When I was a teenager, the idea of the mega electronics store was still a new concept. I remember many people would buy their electronics at their local furniture store! Then came the VCR and all of a sudden the mega electronics store was born. By the beginning of the 90’s though, the boom was over, and many chains were closing shop, declaring bankruptcy, or rebranding to stay alive. The next big thing came along in 1995, and it was software: Windows95 was bigger than life itself, and the electronic stores that sold computers, cashed in on Microsoft’s most popular OS release. The good times would not last and in the Internet era, many stores felt the new pressures of competing against online retail giants like Amazon.com. All of a sudden online retail took off and you could literally order anything you wanted, at any hour of the day. Sure it took a while for UPS and FedEx to get it to your door, but the prices were cheaper. What the mega electronic stores were good at were good prices, but in today’s internet commerce world, their prices are actually higher than most online stores. And this is perhaps BestBuy’s biggest problem. How do you sell more volume when your prices are actually higher? This is something which BestBuy still hasn’t figured out.
For electronics there really is two types of customers, bottom line value customers and higher end. Higher end goods are hard to stock in mass quantities because they sell in less quantities than cheaper items, and they are manufactured in smaller quantities. A retail giant like BestBuy needs massive quantities to stock all of its stores. This makes it hard for BestBuy to cater to higher end consumers, therefore they settle for value customers who spend less. An ideal store would be able to cater to both customers. And this is exactly what online stores do. My personal favorite online store is Newegg.com. They not only carry massive selection of everything computer related, but they also have the best prices. These days, BestBuy is more concerned with trying to attract more walk-in customers than actually providing an interesting shopping experience. Much like Wal-Mart and Target, BestBuy depends on new DVD and CD releases to bring in customers every week. This strategy is not going to work forever, eventually Apple’s iTunes Store is going to take a significant amount of these customers, leaving BestBuy to come up with another way to attract physical customers.
This brings me the main point: is BestBuy a good deal or not? Perhaps in home appliances it is a good deal, but lets face it, BestBuy has not carried the best prices in a long time. Their accessories are overpriced compared to Target and Wal-Mart, and in consumer oriented video and audio, their prices do not even come close to online stores. Everyone seems to write about how bad Wal-Mart is doing, but in my opinion BestBuy is the one who should be worried.