Electronics giant Best Buy (NYSE: BBY) is not only suffering from the worst consumer holiday spending meltdown in years, but its beleaguered customer base is now fleeing to discount retailers like Wal-Mart (NYSE: WMT) and Costco (NASDAQ: COST).
So it appears Best Buy is getting hit with a double whammy, according to a November ChangeWave Alliance Research Network survey of 2,763 U.S. consumers.
The massive slowdown in consumer electronics spending this holiday season -- which the survey shows to be the weakest ever -- is a far cry from the surge that normally occurs at this time of year.
Only 19% of consumers said they'll spend more on electronics during the next 90 days compared with 43% who said less -- a net 40 points worse than a year ago.
But it was when ChangeWave asked respondents where they'll buy their electronics during the next 90 days that the full scope of Best Buys' woes became apparent.
Among consumers planning to shop for home entertainment and computers, only 44% said they'll shop at Best Buy -- down three points since September and seven points from a year ago. That's the lowest November reading ever for Best Buy in a ChangeWave survey.
Over the next 90 days, which of the following stores do you think you and your family will shop at for home entertainment and computer/networking products? (Choose no more than three.)
And as quickly as consumers are filing out of Best Buy, they're filling up the parking lots at Costco (up three points to 27%), Wal-Mart (up five points to 18%) and Sam's Club (up three points to 12%).
In other words, the huge shift by consumers to the discounters and wholesalers is hitting the electronics industry with a vengeance.
Only 5% of respondents said they'll spend more money at Best Buy during the holidays compared with last year, while 26% said they'll spend less.
Best Buy recently cut their fourth-quarter outlook, and the ChangeWave survey provides no sign that things will stabilize anytime soon for the electronics giant.
Looks like Best Buy will be getting a lump of coal for Christmas.
Paul Carton is the Director of Research for the ChangeWave Alliance Research Network. The Network is a group of 20,000 highly qualified business, technology and medical professionals -- as well as early adopter consumers -- who work in leading companies of select industries.
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Reader Comments (Page 1 of 1)
11-20-2008 @ 12:02AM
Sam said...
BBY's loss is Walmart's gain (WMT may even start selling iPhone soon).
Macy's loss is TJX's gain.
GM's loss is ________ gain.
I sure do hope the updated 'loan' package goes thru tomorrow (please do not call it bailout - that hurts us taxpayers).
Bill Maher - "There is a new chapter in America. Chapter 11"
Sam
-http://tickertoday.blogspot.com
11-20-2008 @ 1:29AM
Jessy Scholl said...
Paul Carton didn't read the entire graph. Sure you can say that Best Buy could be getting a lump of coal in its stocking, but when it comes to buying consumer electronics, Best Buy is still the leader according to the survey. It just fell 7% from the previous survey and even though that might be bad, it isn't that horrible because people's spending habits could change on a dime because some people are flocking to Circuit City to clear out the closing stores which is why Best Buy is making the adjustments to its bottom line. I woundn't be shocked to hear next Wednesday that Circuit City is throwing in the towel with the bankrupcy judge approving a switch to Chapter 7, the stores would be closed Thursday to prepare for the closing sales, and the end would begin for Circuit City on Friday which just happens to be Black Friday. I am willing to bet that Circuit City's death didn't make it into the survey though it was taken recently. Yes I realize that Circuit City is down from 17% a year ago, but that doesn't take into consideration the closing sales and so on.
11-20-2008 @ 2:37AM
TrueDat said...
Hey Jessy, Best Buy is going the way of Circuit City...and if Circuit doesn't make it...it's only going to be worse for the consumer.
11-20-2008 @ 11:15AM
Jim C said...
Best Buy has lost a lot of my business do to their financing dept. I did a 12 month no interest 12 payment programon a computer. 2 times they charged me a $35.00 late payment fee saying that they didn't get my payment until after the due date. The second time they did this I had sent the payment 17 days early. Every other check had cleared at least 10 days earlier. I sent them the balance in full and won't finance through them anymore.