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Another maladjusted boner that can't read.
RCMB Premium Poster
They are toast. Nomination for the dead pool next year? I bet they are done by April.
(Image credit: Getty Images via @daylife) Best Buy has just reported its second quarter sales and earnings. Sales declined 3% and earnings declined 90%. Lack of interest in large television sets, reduced interest in tablets and phones were cited as some of the reasons the results were so weak. Looking ahead, [...]
I still say customer service killed them. They couldn't compete on price, so service could have been their "niche," and they f**ked that up. The story of the guy who bought a digital camera, got home, and there was no camera in the box put their piss-poor customer service on the front page when they told the guy to f**k off. Hate to see people lose their jobs, though--especially in this economy.
It is much more than just customer service, though that is part of it. Some reasons I can think of are:
1. Over-expansion. "The firm contains roughly $7.5 billion in lease obligations, not including "real estate taxes and common area maintenance", which create another $2.1 billion in obligations, totaling at $9.6 billion." Game over. Same thing Borders did. Big Box was booming, signed long leases, and now when some of these stores are not profitable, they are locked into them.
2. Customer Service, bottom-line hurting. Pay your employees less. Someone making 15 dollars an hour is more likely to be knowledgeable when being asked questions. The new guy making 10 dollars, fresh out of high school and not very bright....yeah...not gonna cut it.
3. Amazon. They generally do not have to charge sales tax. Best Buy does. Also, when you purchase items from Best Buy, the costs of keeping up their physical locations is factored into the pricing. Amazon just maintains warehouses. The shipping does not matter too much, because either way it has to get shipped to a customer or store location.
I would recommend waiting til Best Buy pops a little bit as it should this Winter, and then short the shit out of it. The death will not be as quick as you suggest, but more likely by the end of 2014.
Walmart, Target, Meijer, etc. are all offering 95% of the items that Best Buy is at competitive prices.
Yeah that definitely does not help. I even think long-term a store like Barnes & Noble is in trouble. Same way mall stores went to crap and Record Town would charge 18 dollars for a CD that Best Buy would sell for 12 dollars. Now that is being flipped on Best Buy. Meijer is glad to let you in and offer you a competitive price on a CD or a DVD because chances are you'll buy something else. Most people go into Best Buy with what they are going to buy in mind already.
The Warehouse stores like Sam's Club and Costco have to be hurting them too. My Dad bought a tv from Costco that 5 years ago he would of bought from Best Buy.
Look at the airlines. Nobody cares about customer service, they'd be fine with being treated like shit for $20 off a flat screen. What they needed to do was reduce the foot soldiers peddling warranties and the worship of that as a metric and to invest in supply chain.
You can take it home today, right now, the distinct advantage big box retailers have. If they capitalized on mass shipping of stuff people wanted, they'd outlast Amazon
I don't know. We're heading out to San Diego in a couple of weeks, and I booked with Southwest. I didn't bother checking with any other airline. I don't know (or care) who is the cheapest--treat me decently, treat your employees decently, and you have my business. Treating people decently is the main reason I'll drive 50 miles to Costco when there's a Sam's 20 miles away. I shop at Meijer, not Wal-mart--not that Meijer is curing cancer, but Wal-mart treats their people like shit (yes, I know Wal-mart and Sam's are connected).
I'm not totally dissing your point, it's just not as simple as price.
What product do they have left that they dominate ?
Almost everyone that can afford a flat screen has one.
Movies, CD's, dead or dying
Video Games...I don't know seems to have plateaued.
Tablets, smart phones...a bunch of other places with better service and selection.
I just started my last semester of grad school and the capstone class "Competitive Strategies" is going to focus on Best Buy throughout the semester. Our final project is to write a business strategy for Best Buy moving forward. In all honesty, I'm not sure what they can do to make a comeback.
Will be curious for outsider input over the next few months.
KC I wrote one of these for Borders and the parallels between the two are great. Let me see if I can find it.
I don't think it is that simple. Look at Wal-mart. I'm trying to think of specialty big box stores that have done well recently and it is a struggle. How do they overcome their lease commitments? How do they beat Amazon when I can buy a video game from Amazon tax-free with free release day delivery. I just have to come home from work and it is on my doorstep. I'm not gonna waste gas to go to a brick and mortar store because Best Buy Billy is gonna greet me with a smile and point me to my video game.
The lone reason I have vowed to never step into a Best Buy again is due to a customer service nightmare I had with them and their Geek Squad. I'd rather not get into the details in order to avoid bringing back those infuriating feelings, but Best Buy is one company that I am glad is reaping what it sows. They showed absolutely no interest in trying to retain me as a future customer and I feel bad for their employees, but fuck that shithole and the clueless dipshits at the top of the chain who set the tone and ran it into the ground.
They need to focus on high end stuff with a knowledgeable staff and quality installation and setup. If I buy a $2000 TV, $1000 receiver, and $2000 speakers, I want to buy it from a brick and mortar store so that if there's a problem I can take stuff back. They should also scrap the extended warranty B.S. and instead say "we sell quality stuff, so everything has a 5 year warranty already included. If it breaks we come and replace it at no cost." You can't get service like that from SAM'S or Amazon.
They can still sell their cameras, computers, and other stuff, but they need to get rid of the junk and focus on quality products. No more eMAchines $200 desktops, leave that to Walmart.
What a lot of people haven't mentioned is the growing amount of people that are no longer clueless about electronics.
You guys want to know why a high school kid can walk into Best Buy and sell electronics? He has a laptop, an iPod, an iPad, a flat screen TV, surround sound, a smart phone, and a 360. He's been using all of these things since he was like 5 years old.
To make matters worse, people already know how to research products. We have the internet and a lot of us are pretty outstanding at using it. I can google search a ton of different products and read reviews. So can that high school kid. Except, why listen to him when I can go straight to the source and read about it online. Then, with a few clicks it's shipped to my house. No car, no traffic, no getting dressed, it's just going to show up in a few days like f'ing magic.
Best Buy's biggest competitor is the growing intellect of our country and our ability to utilize technology. Best Buy's business model is a dinosaur.
Best Buy used have the cheapest prices on games when they came out. They also used to offer freebies. Before we had a Best Buy in our town (nearest was 30 miles) people would bring in the ad asking if we could match the price and we could not. Madden would be like $39.99 (back when games were $50) and you got a free madden shirt. Stuff like that helps sell but now they are just going with suggested retail and offering nothing different.
"This is the strangest life I've ever known"
Jim Morrison (1943-1971)
This big time.
I can get any and all questions answered online with out the attitude and bullshit. Also if I want an ipad/ipod/laptop I go to the apple store since it will be the same price and the apple people seems to have a better knowledge of their product anyway.
My grandmother still buys shit at best buy but has had her CC info stolen twice there and has been tricked into buying ridiculously expensive unnecessary cables for shit too.
No sympathy for best buy.
I would agree with you for the most part 5 years ago. They cannot afford to provide better customer service at this point. Their gross margin is too thin. Adding additional payroll to a company struggling to maintain cash and borrowing money like crazy. Their long-term debt went from 700 million to 1.6 billion from FY 2011 over FY 2010. Getting higher quality people to work in their stores will put them in their grave faster. Even the sales they could generate by tailoring themselves to the older generations most likely would not offset the payroll increase.
Now, I do think they need to do something while they still have access to some capital. At this point, they need a Hail Mary of sorts. What that is, I am not sure. In my opinion, it is already too late.
Oh, I didn't even mention that the 1.6 billion in long term debt is on their balance sheet. You can hide lease commitments off of your balance sheet in the footnotes. That number is almost 10 billion in lease commitments.
I guess my overall point is that what your saying maybe could help a little bit. It still won't fix a sinking ship and could make it sink faster.
This turnaround guy will fail in a year or two, than they will bring in a finance guy to try and save the day because they will have to try and meet their debt covenants and avoid running out of cash. Than they will file chapter 11. Game over.
Great points - I never even considered that the younger generation grows up learning all about these electronics. If anything, it is to Best Buy's advantage to use these high school kids and save money that way. They just need to learn how to be better with customers.
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