BEST BUY Implodes: Firing 400, Closing 50 Stores

[Hum]

Electronics retailer Best Buy announced it would close 50 big box locations in the U.S. as it refocuses its operations around mobile.

The company said it will launch 100 new mobile locations as it retools its domestic store format.

The announcement was timed with the company's fourth quarter report, where it sharply beat analyst expectations on the bottom line. Over the final quarter of 2011, revenue grew three percent to $16.6 billion while earnings per share hit $2.47.

However, analysts polled by Bloomberg had forecast top line results of $17.15 billion, some $500 million more than the company reported. The quarter also benefitted from an extra week in the company's fiscal calendar ? excluding the week would mean revenue actually fell 1.1 percent. Shares were down 6 percent in the first minutes of trading.

The company saw same-store sales decline 2.3 percent during the period, highlighting its difficulties as the U.S. economy gained steam during the first few months of 2012. Best Buy saw weakness across the board, with sales suffering in gaming, notebooks, digital imaging and televisions.

Best Buy has rapidly been trying to turn its operations around as it has seen peers CompUSA and Circuit City fail. Consumers have been using its locations as a testing ground for products before making final purchases at competitors like Amazon and Walmart.

Best Buy is targeting more than $800 million in cost savings by 2015, largely expected through layoffs and the aforementioned store closings. The targets are roughly split between corporate, retail and declines in costs of goods sold. The company will layoff 400 employees within its management and support channels.

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[Gaffney]

Possibly due to it's massive failure in the uk?

[CentralDogma]

I?ve heard Best Buy of China has a totally different structure than it?s US counterpart. Rather than stock the store with minimum wage employs who have little to no knowledge of every sign product, they create ?stations? for each manufacturer and have manufacturers stock their respective station. For instance a Sony station would have a Sony rep who is knowledgeable in Playstation, Vita, Vaio, and their brand of phones.

This keeps Best Buy?s price down because they don?t front the bill for training and employing those reps. Manufactures also do well, because even if a customer chooses to use another retailer, they still make a sale. And the customer ultimately gets more knowledgeable customer service, albeit towing the company line.

Ultimately this we be what Best Buy in the US has to do if they want to survive.

[Hum]

Consumers have been using its locations as a testing ground for products before making final purchases at competitors like Amazon and Walmart.

I never would have thought of that ... :shifty:

[spacer]

I?ve heard Best Buy of China has a totally different structure than it?s US counterpart. Rather than stock the store with minimum wage employs who have little to no knowledge of every sign product, they create ?stations? for each manufacturer and have manufacturers stock their respective station. For instance a Sony station would have a Sony rep who is knowledgeable in Playstation, Vita, Vaio, and their brand of phones.

This keeps Best Buy?s price down because they don?t front the bill for training and employing those reps. Manufactures also do well, because even if a customer chooses to use another retailer, they still make a sale. And the customer ultimately gets more knowledgeable customer service, albeit towing the company line.

Ultimately this we be what Best Buy in the US has to do if they want to survive.

That does sounds like an awesome set up. It is really sad (and hilarious at the same time) when I walk into a Best Buy, and overhear the employees BS'ing customers. Most of the time they just give misinformation, but sometimes they give flat-out wrong information. A change in the business paradigm would go a long way to revitalizing the store.

Consumers have been using its locations as a testing ground for products before making final purchases at competitors like Amazon and Walmart.

This is exactly what I do. Especially when I want to see a product in person before I buy it. But Best Buy's prices are generally much higher than Amazon. And with free shipping, the only benefit is that you get your item right then instead of having to wait. But most of the time that's not a big issue.

[Rudy]

They could bring it to the US but then it would change a bit to something like this:

I?ve heard Best Buy of China has a totally different structure than it?s US counterpart. Rather than stock the store with minimum wage employs who have little to no knowledge of every sign product, they create ?stations? for each manufacturer and have manufacturers stock their respective station. For instance a Sony station would have a Sony rep (paid minimum wage) who is not knowledgeable in Playstation, Vita, Vaio, and their brand of phones.

In north america we try too hard to have the lowest price and customer service takes a big hit

[Charisma Veteran]

I?ve heard Best Buy of China has a totally different structure than it?s US counterpart. Rather than stock the store with minimum wage employs who have little to no knowledge of every sign product, they create ?stations? for each manufacturer and have manufacturers stock their respective station. For instance a Sony station would have a Sony rep who is knowledgeable in Playstation, Vita, Vaio, and their brand of phones.

This keeps Best Buy?s price down because they don?t front the bill for training and employing those reps. Manufactures also do well, because even if a customer chooses to use another retailer, they still make a sale. And the customer ultimately gets more knowledgeable customer service, albeit towing the company line.

Ultimately this we be what Best Buy in the US has to do if they want to survive.

See, that would be great. I shop at Best Buy sometimes, but that's only because I've done my own research and don't need to rely on anyone else for help. I'm tech-savvy, lots of folks aren't. Most of what I hear about Best Buy is that they weren't very helpful (or worse, someone thinks they were helpful but I can take one look and see they were massively ripped off). When I bought my tablet there, I asked a few questions of them just for fun, and they either didn't know, or spent ~5 minutes hemming and hawing at their computer before giving me an answer, one of which was flat out wrong. If I didn't already know what I needed to know, I'd be really confused by the time I'd finished working with them.

[jerzdawg]

I?ve heard Best Buy of China has a totally different structure than it?s US counterpart. Rather than stock the store with minimum wage employs who have little to no knowledge of every sign product, they create ?stations? for each manufacturer and have manufacturers stock their respective station. For instance a Sony station would have a Sony rep who is knowledgeable in Playstation, Vita, Vaio, and their brand of phones.

This keeps Best Buy?s price down because they don?t front the bill for training and employing those reps. Manufactures also do well, because even if a customer chooses to use another retailer, they still make a sale. And the customer ultimately gets more knowledgeable customer service, albeit towing the company line.

Ultimately this we be what Best Buy in the US has to do if they want to survive.

My local BB has this for the PS3 (not sure if its every day open to close) but the few times I have gone in there they had the station manned. Basically he was set up in front of a PS3 demo station which had a Move game on one side and a regular title on the other. Def seems like a good idea to cut down on costs but this would most likely only work for the big players in the industry. I cant see Vizio sending a guy to the stores, mainly Sony, Samsung, Apple, Microsoft, Panasonic, etc.

[remixedcat]

Damn seems like a buncha companies are being purged. Buffets Inc, RIM, and now Bestbuy.

[neufuse Veteran]

It is really sad (and hilarious at the same time) when I walk into a Best Buy, and overhear the employees BS'ing customers. Most of the time they just give misinformation, but sometimes they give flat-out wrong information.

you mean like what I hear almost every time I go to one and want to freak out on the employees? the best one I've heard yet was "the first thing you want to do is disable windows update, updates don't protect you from threats they just slow your computer down you need a goood virus scanner like norton" *head almost explodes* then that continues with "and for $xx we can do that for you at the geek squad station"

[jakem1]

See, that would be great. I shop at Best Buy sometimes, but that's only because I've done my own research and don't need to rely on anyone else for help. I'm tech-savvy, lots of folks aren't. Most of what I hear about Best Buy is that they weren't very helpful (or worse, someone thinks they were helpful but I can take one look and see they were massively ripped off). When I bought my tablet there, I asked a few questions of them just for fun, and they either didn't know, or spent ~5 minutes hemming and hawing at their computer before giving me an answer, one of which was flat out wrong. If I didn't already know what I needed to know, I'd be really confused by the time I'd finished working with them.

That's a pretty common problem in retail these days. It doesn't seem to matter what you're shopping for, the staff don't know anything about the products they sell and will say anything to make a sale. Company's like Best Buy need to ensure that their staff are properly trained and familiarised with the products they sell but they'd rather lose a sale than invest in well-trained staff.

[SuperKid]

I never would have thought of that ... :shifty:

LOL, Yeah, When it first came over to the UK and went to a store I though "woah, its like a gadget fair" and I went in there to test IPad, Headphones etc and always have bought somewhere else or online haha

[Hell-In-A-Handbasket]

50 stores and 400 people in the US is a small % , I wouldn't say they are imploding.

[Ently]

I also heard they didn't pay commission for sales (or at least it was very hard to achieve) which if true then wow in a retail sales job.. where is your motivation?

[Denis W. Veteran]

One thing they may be forced to do in the near future is to charge restock fees. The current policy seems a bit generous, while for instance, their smaller competitors throw in 10-15% fees to prevent 'rental' abuse.

Or if they're not going to change that policy, at least have fresh packaging on hand; simply taping it back together and slapping on the shelf doesn't help, especially when it's mixed with unopened stock and all carry the same price tag.

[primexx]

I also heard they didn't pay commission for sales (or at least it was very hard to achieve) which if true then wow in a retail sales job.. where is your motivation?

the ability to keep your job...

they don't pay commission because it gives consumers a better impression since it seems like they're not motivated by commissions to aggressively sell you ****. to a little degree you do notice an actual difference because they're not under constant immediate pressure, and their targets are set rather than open-ended (as much as you can make) in a commission based system. But they still have targets and if you persistently don't reach those targets guess what they'll do?

so yea, mostly a marketing thing

[Skin]

welcome to the new norm worldwide...

cuts and minimal lean running instead of the old bloated way. fair for workers? naw, but seriously... what is?

[PNWDweller]

About a year and a half ago, they spent quite a bit of money renovating an shut down 'Joe's' sports and outdoors store to put our one and only Best Buy in. I used to live literally a stone's throw away from them so got to see the huge crowds do what they normally do - flock to the store for a week or two, then things normalize.

I have only been to the store 5 times at the most. I do drive by it almost daily anymore going to my favorite grocer and every time I go through their parking lot, the store doesn't seem too busy. Part of me wonders if they will close that store or if they will keep it online for a bit longer because they just threw tons of money at it.

Sort of OT, but also in the last 2 years, we have had a couple of Large furniture stores close down which has dramatically increased business for some of the smaller guys who have managed to stay on. I have been watching one guy who started out 5 or 6 years ago grow because of the gained business. Perhaps this may become the case if Best Buy shuts stores down in some areas, will give the 'little' guys a chance to grow. :)

[neufuse Veteran]

The one thing that always made me hate going to best buy... being basically frisked on the way out.... anytime you left some security person had to check you out.... buy a movie... "can i see your receipt" its like I JUST came from the register sheesh... they are the only store I've ever been to that does that

[Southern Patriot]

I also heard they didn't pay commission for sales (or at least it was very hard to achieve) which if true then wow in a retail sales job.. where is your motivation?

Very few retail stores pay commission for sales. None of the ones I've ever worked for do.