An article for the Wall Street Journal listed four retailers that are going to have do-or-die years. Due to slow economic recovery, cautious consumers and competing online competition, the next 12 months are critical for J.C. Penny, RadioShack and Sears. The fourth retailer is one where consumers go for a lot for electronics and gaming — Best Buy.
Best Buy is being plagued by "showrooming." Showrooming is a retial phenomenon where consumers will look and examine products in the retail store, but then buy the product online through rivals. The article states that "a quarter of shoppers who said they had showroomed had done so at Best Buy […] so analysts will be watching to see if it can capture more of those sales on its own website."
Hubert Joly took the helm of Best Buy in September. While it's still the largest consumer-electronics seller in the world, stores open at least 14 months have seen a decrease in sales in eight of the last nine quarters. While there's been no viable strategy articulated by those in charge, including Joly and the chain's founder Richard Shulze, they've talked about reducing costs, improving staffing on weekends, shrinking stores and improving the website. Best Buy's stock has lost 50% of its value in the past year, and their credit rating has dropped from BB+ to BB-. However, Best Buy was one of the top three most-visited sites over Thanksgiving weekend — all because of Black Friday and Cyber Monday, according to comScore. We will find out if those visits translated to sales when Best Buy releases the holiday sales results on January 11.
So what does this mean for gaming? Honestly, I don't think a lot will change. Even if Best Buy struggles over the next 12 months, it's not likely that we'll see it disappear like Circuit City did years ago. Circuit City also suffered from showrooming, but unlike Best Buy, they didn't address it. Instead, they made showrooming more convenient by adding places to try console and PC games while sitting in comfy leather seats. Best Buy already has a solid online presence, and I can't see all of their retail stores going away. People need a place to try products before they buy them, and Best Buy offers that. The challenge will be to translate that into sales for either their retail store or online store.
If Best Buy did liquidate, that would mean one less competitor in the retail gaming market; we'd be left with Target, GameStop, Walmart, Toys 'R' Us and smaller gaming boutiques. While I have fond memories of waiting outside for hours upon hours the night before the Xbox 360 release, that can easily happen at the other stores mentioned. The Best Buy trade-in program hasn't lived up to the trade-in program at GameStop, so that won't be missed that much either.
In the end, Best Buy won't be going anywhere. They'll still have retail stores, but they need to focus on online competitors. Most shopping — especially for the holidays — is done online now, and Best Buy needs to adjust.
You can follow Senior Editor Lance Liebl on Twitter @Lance_GZ. He likes talking sports, video games, movies, and the stupidity of celebrities. Email at [email protected]
[Source: WSJ]
