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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 5:06 am 
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Best Buy reboots as it targets Amazon, Wal-Mart

Chris Burritt,Cliff Edwards, Bloomberg News
Wednesday, March 23, 2011


Best Buy Co. is rebooting -- again.

Concerned that consumers are coming to view the world's largest consumer electronics merchant as just another big-box chain, Chief Executive Officer Brian Dunn is rethinking just about everything the company does.

He's reorganizing the stores; new test locations in Pittsburgh and Las Vegas are less cluttered and bear more than a passing resemblance to Apple Inc.'s retail minimalism. Floor walkers have been retrained to show shoppers how gadgets work together -- a concept Dunn calls the "connected store."

"We have an industry that's transforming, so naturally we're transforming," Dunn, 51, said in a telephone interview. "All of those initiatives show how we are transforming to what our customers need and want from us."

The connected store represents a midcourse correction for Dunn, whose previous strategy involved loading up stores with exclusive products, including an electric bike. Best Buy has since lost customers to Apple, Amazon.com, Wal-Mart Stores Inc. and Costco Wholesale Corp., say analysts.

When the company reports fiscal 2011 earnings today, annual revenue may rise about 1 percent to $50.3 billion, according to analysts surveyed by Bloomberg News. That's the slowest pace since 1990. Profit may rise 4 percent to $1.37 billion, compared with a 31 percent increase the year before.

The connected store strategy won't solve Best Buy's challenges, according to Michael Pachter, an analyst at Wedbush Securities in Los Angeles who rates the shares "neutral."

"With the Internet and smart phones, we don't need to shop at Best Buy to figure out which TV or electronics we want," he said in a telephone interview. "Their solution may be good for 2011 but will be irrelevant by 2014. Technology is going to pass them by like they're standing still."

Dunn, who has been CEO since June 2009, is betting big on services. While trying to match the discounters on price, Best Buy intends to sell add-ons Wal-Mart and Costco don't offer, including extended warranties, digital content streamed to devices and remote home-monitoring and repair, says Mike Vitelli, co-chief of the North American division.

Store No. 584 in the Pittsburgh suburb of North Fayette provides a glimpse of Best Buy's new direction. Gone are the tall enclosing shelves that have long typified the stores. Instead, a range of gadgets - from tablets to cameras to digital photo frames - are displayed on low tables. Shoppers get there via "the runway," a stretch of blue tile leading from the front doors through the center of the store.

As few as half of the store's employees were trained to sell gadgets storewide. Now most are trained to sell across all categories.

Keen to reclaim customers who have defected to online retailers such as Amazon.com, Dunn is bringing the Web to the connected stores. Touch-screen kiosks allow customers to shop on bestbuy.com, print out price comparisons and see gift-card balances. Just inside the front door, shoppers can pick up merchandise ordered online. Salespeople with smart phones check out customers right on the floor.

Best Buy's Geek Squad is getting a makeover, too. Besides installing and repairing entertainment and computer systems in customers' homes, the corps of technicians will staff consulting booths and troubleshoot and fix simple problems in the stores.

In the interview, Dunn acknowledged that the new stores look more Apple-like. Still, Best Buy didn't take its cues from Apple, whose products it sells, says Ken Morris, field executive director for connected services.

"We heard from our female customers, 'Lower your tables so we can talk,' " he said. "We've created a conversation."


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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 6:06 am 
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I suppose it beats what Circuit City tried--firing all your experienced, higher-paid employees and replacing them with minimum wage workers.


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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 9:02 am 
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AMW wrote:
I suppose it beats what Circuit City tried--firing all your experienced, higher-paid employees and replacing them with minimum wage workers.


See how nice that worked out for them?

I wouldn't call Best Buy employees "experienced" either, though.

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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 9:50 am 
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Best Buy needs to lower its prices, especially on DVDs. It's not really Best Buy when most of the store is full retail.


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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 10:10 am 
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Yeah, I pretty much stopped going there when it didn't feel I was getting a "best buy" anymore.


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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 10:21 am 
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Hanzo the Razor wrote:
Yeah, I pretty much stopped going there when it didn't feel I was getting a "best buy" anymore.

So right after they opened then, pretty much. :)


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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 10:28 am 
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Before I got on the "internet shopping" thing that the kids seems to love so much.


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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 10:32 am 
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I always thought that Best Buy was a little pricey.

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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 10:45 am 
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They got me in there every week with the reduced-price new DVDs, but since I pretty much only buy the superhero movies anymore due to hundreds of unwatched DVDs taking up space, I have no reason to go there anymore.


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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 1:54 pm 
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It strikes me that once upon a time, Best Buy's standard shelf CD price was a little cheaper than the competition, though they certainly let their prices creep up over time. I very much agree with the comments made about their shelf prices being far too high on DVD/Blu-Ray titles though. That stuff just sits there and gathers dust at regular price and doesn't move until it's put on sale. They should be able to find a middle ground to lower their regular prices down to, which would stimulate sales and lead to less dust on stale titles.

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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 2:33 pm 
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Wal-Mart is almost always cheaper for the same movies.


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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 3:07 pm 
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I personally don't get those Apple mall stores. I was in one once--there were about two hundred people jammed into a room, crowded around a bunch of flat tables and wall displays. I guess the idea was to flag down somebody with a red Apple shirt, preferably by waving hundred dollar bills.


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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 3:14 pm 
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That was exactly my experience, AMW. It was weird because I wasn't used to it.


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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 3:38 pm 
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Tricky Kid wrote:
He's reorganizing the stores; new test locations in Pittsburgh and Las Vegas are less cluttered and bear more than a passing resemblance to Apple Inc.'s retail minimalism.

Gosh, my store is already that way, they've cut their inventory back to almost nothing.

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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 3:55 pm 
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Hanzo the Razor wrote:
Yeah, I pretty much stopped going there when it didn't feel I was getting a "best buy" anymore.


Same here. Them and FYE charge like crazy.

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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 4:16 pm 
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I can't understand why stores like FYE are still around. They've always been sooo overpriced.

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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 4:21 pm 
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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 4:22 pm 
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The connected store strategy won't solve Best Buy's challenges, according to Michael Pachter, an analyst at Wedbush Securities in Los Angeles who rates the shares "neutral."

"With the Internet and smart phones, we don't need to shop at Best Buy to figure out which TV or electronics we want," he said in a telephone interview. "Their solution may be good for 2011 but will be irrelevant by 2014. Technology is going to pass them by like they're standing still."

I agree with this assessment. Best Buy could be gone altogether within a few years, but there's absolutely no doubt in my mind that they're going to stop carrying all physical media sooner than that, and focus solely on computers/electronics/phones.

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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 4:26 pm 
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Only thing I get there is laptops, because of their crazy generous insurance plan.


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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Thu Mar 24, 2011 10:40 pm 
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RoyalScam wrote:
AMW wrote:
I suppose it beats what Circuit City tried--firing all your experienced, higher-paid employees and replacing them with minimum wage workers.


See how nice that worked out for them?


Seems like it worked out brilliantly - they haven't had a complaint in years!

The closest BB to me has had CD/DVD prices creep up fairly significantly - far fewer good deals since CC closed. Not based on a ton of personal experience, mind you - I hate BB and will only go there if I decide I need to have some exclusive edition or if they have a crazy cheap price on something I want.

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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Fri Mar 25, 2011 9:09 am 
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Dr. Chris Evil wrote:
I can't understand why stores like FYE are still around. They've always been sooo overpriced.


They actually dropped a lot of their CDs to $9.99. I go there to get used stuff sometimes.


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 Post subject: Best Buy reboots as it targets Amazon, Wal-Mart
PostPosted: Fri Mar 25, 2011 9:37 am 
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Hanzo the Razor wrote:
Dr. Chris Evil wrote:
I can't understand why stores like FYE are still around. They've always been sooo overpriced.


They actually dropped a lot of their CDs to $9.99. I go there to get used stuff sometimes.


Their used stuff is still usually way overpriced compared to what the same stuff goes for on Amazon Marketplace, IMO

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