It wasn’t that long ago that Best Buy was sitting in the catbird seat, even as the recession was in full force. Circuit City had collapsed and the people who still were buying HDTVs were less likely to make their purchase online.
But times have changes — even if it’s been just a year or two — and Best Buy is reporting a decline in TV sales for the third quarter, even as the economy is in recovery (albeit a lurching one). What happened, and how much is Best Buy to blame?
Some of the company’s concern should be focused outward. Walmart has greatly stepped up its HDTV stock and sales; to a lesser degree, so has Target. The electronics chain Hhgregg has also expanded, providing a new source of competition. Best Buy hasn’t been as aggressive as those chains in pushing low, low prices on their sets, choosing instead to bet on 3D and network-connected TVs. Despite all the hype, 3D sets haven’t been a runaway success, and Internet-capable ones haven’t fared much better.
Meanwhile, customers continue to get more comfortable ordering HDTVs from Amazon.com and other online retailers — 20 percent of consumer electronics sales are now made on the Web. Even worse for Best Buy, potential buyers are checking out sets at its stores, comparing costs on their smart phones — and possibly going home and purchasing from a site promising a lower price.
So how can Best Buy make sure the third-quarter results are a blip, and not a long-term trend? Given slender profit margins on TVs, the obvious answer won’t please the retailing giant: People are comparison shopping more and more, and offering the Geek Squad instead of the lowest prices clearly isn’t cutting it like it was in 2008. More consumer-friendly moves like eliminating restocking fees, which Best Buy just instituted this weekend, will help. What else can the company do to regain its HDTV-selling mojo? Let us know in the Comments section.
