Although consumer electronics retailer Best Buy, Inc. (NYSE: BBY) reported decent results during its latest quarter, the addition of sales from Circuit City's demise may be hiding inside those results. You can't just banish billions in quarterly revenue to nowhere, and when Circuit City folded for good last month, many retailers were still swimming in the sales wake left behind.But incoming Best Buy CEO Brian Dunn is not relying on capturing those sales to spark any kind of growth possible at the retailer. He's taken stock of the current consumer market conditions, looked at his online competition and energized competitors in the consumer electronics space -- companies like Wal-Mart Stores, Inc. (NYSE: WMT) and warehouse clubs. Here's the skinny by Dunn: recruit local market share from competitors, enhance the retailer's mobile offerings, push its international presence further and become more efficient in the SG&A end. Not bad for four overall solutions.
Best Buy has power in the brick-and-mortar market. Internet retailing will always give Best Buy a run for its money, but the consumer power of actually touching a potential purchase is an intangible that's not often mentioned (but is incredibly powerful). Best Buy's "connected digital solutions" strategy sounds more like fluff, but then again, customers are already becoming connected without the retailer's help. Offering related products in the same area on the sales floor is not enough, so it will be interesting to see what Best Buy does here. One other strategy -- taking U.S. merchandising lessons and applying them internationally -- is enough to really goose Best Buy in the next few years. It's the most boring, but also has the most potential for adding to the retailer's growth.
Closing Bell: Dubai sends jitters throughout the market (S, BBY)
Heinz looking good after the second quarter?
Why isn't Bank of America updating its shareholders on CEO situation?
Reader Comments (Page 1 of 1)
4-02-2009 @ 5:21AM
al coholic said...
Don't underestimate the number of people who will go to Best Buy, touch the product, and then order it online.
Best Buy would be smart to see what has become of companies like Barnes & Noble, whose brick and morter stores have turned into ghost towns.
Consumers are changing their buying methods. Their business model is quickly becoming obsolete.