Expert: Coming Best Buy Closings Reflect Move Away From Big-Box Model

Updated 03/29/12 – 3:34 p.m.

CHICAGO (CBS) — A local expert says the planned closings of 50 Best Buy stores is reflective of an evolution of the consumer retail market from big box stores toward the Internet.

Best Buy announced Thursday that it is closing 50 stores across the country next year. The company will not say what specific stores are closing, and says the decisions are not yet finalized.

The consumer electronics chain’s new retail strategy will focus on smaller stores, and will remodel key stores into its new “Connected Store” format that will focus on how mobile, computer and wireless networking can make a difference in the average consumer’s life.

Best Buy is also opening Mobile small format stores through the country.

“We are deliberate and thoughtful when we make such decisions. We are working to ensure the impact to our employees will be as minimal as possible, while serving all customers in a convenient and satisfying way,” Best Buy spokeswoman Kelly Groehler said in a statement.

Best Buy is considered the gold and blue standard for consumer electronics stores. So some of its faithful shoppers were stunned to hear 50 stores are now set to close.

Rebecca Cuevas said she shops at Best Buy a lot, “and I am surprised that they want to shut down.”

On WBBM Newsradio’s Noon Business Hour, Morningstar analyst R.J. Hottovy says Best Buy’s plan to scale down reflects a fundamental change in the market that is hardly new.

“I think the company is coming around to realize that it’s a rapidly evolving consumer electronics market, and these are things that they problem should have done long ago,” Hottovy told WBBM Newsradio’s Sherman Kaplan and Regine Schlesinger Thursday during the WBBM Noon Business Hour on Thursday.

Best Buy is facing stiff competition from Amazon and other retailers without brick-and-mortar stores, as well as from their own vendors – with Apple having launched its own retail network several years ago, Hottovy said. It’s also facing competition from other big-box stores like Costco and Wal-Mart, which have begun selling more and more consumer electronics along with the much wider range of products consumers can find at their stores.

“I think the common denominator here is consumers tend to flock to the lowest-priced competitor, regardless of what service level they get behind it,” Hottovy told CBS 2’s Dana Kozlov.

Hottovy believes the big-box model will survive for specialized retailers such as hardware and home improvement giants Home Deopt and Lowe’s. But for Best Buy’s consumer electronics market, “those stores were designed for a different time, when consumers were used to a different shopping experience,” Hottovy said.

Blame the Internet and the growth of online shopping for that.

“Amazon has really been, I think, the most competitive threat to Best Buy,” Hottovy said.

Walk into almost any coffee shop, and laptop-toting customers will back it all up.

“I do probably 80% of my shopping online,” said Jaclyn Jones.

Joanne Archibald said, “I don’t find Best Buy has the best prices anymore.”

Asked what Best Buy needs to do to remain competitive and stay in business, Hottovy said, “I think it’s taking what we heard today a lot further. I think they need to look at more aggressive store closings, perhaps as much as 20 to 30 percent of the overall store base. Either rotate that into smaller format stores, or other remodeled locations.”

More importantly, Hottovy said Best Buy needs to use the money it saves by closing stores to offer prices that better compete with Amazon, Wal-Mart and Costco.

  • jtass

    Best Buy is complaining that they are in trouble because they cannot compete with Amazon or Walmart which can undercut their prices. Best Buy is not acknowledging the real problem. They have lost their customer base because the service in their stores is TERRIBLE. It is nearly impossible to find a clerk, When you do they either claim it is not their department or they lie about the product to sell the most expensive item possible. And customer service? What a joke. After shopping there for years I became increasing annoyed until 2 years ago when I walked out and have absolutely refused to ever return. I will totally do without a product rather than ever shop there again.

  • cc

    I agree with jtass, consumers will shop in an electronics store in droves when the service is good and the sales people are knowledgeable about the product. Look at ABT electronics as an example. That store is packed during all open hours with merchandise flying off the shelf because of their service – and they’re not undercutting Best Buy’s prices to get the business either. Best Buy’s problems were stores that were too lightly staffed and training for the sales associates was minimal at best. They also don’t have great options in terms of product delivery, installation, etc. Simply put, they took on the expense of brick and mortar locations without giving customers a good reason to go their stores.

  • Reb Biker

    Free enterprise should have nothing to do with which stores thrive or close. That should be determined solely by President Obama. Those businesses that contribute to his election campaigns should succeed, and those that don’t should fail.

    Hey, wait a minute. It already IS that way! Nevermind!

  • Olen Teston

    Their new return policy, requiring ID to return a product with the unveiled threat of
    refusing to accept returns, did it for me. Also their product selection is horrid.

  • CGB

    Living in a small town, we have limited access to many other stores, so we have used BB. That is over! The help is ill equiped to deal with customers, having a problem resolved is a two day, two trip deal, and assistance is almost impossible to get. Three months ago we bought two cell phones there that ultimately were faulty. When I took them back I was told that they do not sell that particular cell phone. Another two day process began which included finding out receipt and forcing the issue. This does not win friends and increase customer usage.

  • kevin d

    same problem circuit city had bad service. was looking for hp 15 cart at best but less than ten min. away from home ans sales person advised me they did not carry carts anymore nor any store in the area. unable to get service for over 12 minutes. 17109 store colonial park store

  • Jarvis

    Best Buy has the worst customer service ever. Their team leads, especially in the computer department, was very rude, and unwilling to help. Their return policy has always been terrible, and from what I read has gotten worse. I have not shopped there in over 5 years due to the terrible customer service. So with that, it is no wonder why they are closing. I am surprised it has taken this long. On line shopping has nothing to do with it.

  • cindy lou

    I agree and disagree with all the statements previously submitted. I agree that the sales staff is not as knowledgeable as the general public. We research, read product information and talk among ourselves. We usually know what we want before we shop. Then we shop for price, mostly anyway.
    The BB return policy is okay. On products other than certain electronics, which in all fairness any of us can mess up; they have a 30 day no questions asked policy. I know this to be true because I have experienced it in the past two weeks. We purchased a Dyson vac, used it two times, hated the limitations of using it under beds, couches, ect. Returned it in the original box, not packaging; no questions asked. So happy with the experience that we purchased the Dyson canister the same day. Although we don’t like it and are returning it also under the 30 day no questions policy, ( I guess we just don’t like Dyson vacs ); I will continue to shop Best Buy and hope they don’t change our local store in Concord, NC.

  • How To Set Up A Home Wireless Network | Network Two Computers

    […] Expert: Coming Best Buy Closings Reflect Move Away From Big-Box Model A local expert says the planned closings of 50 Best Buy stores is reflective of an evolution of the consumer retail market from big box stores toward the Internet. … Read News […]

  • zapatos bailarinas

    Normally I don’t read post on blogs, but I would like to say that this write-up very compelled me to take a look at and do it! Your writing taste has been amazed me. Thank you, very great post.

blog comments powered by Disqus
Daily Weather Reports Delivered To You!SIGN UP NOW: Get daily weather reports every morning from meteorologist Steve Baskerville!
CBS Sports Radio RoundupGet your latest sports talk from across the country.

Listen Live