but…

It’s a race to the bottom, folks.  Who’s winning?  I would argue that nobody is.  Consumers will argue they’re winning… they get more product for less.  But do they really get more?  Personally, I think they just get to fulfill some need to say they saved more $$, and, by doing it this way they can justify their bad decisions. 

Just my $.05 (sorry, I had to raise my prices to account for fewer sales due to the lost customers to online retailers).

I agree 100%. We have to also accept the fact that consumer expectations and demands (for quality) have generally dropped as a result of this behavior. While there is still a micro-segment of consumers out there that understand the value we bring to the table, they still want the best price on the product. I believe that product sales will be a secondary part of our business over the next 2-5 years - Service and expertise will be #1. This cannot be found online or overseas.
Mr. Dunn in bringing in around $10 million a year so I am not sure he is really worried about being behind the 8-ball at any given time. He has been there for a LONG time and should know that the writing on the wall - everyone seems to accept it but him.
If they ever get HDMI to work properly, we are all screwed!

Details Matter saved me a ton of typing. I was going to write the same thing.

Adding… Look on the bright side.. remember when you spent hours/days/weeks engineering systems for free to make a few bucks on hardware sales? Those days are over also.

Amazon can get them the hardware but they cant tell them how to hook it all up and there sure isn’t a note in the box that says “oh by the way this hardware really isnt finished yet so you and your staff will have to handle that and you will need to update firmware and the software isnt quite ready yet so you have to wait on promised features etc”.

We are architects and engineers not stereo salesmen. We bill for our time and let amazon and the clients deal with betaware and HDMI hell.

Another issue that has become a part of our existence is that this same consumer habit and expectation is bleeding into the entire chain.  Even our prized customers who are affluent and willing to pay for service seem to be taking the same shopper mentality and apply it to our services.  Haven’t you been called to a job where there is an existing integrator that the client would like a second opinion on?  So how do we handle that?  Undercut them for the sake of a new job?  Unfortunately to no fault of the other integrator our experience is that once the client even considers getting a second opinion they’re out.  We’ve been on both sides of this one.

Seems like we need to find innovative ways to customize our value added proposition to fit the life style and demands of each client.

Sounds like fun!  Hey, if it were easy everyone would do it.

Forget about seminars and books and stories from those in the industry. Want to learn how to stay in business? Get in your car and look for the golden arches. Walk inside and look at the menu. Everything they sell has a fixed price and they never discount anything.

If someone wants a big mac they pay for it. Why should you be different?

Let the “value” shoppers have fun learning all about trunkslammers and how much it costs to install/uninstall/reinstall their system.