News and Reviews....
No Boost To Best Buy December 2008
By Bob Lieto
As the year comes to an end, I generally anticipate a new beginning of a new year with an end to all the previous years wrongs, wiped clean, with a new slate for the time ahead. This is not the case for this years transition. The year 2008 just culminated the slow and steady factors which began in late 2006 and added some new and interesting facets to the problems at hand. The housing downturn which started quite a while ago, coupled with the collapse of the construction market, the financial market and something that directly relates to our business "the loss of competition" in the Consumer Electronics markets brought about by the tanking of TWEETER and CIRCUIT CITY.
What is not told to the typical consumer is that the remaining BIG BOX Store, BEST BUY, is in a hold pattern of its own. The Minneapolis-based No.1 consumer electronics retailer announced that its third quarter (ended Nov. 29) profit fell 77% to $52 million when compared to last years 3rd quarter of $228 million. To circumvent the possible effect of a prolonged recession, Best Buy is offering all of its 4,000 corporate employees a voluntary separation plan, which includes additional weeks of pay, health care and dental coverage. The move to target corporate, not hourly, employees for downsizing underscored the retailer's consistent store-centric approach aimed at recognizing and rewarding front line workers. They still believe that somewhere in 2009, there will be a need for involuntary layoffs. the company also said it will cut capital spending by 50% in 2009.
Comment ..... It started back in 1989 as 5 BIG BOX stores and now down to one. It does not help the consumer by having only one and I see a move back to smaller A/V specialty retailers as the winners of the transition. I believe that consumers will eventually go back to shopping at smaller specialty stores for two main reasons. The knowledge base that is consistently evident in a smaller store and the personal touch a smaller store can provide. I also believe that the first reason "Knowledge Base" is what will separate the men from the boys from one specialty retailer from another. we will have to wait to see how the limited access of cutting edge knowledge on current technology will find its way into the consumer base. Also, keep in mind that Best Buy 4th quarter results will be on or about February 28 and will tell of the Holiday spending results. It could be a very hard year for the sole remaining Big Box Store, will it too go the way of the dinosaur?
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