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Old 01-04-2012, 11:26 PM   #1
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"Why Best Buy is Going out of Business...Gradually"

Bit of a long read:

Why Best Buy is Going out of Business...Gradually - Forbes

Clearly this editorial is heavily biased based upon a couple of poor customer service experiences, but he brings up an interesting possibility. We've all seen large box store companies go out of business (Circuit City, etc), but with the popularity of online-only companies like Amazon and boutique stores like NCIX and ME, do you think the near future will have any impact on electronic places like Best Buy?

I'll admit, I've never had a problem with BB... it's always Future Shop that's caused me grief with customer service issues. And I know there will always be people that will want to go into a store and physically play with an item they want to buy, but more and more people are simply buying off of the internet now. Yes, there will always be people who demand the instant gratification of buying an item and taking it home that very same day, but just as many would rather save a few dollars and wait a couple days for it to arrive.

Thoughts?
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Old 01-04-2012, 11:32 PM   #2
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Best Buy is good if you know EXACTLY what you are looking for (Future shop it's a hit or miss... but best buy is complete crap)

Point:
I was trying to decide between two AV Receivers on Boxing day (I had both in my hand). BB Employee walks up to me and asks if I need assistance since he's in the Home Audio section. I asked him if the Sony one had 1080P upscaling for Analog and Digital input signals.

his answer: It's not a DVD player, if you want, the DVD systems are a great deal right now! I don't think this is what you are looking for...-- Of course, if you know me you know i'm too polite to interrupt someone mid-speech. Then he tries to throw in all this technical jargon (which made no sense) about how DVDs are always digital signals etc... etc...

At the end of it, I just said... "No, Signal Upscaling, not in the sense of DVD playback, but signal processing via internal processor in the receiver"

BB Employee: I actually don't know, it's quite a busy day today I better get back to my station...

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Old 01-04-2012, 11:35 PM   #3
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I always thought Best Buy was a big reason why Circuit City went under and the same with Futureshop and A&B Sound. I usually find BB/FS prices pretty competitive with what's online at Amazon and I only buy specific items from NCIX. That said I fall under the 'want something now' type of consumer. I got my last TV at Best Buy and I cannot see myself ordering a large item online. There will always be a big chunk of customers who don't know what ncix is and will go to BB/FS to buy a computer so I think they're pretty safe for now.
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Old 01-04-2012, 11:37 PM   #4
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best Buy and futureshop are the same company, they compete with eachother just to make it seem like you have choices.
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Old 01-04-2012, 11:46 PM   #5
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My dad swapped to another sales associate walking around at Best Buy because the first one couldn't answer his questions on electronics. He told sales guy he was gonna find another person who can help since he (the first sales guy) didn't know anything. Sales guy 1 got mad, asked to "take it outside" and threatened to beat up my dad.

It was quite shocking to hear. Dad was maybe a bit cheeky about it but the sales guy honestly didnt know anything and stood around just chatting, if I recall.
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Old 01-05-2012, 12:35 AM   #6
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Quote:
WALL STREET JOURNAL
Dec 14, 2011

Best Buy Co. may finally have found a way to defend itself against Amazon.com Inc.'s cutthroat competition—but at a steep cost.

The world's largest electronics chain used heavy Black Friday promotions and free holiday shipping on all Internet purchases to lure customers back. So sales at Best Buy stores rose for the first time in six quarters, including a 20% jump in Web sales.

But the aggressive tactics took a serious toll on the retailer's bottom line. Profit margins fell at its core U.S. business and quarterly earnings plunged 29%, leading analysts to question whether the company should speed up plans to shrink its more than 1,100 big-box stores across the country.

Best Buy, on average, made less profit on its sales than discount retailer 99 Cents Only Stores. Best Buy's margin on earnings before interest, depreciation and amortization was 6.1% in the latest quarter, compared with the 8.7% that 99 Cents booked in its quarter ended in October.

Best Buy's shares, which have lost almost a third of their value this year, plunged 15% in heavy trading Tuesday to $23.73.

The retailer and other traditional chains face the prospect of becoming showrooms for online-only competitors. Some shoppers visit a mall or big-box location to check out merchandise and then find lower prices on the Web, sometimes while using smartphones right in the store's aisles.

To fight back, Best Buy took what it admits is the costly step of offering free shipping on all online orders. Inside its stores, it is increasingly focused on selling services such as installing televisions and wireless routers in addition to electronic hardware, Chief Executive Brian Dunn said in an interview.

"While the Street has not received our news positively, we are confident in our strategy," Mr. Dunn said. "We see big pools of profit that we can grab."

The company, which last year had revenue of more than $50 billion, is alone among major U.S. retailers in reporting earnings midway through the holiday season, and its results are an early window into how store chains are performing during their most crucial time of year.

The company's results for the three months ended Nov. 26 support the views of retail-industry skeptics who predicted a strong post-Thanksgiving weekend didn't necessarily presage healthy profit growth for store chains.

Like other retailers, including Macy's Inc. and Target Corp., Best Buy opened at midnight on Black Friday for the first time ever, and saw an unusually high portion of its quarterly sales come from the weekend, "which is more promotional by nature," said its chief financial officer, Jim Muehlbauer.

Its sales were up 7% on Black Friday, compared with a year ago, Mr. Dunn said. For the quarter, domestic sales of appliances jumped 13.7%, and mobile phones rose 9%, more than offsetting 9% declines in videogames and other entertainment.

But earnings dropped to $154 million from $217 million a year earlier, as Best Buy's overall gross profit margin dropped to 24.2% from 25.1%. That included charges related to closing the company's underperforming big-box business in the U.K.

Best Buy's lower profit rates will be a trend for store chains, not just those selling electronics, "as the Internet, a lower-margin sales channel, continues to hurt margins," analyst David Strasser of Janney Montgomery Scott wrote Tuesday in a note to investors.

Amazon upped the ante on that competition this month when it offered customers an additional discount of as much as 5% if they used its Price Check app to compare offers inside a physical store.

The deal outraged retail-industry trade groups, who cited it as an example for why Congress should pass legislation forcing online merchants to collect sales taxes as a way to level the playing field.

Best Buy has set plans to reduce its store square footage by 10% in the next five years. It's an acknowledgment that many of its big-box stores are too large for modern electronics retailing, as former top sellers, such as music and movie discs, give way to digital downloads.

But in light of the online competition, analysts questioned company executives during an earnings conference call Tuesday on whether Best Buy should accelerate efforts to slim down its store fleet to reduce operating costs and preserve profit margins. Best Buy reiterated that it expects fiscal year revenue to come in at between $51 billion and $52.5 billion, but narrowed its earnings guidance to $3.35 to $3.65 a share and said it now expected annual gross margins to decline by a percentage point.

Best Buy's Profit Tumbles - WSJ.com
coles:
- Amazon is lighting a fire under Best Buy's ass
- Best Buy counter attacks by offering free shipping on ALL orders throughout the holidays and discounted some items heavily during Black Friday
- their online sales went up 20% but profits ended up averaging out at 6%..which is slightly worse than profit margins at a dollar store.

here's what jumped out at me: Amazon offered customers 5% off if they used its Price Check app to compare offers inside a physical store.
OUCH lol

I'm not sure if Bestbuy will go away in the next 10 years...but they will for sure be downsizing by shit tons. I noticed their online phone support in canada used to be 24/7...it's now regular office hours.
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Old 01-05-2012, 01:28 AM   #7
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Originally Posted by butter_sashimi View Post
My dad swapped to another sales associate walking around at Best Buy because the first one couldn't answer his questions on electronics. He told sales guy he was gonna find another person who can help since he (the first sales guy) didn't know anything. Sales guy 1 got mad, asked to "take it outside" and threatened to beat up my dad.

It was quite shocking to hear. Dad was maybe a bit cheeky about it but the sales guy honestly didnt know anything and stood around just chatting, if I recall.
wutta dick, i've encountered through a similiar situation before as well, but didnt go as far as 'threatening to beat up'..
did you at least let the mangement know about this guy? he should be terminated right off the bat
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Old 01-05-2012, 02:17 AM   #8
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best Buy and futureshop are the same company, they compete with eachother just to make it seem like you have choices.
Wat he said
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Old 01-05-2012, 06:35 AM   #9
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I pretty much don't ask the sales staff of Future Shop or Bestbuy any questions, none of them really seem to have any real knowledge of the products they sell. They seem to read the info card and that's it.
I once had an argument with a Best Buy employee who didn't understand that Optical and Coax audio outputs are the same signal.

That being said, I'm not a fan of online shopping. I hate having to order it, wait days for it to arrive, deal with picking it up at the post office. And if something's wrong with it I hate having to deal with shipping it back.

When I want something I like to drive to the store, buy it, drive home and then use it that same day.
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Old 01-05-2012, 06:58 AM   #10
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Well come on guys. I`m the first to jump over shit service, but you need to keep in mind the store you are in.

If you want someone that can give you every technical spec on the item you are buying and guide you through the process, then you need to go to a smaller store, with a commission sales person that knows what they are doing. Unfortunately, that sales guy needs to make money, and so does the store, and you pay for it.

When I go into Best Buy, I`m looking for a TV. I`m looking for good, better or best. The sales guy is there to justify why this 40`tv is 300 more than that 40 inch tv, and how that $300 is going to rock my world, tv wise. That`s it! I don`t expect that he`ll be able to tell me the wattage rating on the carrier signal that powers the flux capacitor that makes time travel possible with the tv.

It`s the same as my arch-nemesis, Home Depot. You have some person wanting to guide you through your project, that has sat in front of a computer for a few hours getting `trained`and by training I mean they guide them through the products that they carry that will meet your needs. If I need something that they don`t carry, you get a `uhhh`look on their face, unless they are one of the people that come in with outside knowledge.

And its the same thing...if I want someone thats been doing it for 30 years, I need to go to a specialty store, which is a separate trip to a different place. In my case though, I save money because they are usually cheaper
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Old 01-05-2012, 07:16 AM   #11
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We've all seen large box store companies go out of business (Circuit City, etc), but with the popularity of online-only companies like Amazon and boutique stores like NCIX and ME, do you think the near future will have any impact on electronic places like Best Buy?
Yes, the future of the big box store is not great. I've read other articles explaining the demise of the big box store and how some companies have already chosen to downsize.

It costs a lot of money to keep that much inventory in prime retail locations. Office Depot found this out and downsized to boutique sized stores with only the most popular items, and everything else is shipped same day from a warehouse nearby that costs pennies compared to the prime retail space.

I think its smart, especially as we move to a more dense urban society with smaller cars, no cars or car sharing - its increasing hard to bring big items home when you shop. If a store can offer same day shipping, hell even free shipping if they are saving enough by using cheaper warehouse space, then that would work better for me.
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Old 01-05-2012, 07:18 AM   #12
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It`s the same as my arch-nemesis, Home Depot.
Go to Home Depot during the middle of a weekday, not on a weekend. The older more experienced staff work the weekdays and will have more time to spend with you.

I hate going on weekends, its just a bunch of kids working that don't know much.
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Old 01-05-2012, 07:28 AM   #13
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Go to Home Depot during the middle of a weekday, not on a weekend. The older more experienced staff work the weekdays and will have more time to spend with you.

I hate going on weekends, its just a bunch of kids working that don't know much.
Lol...I go to Home Depot enough that they cheered when I was the first customer of 2012 at the North Surrey location. How much does it suck when you are the first customer on New Year's Day?

Like, this>>>>>>>>>>>much.

Unfortunately, tenants move in on the first regardless of what holiday it is.

I actually prefer going when they are busy, as they leave me alone.
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Old 01-05-2012, 07:30 AM   #14
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Here in Canada Best Buy and Future Shop are owned by the same parent company (which makes the bestbuy across the street from and directly competing with the coquitlam center future shop a little mind boggling).

Personally I prefer to shop at Best Buy because I always know what I want before I even get to the store and the sales people aren't as pushy. Mean while Future Shop generally appeals to an older or less tech savvy demographic that needs staff input on their purchases (and is more often up sold).

Now, down in the states, I think Walmart is presenting a big competition for Best Buy, as they have extensive electronics departments that cater well to thrifty shoppers - and given the economic climate in the states these last few years, a good bulk of their population are thrifty shoppers. Currently up here we don't have any thing akin to that (yet) except maybe Costco and their product range is pretty limited, Staples as well carries some great deals on electronics but at such a limited range that I can't imagine it's going to make a wide spread difference.

Now, when Target moves up here and Walmart starts to expand to more and more mega stores, then we might see Best Buy taking a greater hit, but I think at the moment they're more stable then their sibling company Future Shop.
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Old 01-05-2012, 07:35 AM   #15
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Why do you even have to ask best buy employee’s for advice? I’m sure mostly everyone these days will look at all the details for what they want online first then they will cost compare for the best deal then they will go to the store with all the info but will ask for advice anyways just to hear what they say even tho you already know what you want. I’m talking about us in general since we are on forms and if we have questions we will prob make a post for the best advice. Bestbuy will never go out of business a name change could happen or a buy out but we need companies like that out there.
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Old 01-05-2012, 07:39 AM   #16
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Future Shop is forever soured on me as a result of the boxing day sale from a few years ago.
I was at the one in Courtenay and, obviously in Courtenay technology more advanced than a calculator is black magic, so I was on my own in talking about specs.

The problem was that they positioned their sales staff in such a way that once the doors were opened the sales staff were acting as a group of linebackers trying to keep us from the 10 yard line. On my way to the PC deals I had one guy block my way and try to direct me to the portable DVD players.

After being told that I was only looking for a computer he replied "But it plays DVDs in your car!"


Aggressive bastards.

Best Buy isn't much better. The Best Buy in South Surrey seems to be where they put the company's worst employees so they're not at risk of being in other stores. I fucking hate that place.
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Old 01-05-2012, 07:40 AM   #17
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Yes, the future of the big box store is not great. I've read other articles explaining the demise of the big box store and how some companies have already chosen to downsize.

It costs a lot of money to keep that much inventory in prime retail locations. Office Depot found this out and downsized to boutique sized stores with only the most popular items, and everything else is shipped same day from a warehouse nearby that costs pennies compared to the prime retail space.

I think its smart, especially as we move to a more dense urban society with smaller cars, no cars or car sharing - its increasing hard to bring big items home when you shop. If a store can offer same day shipping, hell even free shipping if they are saving enough by using cheaper warehouse space, then that would work better for me.
And thus, we set ourselves up for the next new urban blight...huge, empty big box stores.
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Old 01-05-2012, 07:41 AM   #18
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I pretty much order everything online now, its just that much cheaper. Even best buy and futureshop online have better prices than in-store. But prices in the states are dirt cheap compared to here, so I order everything and anything over there, I even buy all my gas and groceries over there.

and the nice thing is you can return your online purchase at any store location.

The major problem with NCIX is they never back up their shit, meaning if you have any issues with your purchase they will always tell you to contact the manufactorer, or if you want to return it they will charge you a 15% restocking fee, they have the worst customer service.

I know many people that have turned away from NCIX because of this, and went to memory express, because they dont have these policies.
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Old 01-05-2012, 07:43 AM   #19
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And thus, we set ourselves up for the next new urban blight...huge, empty big box stores.
This is what Southern California looks like right now. It's really, really weird.
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Old 01-05-2012, 07:43 AM   #20
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The retailer and other traditional chains face the prospect of becoming showrooms for online-only competitors. Some shoppers visit a mall or big-box location to check out merchandise and then find lower prices on the Web, sometimes while using smartphones right in the store's aisles.
While this is true, and I've done this, there definitely still exists a population of people that like buying stuff in person, or maybe rather haven't started buying things online. So as long as those types of people are still around, I think Best Buy won't go out of business.
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Old 01-05-2012, 08:04 AM   #21
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That being said, I'm not a fan of online shopping. I hate having to order it, wait days for it to arrive, deal with picking it up at the post office. And if something's wrong with it I hate having to deal with shipping it back.
Had that happen once. They tried to argue the 30 day return period started when the order was placed even though it took them 5 days to ship me the item.
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Old 01-05-2012, 08:05 AM   #22
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I pretty much order everything online now, its just that much cheaper. Even best buy and futureshop online have better prices than in-store. But prices in the states are dirt cheap compared to here, so I order everything and anything over there, I even buy all my gas and groceries over there.

and the nice thing is you can return your online purchase at any store location.

The major problem with NCIX is they never back up their shit, meaning if you have any issues with your purchase they will always tell you to contact the manufactorer, or if you want to return it they will charge you a 15% restocking fee, they have the worst customer service.

I know many people that have turned away from NCIX because of this, and went to memory express, because they dont have these policies.
Well, here's the problem.

"We" as consumers want: Online pricing, with NCIX service, with Costco's return policy.

So go ahead and conduct business in that environment.

I can see a day when retail is no longer "the" way to sell. I want a Samsung TV. I go to Samsung's website and order me a tv. Straight from the manufacturer.

It cuts several steps in distribution, it goes from place of origin to manufacturers DC to a truck heading to somewhere close to me, to me. Obviously, a bit of that would need to be built out, because that would be a logistics nightmare for 1000 customers a day, but its not outside the realm of possibility.
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Old 01-05-2012, 08:13 AM   #23
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lmao guy in the article is such a self fulfilling prophecy over that one stupid incident.

Personally I don't ever buy anything at best buy/FS before checking online what the best price is, often when they have clearance/sales they DO in fact have the best price (locally at least) I could care less about customer service when I can save $10+, it is such a hassle in my experience to get something price matched at London Drugs/FS/BB, Memory express simply googles the store looks at the inventory online and OK's the price beat.

But assuming that service is better in a smaller store, a price match guarantee/10% of the difference from these big box stores isn't enough and personally I've never successfully used it at any big box store. :/
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Old 01-05-2012, 08:19 AM   #24
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Why do you even have to ask best buy employee’s for advice? I’m sure mostly everyone these days will look at all the details for what they want online first then they will cost compare for the best deal then they will go to the store with all the info but will ask for advice anyways just to hear what they say even tho you already know what you want.
Nope.

We think that way cause we're savy geeks who live on the interwebz. My GF wanted a laptop for her daughter so she just headed to a big box store to look at laptops, only to be thoroughly confused by the sales idiot there.

More and more are joining our geeky ranks, yet there's still a large group of people that don't scour the interwebs for the best reviews and deals.
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Old 01-05-2012, 08:23 AM   #25
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lmao guy in the article is such a self fulfilling prophecy over that one stupid incident.
The constant sales pressure incident? I get this everytime I'm in FS and BB and I hate it. I completely agree with the author that I cannot shop at either store without getting mad.

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But assuming that service is better in a smaller store, a price match guarantee from these big box stores isn't enough and personally I've never successfully used it at any big box store. :/
I used it at FS to price match NCIX. Brought up the ad on my phone, super easy.
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