Electronics superstore Best Buy has taken a hard tumble in sales and profits over the past year, casting major doubts and speculation over its future as a retail leader. Its problems stem from more and more consumers having become privy to cheaper online deals on electronics, and steadily over time, Best Buy has been losing sales and profitability. Its omipresent box stores have even become a showroom for online merchants. Meanwhile, fellow superstores like Target and Walmart are making it exceedingly difficult to rationalize a special trip to Best Buy, what with their competitive prices and similar omnipotence. But new changes in the company's business model, in addition to new leadership, aim to change shoppers' views of the superstore.
Expected Changes at Best BuyForbes reports that Best Buy is cutting costs and changing its business model in order to stay competitive this fiscal year. Since March, it has already closed 50 of its stores, and is shifting its product focus to mobile electronics. By 2016, Best Buy anticipates operating "some 600 to 800 mobile-only stores, up from 305 today."
Even more dramatic, Best Buy recently announced new CEO, Hubert Joly, to takeover in September. Joly is the former CEO of Carlson Companies, a leader in the travel and hospitality industry. Known as a turnaround expert, Joly has invigorated profit growth for two of Carlson's major brands: Raddison Hotels and TGI Friday restaurants. Whether he spin Best Buy's current dilemma remains to be seen, however one thing's for sure: Joly's background in hospitality may be a godsend in terms in improving Best Buy's most griped about inadequacy — poor customer service. Customer reviews for Best Buy customer service, either online or at a physical store fall far short of stellar and closer to irate. And don't even get people started on Best Buy's 24/7 tech support team aka the Geek Squad. Based on online reviews, if there's any continuity in terms of brand experience, Best Buy's is pure frustration.
Best Buy Still a Big Box Competitor?
Plummeting profits and customer service flaws notwithstanding, Best Buy is still one of the top five retail brands in the nation and can likely hold its own alongside Walmart and Target. Global brand agency Interbrand states that Best Buy's profit woes are mainly the result of a "soft consumer electronics market" and the brand is still "top-of-mind by 65% over competitors," as it claims more than 20% of the market share. What's more, Interbrand points to a recent buyout by Best Buy of its U.K. partner Carphone Warehouse as a major investment in the company's future growth in smartphone sales. This, along with consolidating its stores to 36,000 square feet, innovations, and new leadership, could save Best Buy from what some perceive as its inevitable demise.
Is Best Buy a lost cause? Or is it still the best place to find the in-store deals in electronics? Have you moved on to new retailers? Sound off in the comments below.
Photo credit: Interbrand
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