Best Buy Shrinking Store Space By 10% Over Next 3-5 Years

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Recently, it was reported that Wal-mart stores would begin carving the size of their electronics department due to shrinking sizes of gadgets, and now it feels like Best Buy is following suit. Now that Circuit City no longer exists (that's STILL hard to believe!), Best Buy has become the go-to big box retailer when it comes to electronics. But it's still a tough market to be in; online sales are creeping up, and it's just easier to shop for electronics, music and the like on a computer versus heading into a store for a lot of devices that the company sells.

Now, a Reuters report is suggesting that Best Buy will be boosting their presence on the Web while shrinking some of their larger stores. The tradeoff? They'll be opening more "smaller U.S. stores" in an attempt to win back market share from Amazon and Wal-mart. The motivations stem from investor concerns that Best Buy's overhead is just too high, not to mention the fact that same-store sales have been falling in recent quarters. RBC Capital Markets analyst Scot Ciccarelli had this to say about the news: "I do believe that a lot of their bigger box stores have to be downsized. If there was a disappointment, I was kind of hoping they would be even a little bit more aggressive than what they outlined."



Currently, the company has around 1,100 stores, and they expect that by slashing that square footage by 10% (over the next 3 to 5 years), they'll see an annual savings of around $70 million or so. Would you be startled to see your local Best Buy shrinking? And moreover, what does Best Buy intend to do with the freed up space? Should be interesting to see, but as the times change, so must retailers.
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I worked for them in the past, all I can say is the rely on a more antiquated business model. The associates were mostly used for their knowledge and then the people went online to but the product. They need to change the prices on the accessories which is the main part them make $ but 1000% mark up on some cables is not the way to keep people coming back. 200% I can see for convince and such. 

If I were them I would set their web store prices to compete with other online stores. And their in store prices 5% more, consider it a convince fee. If you want to be able to come in the store to return it/ exchange it/ get it fixed you have to buy it in store. If you dont care about that you can buy it online and deal with online returns ect. 

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AKwyn replied on Sun, Apr 17 2011 12:52 AM

Eh, wouldn't be surprised. Most of the stuff there is overpriced as hell anyway and there isn't mostly anything that computer geeks (like me) would want (Ironically, Best Buy sells most of this stuff online, so their web presence is already more known then their store presence due to the wider selection.

I admit, it is nice if you want see the latest tech or you want something now but barely anybody is in Best Buy and I feel like the only thing Best Buy could do is to offer better service and fair prices, and get rid of that appliances section which barely anybody uses or looks through.

 

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LBowen replied on Sun, Apr 17 2011 2:24 AM

The internet is such a varied place that allows for so much more custom options for consumers.  Companies like Amazon, Newegg and the like are on the fast track to continued success and many retailers will have to adapt and continue adapting to these changing times.  It isa  very competitive and very exciting time.

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Best buy is way too loud for my tastes. I can't go in their for more than 5 minutes because of all the TV's surround sound systems and car stereos blasting. Also I have to agree with the rest of the people here that their prices on most things are stupid though some of their sales are very good.

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jonation replied on Sun, Apr 17 2011 11:34 AM

although that's the one main perk of having a tangible store - testing/judging quality for yourself in person.

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jonation replied on Sun, Apr 17 2011 11:35 AM

Especially when you have server script acting like a personal sales assistant to you.

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fat78 replied on Sun, Apr 17 2011 1:04 PM

There was only one time that i found best buy price on an item was cheaper than other places i usally buy, and that was on a h50 cooler that was 10$ cheaper. When ever i am asked by people where to buy electronics and ask about best buy i always tell them to look some where else before they buy anything.

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3vi1 replied on Sun, Apr 17 2011 3:19 PM

So Fry's will soon be opening more and more stores, as Best Buy becomes the new Radio Shack.

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CHolt replied on Sun, Apr 17 2011 7:57 PM

Oh gosh, I want more Fry's in Indiana - it is the coolest electronics store ever.

Anywho - I bought a laptop from Best Buy that was $70 cheaper than Newegg.

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AKwyn replied on Sun, Apr 17 2011 8:50 PM

3vi1:

So Fry's will soon be opening more and more stores, as Best Buy becomes the new Radio Shack.

I doubt that. As far as I know, many Best Buy stores are still popular (and profitable somehow) locations to shop for electronics. So no, I don't see them becoming the new Radio Shack anytime soon. I do expect them to have less of a superstore feeling as time goes on.

 

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rrplay replied on Sun, Apr 17 2011 11:17 PM

I dread the thought of ever going into the my local Best Buy store it is just way to loud and distracting.The prices are too high and too much house brand like Dynex etc mostly just stop in and look around once in a while to get an idea what some models actually look like , but that's about it for me.

A few years ago I needed to replace some appliances and shopped around a bit at Best Buy and ending up purchasing from the local appliance dealer that had the same or better price and service.

So if Best Buy needs to cut some sq footage ..

Oh well...

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LLeCompte replied on Mon, Apr 18 2011 10:18 AM

I worked for best buy last year in the computer section and i have to say it was horrible. Our prices were sky high on everything, but we did have a decent size computer section. It doesnt surprise me they are downsizing, we were losing money most of the time when i was there. After working there for a year, i dont really see myself buying anything from them unless its onsale or if i need something and cant wait. online is way cheaper and the CS is way better too.

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