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2good2betrue (< 20)

BBY: The homedepot of the electronics business



November 26, 2012 – Comments (0) | RELATED TICKERS: BBY

 I've read a lot recently about those who call BestBuy's best days are behind them. Some think the company is on its way to bankruptcy within 5 years. 

I totally don't agree - consumers still PREFER to buy things that they can first see, touch, smell, try out, etc. BBY is the homedepot of electronics... and while they have their up and down years (like most electronic companies), people still look to them for a lot of things - expertise, selection, service, etc. The best thing that happened to BestBuy is the demise of CircuitCity. They are the last quality retail electronics super store standing...

Homedepot, Walmart, etc. are not going away. Neither is BestBuy. They actually carry models that you can't see anywhere else. Provide a niche service, and while margins get tighter, their success and failure rides on the ability of consumer electronics to continue to innovate - not whether people shop online or not.

Increasingly, I've found a lot very successfully high-end specialty Audio/Video shops (e.g. here in fargo, ND) popping up - particularly in cities with 250k people and above. These places specialize in home theater, custom whole home audio, etc. A niche business for sure, but they are booked out for several months because you just can't find their products elsewhere - these are the kind of things that are not sold online.

Clearly people still appreciate quality electronics and the retail experience! So, I guess you could say the retail option is alive and well - not being compromized by the online marketplace. If anything the online marketplace too is specializing - it isn't for everyone and it isn't ideal for everything - particular when it comes to new products people have no experience with. Where BBY shines, its the retail experience of trying out new gadgets, offering no hassle returns, etc.

Similarly, there is demand for the people that want something better than what they can buy at walmart. So, for the same reason why someone would go to homedepot over going to their local hardware store (better selection and higher quality equipment), they will go to bestbuy over going to walmart.

This weekend, I actually visited several BBY stores including one in the mall of america. Unlike other stores in MoA that had many vacant isles, BBY store was bustling with activity. They had the new Sharp Elite TVs, great demo stations that showcased all the latest electronic gadgets, and bins filled with discount Blu-ray discs, and other deals. It was the only store in the mall I went to on Black Friday where I found myself bumping into people - which says something! Their cash registers were going non-stop. My impression was that they were doing well and thought their displays were very good - making it very easy for people to decide among competing electronics. Compare this with the online experience - it isn't the same thing - couldn't hold the cameras, feel the craftmenship of the phones, or actually play a video game, or see the performance of a TV side by side with similar ones. I actually enjoyed just watching other people play certain games - or see other kids pick up stuff - or just watch what kids seem to gravitate to -- that was good for generating ideas of what to buy more than my shopping list! You just can't do this online - that is why, retail stores of this nature are not a dinasour - rather they are a staple.

It is probably time that people show BBY the love... visit one of their stores and perhaps you might too.

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