Best Buy (NYSE: BBY) is widely assumed to be the biggest beneficiary of the downfall of Circuit City, but Wal-Mart (NYSE: WMT) is looking to crash that party. "Circuit City's business is up for grabs right now and we expect to get our share," Gary Severson, Wal-Mart's senior vice president of home entertainment, told (subscription required) the Wall Street Journal.
Companies like Nintendo and Apple (NASDAQ: AAPL) will get their own in-store displays, and Wal-Mart will also be revamping its electronics departments to create a more open and interactive Best Buy-like shopping experience. Wal-Mart has been trying to move upmarket in the consumer electronics business for years, and offering Palm's soon to be released Pre smart phone is another part of that strategy.
The Journal adds that "As Wal-Mart senses an opening, it is expanding its mobile-phone assortment and adding an island where shoppers can pick up and try out laptops and netbooks. Wal-Mart previously kept the portable computers under lock and key for fear of shoplifting, a sore point with some manufacturers."
Any marginal gains in Wal-Mart's consumer electronics market share won't be a driver of short-term earnings. But they could easily be enough to screw things up for Best Buy, whose shares are up more than 100% from their 52-week low -- partly on anticipation of scooping up the sales that will no longer be flowing to Circuit City.
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Reader Comments (Page 1 of 1)
5-18-2009 @ 5:32PM
jeffbloker said...
Best Buy is one of the worst places to purchase electronics I can think of. I cringe when someone considers buying a TV, or worse yet a cable from the company. Prices are exorbitant. Customer service is lousy (I was once held hostage for several hours over a $600 purchase, in which Best Buy re-sold to me a busted, repackaged product returned by an earlier customer). I just went in over the weekend and felt like I was being attacked by hawks too busy contemplating their next job to organize the stock. Best Buy should change is name to something less ironic, like Crap Buy, or Too Old to Trust Online Shopping Buy.
5-31-2009 @ 7:02PM
roudy11z said...
Very good Zac.
I agree with #1 comment. The arrogance of Best Buy is overwhelming. They won't answer the phone,their sales people won't help you, and they will try to sell a woman or teenager something they don't really need but don't know any better. I expect BB to crumble in time. I think some class action suites are also coming. "What goes around comes around". RoudMan