Earlier this month, one time successful big-box retail store Best Buy posted a $1.7 billion quarterly loss and announced the closure of 50 stores nationwide. Following the news Best Buy’s CEO Brian Dunn resigned due to what the company referred to as “an unspecified personal conduct issue.” This news made many question if Best Buy has a future as a 21st century retailer.
Here are 5 reasons why Best buy is stuck at a crossroad:
1. Changing business environment: Best Buy’s business has stagnated due to changing macro-economic forces, accompanied by a shift in consumer preferences.
2. Not enough choice: Shoppers today can typically find more choices online from Amazon and other online retailers than they can find at Best Buy. Frequently the online retailers have lower prices too.
3. Jack-of-all-trades, master of none: When it comes to tech products Best Buy essentially offers a little of everything. Given this strategy, the store’s sales representatives struggle to gain specialized knowledge on products sold. If you want to buy a cell phone it is likely that you could get your questions answered in more detail from a cell phone provider’s store sales representatives than you could at Best Buy.
4. The rise of mobile technology is transforming comparison-shopping: Years ago shoppers would go from store to store comparing prices. Giving their size the big-box stores typically won. Today people can compare prices far faster and easier online at any time in any place.
5. Failure to adapt fast enough: Best Buy has made changes to react to the environment such as acquiring online music subscription service Napster in 2008 (later sold in 2011) and online movie subscription company Cinema Now in 2010. However, such changes have not been fast or successful enough to guarantee the company’s continued success. As a result Best Buy is still somewhat dependent on products that have since been digitized such as CDs and DVDs.
Another area where Best Buy has failed to adapt is their store layout of checkouts and security guards at the door. Such a layout is outdated and un-customer friendly. By contrast at Apple’s retail stores, customers can check out wherever they are in the store and can test new products if a wait is necessary.
So what do you think? How can Best Buy avoid the fate of other big-box retailers such as Borders, Linens ‘n Things and Circuit City? Share your thoughts in the comments section below.
Marie Wiere's Blue Sky Management Blog 
After being successful for so many years, I was amazed to see what happened to Circuit City a couple of years ago. And now Best Buy is having lots of problems. It’s incredible.
It’s so tough to compete against Amazon, Wal-Mart, and many others. I honestly don’t know what Best Buy can do to improve the situation much. It will be very interesting to see what happens over the next year or two.
I agree Greg. It’s hard to know what Best Buy could do next to turn things around. Greater online focus may help a little, but they would likely struggle to compete by price against amazon. Ultimately they need to figure out what they can do better than anyone else and focus.