Is Best Buy's HDTV sales strategy still working?

Is Best Buy's HDTV sales strategy still working?

Summary: 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.

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TOPICS: Hardware, CXO
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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.

Topics: Hardware, CXO

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27 comments
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  • RE: Is Best Buy's HDTV sales strategy still working?

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  • restocking fees

    Restocking fees eliminate the only advantage brick and mortar has over the web low-ball price outlets -- easy returns. Most of this "high tech" stuff promises more than it delivers, removing the risk of getting stuck with a poorly implemented product via a good return policy is the only reason I still shop at stores.

    I never set foot in CompUSA once they instituted their restocking fee BS, will do the same now for Best Buy.

    Around here, Fry's blows Best Buy away in all regards.
    wkulecz
    • RE: Is Best Buy's HDTV sales strategy still working?

      I am not a fan of restocking fees, or Best Buy, but I think you misinterpreted the article. Best Buy eliminated restocking fees for everything except special orders. They always had the restocking fee, now it is gone.

      Granted, that part of the article could have been worded better, or you could have followed the link to see what the author meant.
      taylorcs
    • RE: Is Best Buy's HDTV sales strategy still working?

      @wkulecz

      I think Best Buy just eliminated Restocking fees on all or most items. Just a thought.
      bobiroc
  • Comparison Shopping

    With my Android phone, I have been using apps like Amazon barcode and Barcode Scanner to do comparison shopping. With electronics, I will view it locally and buy it online unless the price is comparable or better locally. This is the best way to save money. Best Buy need to adjust their pricing now before it's too late.
    asamreth
    • RE: Is Best Buy's HDTV sales strategy still working?

      @asamreth

      >> With electronics, I will view it locally and buy it online unless the price is comparable or better locally.

      When everyone start doing this, the local stores will close down and then you will be forced to buy stuff online without ever seeing them. Not blaming you for doing this though.. Brick and mortar company can never set their prices below the internet shops. There is a cost associated with putting up the shop and keeping them running.
      mKind
      • RE: Is Best Buy's HDTV sales strategy still working?

        @mKind
        I used to shop regularly at a computer store (an Amiga store -- it was a long time ago) where I got to know the proprietor fairly well. Whenever I was shopping for something new, I would tell her what I was looking for and what I could get it for online. She would look up the price from her supplier and give me a quote -- the quote was never quite as low as the online price and I always bought the item from her because she at least priced it somewhere in the ballpark and, even if that item was something she had to order (so it was little different than if I had ordered it myself) I figured that the advantage of having a brick and mortar store where I could come and check out products, talk to someone knowledgable about the products, and know that I would be treated right was worth paying a small premium (and clearly she couldn't have been expected to compete with companies which do high volume and have none of the overhead of display stock, etc.). I wanted the store to stay in business so I did most of my buying there.

        But times have changed. I can go online and for many things which interest me I can find fulll hands-on reviews with specifications and often videos of the product. Websites like Amazon get extensive user-reviews of all types of items and while one has to read user-reviews with a wary eye since they often are biased or the user mistakes their own ignorance regarding the product as a quality-defect in the product, when there are enough reviews, those problems tend to fallout. In many ways this type of info is superior to a rushed hands-on in-store demo, particularly if that demo is delivered by a salesman who either lacks knowledge of the product or who uses shady tactics to make quick sales. Brick and mortar stores are becoming somewhat irrelevant. To be sure, some people will always want to see the product first and for their sake, I hope they don't make it a practice to run down to the store to check out the products and ask the salesman for a demo only to turn around and buy it online to save a few bucks (particularly if they do so without even attempting to negotiate a competitive price). As you point out, if everyone does this the local stores will disappear. For me, however, I rarely ever enter a local store anymore -- about the only advantage they have left, for me, is the ability to get the product today, which is rarely something I need -- if I'm in a hurry, next-day is usually good enough and I can get that most places by paying a premium on shipping.
        LesN
      • RE: Is Best Buy's HDTV sales strategy still working?

        @mKind

        My compromise is to not shop at retailers that do not have both brick and mortar and online presences. I pay a little more, but with where I live, it saves me having to travel so far to get everything.
        always-a-geek2
  • Show the customer a plus for buying in-store

    If you can show the customer some advantages for paying a *little* more in the store, you'll get more customers who are perhaps not quite sure they want to wait for shipping.
    For example, what if you had a policy of everything over a certain price level was "Satisfied or we will come and pick up the item for you" policy. If you put the idea in the customers head that they don't have to pay in time and aggravation for returning a problem product, you might even win some repeat customers.
    ridingthewind
  • RE: Is Best Buy's HDTV sales strategy still working?

    Add maybe it is a case that almost everyone has an HDTV now. The business bozos predict ever increasing sales growth figures forgetting that once you have sold 2 TVs to everyone on the planet you are pretty much limited to selling replacements, new-borns, and the occasional upgrade.

    Best Buy was banking on everyone throwing out their relatively new flat-panel 2D HDTV for a 3D model. Guess what, people are happy with 2D and can't afford to buy another set with the feature de jur. If 3D had taken off, next year it would be 3D with smell-o-vision.

    The insanity will end only when Wall Street gets a clue.
    7mgte
    • RE: Is Best Buy's HDTV sales strategy still working?

      @7mgte And if they have not gotten it by now they are 1. Seniors A. Who have trouble with the technology B. Because of normal vision issues that come with age literally don't see the difference in the picture. 2. Long term (and unfortunately probably permanently which is a crime) unemployed who can't afford one even at these low prices. I never understood why they don't sell SDTV's at $50-$100 for the long term unemployed person whose TV breaks.
      edkollin
  • RE: Is Best Buy's HDTV sales strategy still working?

    I just bought a new Samsung plasma from Best Buy - It was a great deal, but I would have happily gone elsewhere as the sales people that work there didn't know the capabilities of the TV's and didn't seem to care. This is what will get Best Buy back on top: know your products - help the customer learn the products. In an increasingly complicated electronics future people that know it and want to share it will thrive. The rest will die.
    DrewLT
    • RE: Is Best Buy's HDTV sales strategy still working?

      @DrewLT
      Yeah, but that's never going to happen when the big box stores, like Best Buy, employ $10/hr college and high school kids. Of course they're not going to be knowledgeable; they're just killing time for beer money.
      Theseus
  • RE: Is Best Buy's HDTV sales strategy still working?

    I walk into a BB store and the overpowering!!! noise level of the rock ??music?? drives me right out again.
    Same thing in some restaurants. Texas Road House is a prime example, the food is great but the crashing pounding sound level makes me sick to my stomach.
    These places must only want to do business with people who are totally deaf.
    bhaskins@...
    • RE: Is Best Buy's HDTV sales strategy still working?

      @bhaskins@...

      absolutely agree re the noise - except I find it's normally rap - which I dislike more than too-loud-not-my-choice rock.
      sbr287@...
    • RE: Is Best Buy's HDTV sales strategy still working?

      @bhaskins@...

      You are so right. I attribute this to the preponderance of young people working in these stores. As we age, we lose the ability to distinguish conversation from background noise, even if our hearing is otherwise fine. An environment that might be intolerable for a 50-year old is perfectly fine for a 21-year old who is unaware of any problems.
      bkshort@...
  • RE: Is Best Buy's HDTV sales strategy still working?

    Since Best Buy still has one price listed on it's public facing site and another price on the in the store site I still do not trust them. I only buy when I have compared and can force them to honor the price on the external site or meet another store's price. Don't Trust but Verify is my motto for Best Buy.
    geoff.schardein@...
    • RE: Is Best Buy's HDTV sales strategy still working?

      @geoff@...

      I have run into that a few times and not once has best buy given me trouble about matching the prices. I show them on bestbuy.com on their on register or on my phone browser and they say "OK, we can do that" and no problemo.

      For the record I have noticed the same thing at stores like Walmart, Target, Sears, and others. The only store that gave me trouble was Sears when I bought a leaf blower there last spring. I ended up winning but got a store credit instead of a refund.
      bobiroc
    • Even better.

      @geoff@...
      They offered to look it up online for me and the store price matched the lookup price. One Android phone later to bestbuy.com and amazingly the lower price showed up on that system. I have no problem with prices online being cheaper, however, it has to say "Online Only" like others do. Nobody likes to see a $49 router for $79 at the store and the best the salespeople can say is "must be a different model".

      TripleII
      TripleII-21189418044173169409978279405827
  • Technology Advancement

    There really hasn't been a big step in technology when it comes to HDTVs in quite a while. Most still see 3D as a gimmick and not a useful feature in home entertainment and that may not change even if glasses free 3D technology improves or becomes more widely available. Many are content with their current HD Capable TVs and may be awaiting the next leap which will be something like the availability of Laser TVs coming down in price or the next resolution bump to ultra definition (2160p I think). That and the economy is not exactly booming so they may be holding onto their money for more important things and letting their current TV that still works keep on kicking.

    I could be wrong of course but I am just going off the feedback I get when people ask me about shopping for technology. I have an "Old School" projection TV that only does 1080i with no HDMI but I am content to use a HDMI to DVI adaptor and optical cable until the time comes a new TV will offer me an advantage. I have thought about getting a thin LCD but decided to wait. I did, however, replace my 27" Tube TV in my bedroom with a 32" 1080P LCD as a Christmas present to myself. The only thing that inspired me to do that is the updated receivers I got from my TV provider now does dual HD output instead of 1 HD and 1 SD.
    bobiroc