Best Buy: On the road to extinction?
Best Buy has been beseiged by bad news this holiday season.
Could one of the Twin Cities' largest companies be on the road toward ending up in the tar pit of retailers along with Circuit City and Ultimate Electronics?
Possibly. A Forbes piece published yesterday makes a strong case that Richfield-based Best Buy is headed for extinction.
?> The piece cites stagnating market share, declining stock value, and a disappointing third-quarter earnings report as indicators that Best Buy is going bankrupt "gradually, then suddenly."
The future of retail, Forbes' Larry Downes writes, are online-only retailers like Amazon that focus on providing outstanding customer service.
The new conventional wisdom says that big box retailers like Best Buy are going the way of the dinosaur. Online giants, notably Amazon, are the future. Online retailers are more efficient, because they lack physical locations, and so can offer better prices. Shopping online is also more convenient. On the web, consumers can shop anywhere they are, day or night.
In addition to the negative earnings report, Best Buy has been taking a PR beating after announcing just days before Christmas that it would not be able to process some of its online orders, including some made the day after Thanksgiving.
In a statement released Dec. 21, Best Buy said:
Due to overwhelming demand of hot product offerings on BestBuy.com during the November and December time period, we have encountered a situation that has affected redemption of some of our customers' online orders. We are very sorry for the inconvenience this has caused, and we have notified the affected customers.
Downes bludgeons Best Buy for the passivity of that statement, writing that "the honest and appropriate" statement would've said: "Due to poor inventory management and sales forecasting of the most popular products during our key sales season, we can't fill order we promised to fill weeks ago in time for Christmas."
The online forum at BestBuy.com is filled with comments from outraged shoppers, one of whom writes"
"As a Minnesotan I preferred to do my business with a Minnesota-based company. But I can say with honesty that I won't shop at Best Buy again."
Given that a 20 percent increase in online revenue over last year was one of the few bright spots in Best Buy's recent earning report, the fiasco over online sales could represent another step toward the proverbial big-box tar pit.
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