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Best Buy (BBY) was the big winner in this year's fourth quarter. It took the lion's share of consumer electronics sales after competitors Circuit City and CompUSA shut down earlier in the year. No doubt, there was enhanced competition from mega-retailer Wal-Mart (WMT) and online behemoth Amazon.com (AMZN). But Best Buy managed to nip at customer heels with deep discounts on flat-panel televisions and laptop PCs that just weren't seen at the competition (yes, I looked). Laptops for $299 and 32" flat-panel TVs for $249 are probably loss leaders by a big margin -- but those prices make a dent on consumer psychology.
Online retailers like Newegg and physical retailers like Radio Shack (RSH) didn't see nearly as large a gain as Best Buy. Frankly, it's even hard to imagine how Radio Shack is still in business, but lucrative wireless phone commissions are probably keeping CEO Julian Day and company afloat. Nevertheless, Best Buy apparently knows how to market and merchandise.
Dan Binder, an analyst at Jeffries & Co., told Bloomberg: "Their market share gains accelerated through the last quarter. I expect they're going to show good numbers this holiday season. They don't have a major competitor around to nip at their heels this year." In a vast sense, this is true.
Wal-Mart may have greatly changed its consumer electronics merchandising to compete better, but it just doesn't have the breadth of consumer electronics product Best Buy has. With electronic gadgets, again, the hottest holiday gift category this year, it couldn't compete on the same level.
More proof from Best Buy CEO Brian Dunn: sames-store sales rose 8.4% in November alone -- before the real rush of the holiday season in December.
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Reader Comments (Page 1 of 1)
12-28-2009 @ 11:25AM
Britt Monroe said...
We work with CompUSA and Circuit City, both under the Systemax, Inc. family of retail brands, and wanted to share that both brands are very much still in business. Bought by Systemax (CompUSA in early 2008 and Circuit City in 2009), Circuit City remains an online retailer and CompUSA currently has 28 retail stores in the United States and with additional locations opening monthly.
Systemax Inc. (http://www.systemax.com), a Fortune 1000 company, sells personal computers, computer supplies, consumer electronics and industrial products through a system of branded ecommerce web sites, direct mail catalogs, relationship marketers and retail stores in North America and Europe. The primary brands are TigerDirect, CompUSA, Circuit City, Misco, WStore and Global Industrial.
12-28-2009 @ 11:54AM
Brian said...
Granted - the "brand names" are alive, but that's it. The stores, their history and - more importantly - their competitiveness, are history. Those brands no longer compete in the same league as national brick-n-mortar/online retailers like Best Buy, Wal-Mart and Radio Shack.
12-28-2009 @ 10:51PM
Ben said...
The fact that BB came out on top doesn't surprise me. The comment regarding Radio Shack also doesn't suprise, partly because they no longer have experienced sales people who know what they're doing or what they're selling. All they want to do is sell you a phone and aren't interested in anything else.
4-12-2010 @ 5:02AM
greatthaman1984 said...
Best Buy, based in Richfield, Minnesota, captured a larger share of the consumer-electronics market after Circuit City Stores Inc. ceased operations this year and CompUSA closed stores. The company also lowered prices on some products last quarter to compete with Wal-Mart Stores Inc. and Amazon.com Inc., according to JP Morgan Securities Inc, ordercomputer.com