Is much-hated electronics chain Best Buy spiraling out of business and into irrelevance before our eyes? Maybe. But not for a while yet. Writing for Forbes, business expert Larry Downes laid out why the company could be gradually going out of business, one Black Tie Protection Plan at a time.
Best Buy’s stock price is falling, and its market share keeps declining even as brick-and-mortar competitors like Circuit City and CompUSA have shut down. But the real reason why Best Buy might be doomed is the same reason why they’re frequently featured here on The Consumerist: the experience of shopping there tends to suck. As Downes puts it:
To discover the real reasons behind the company’s decline, just take this simple test. Walk into one of the company’s retail locations or shop online. And try, really try, not to lose your temper.
Another major piece of evidence? Big Blue and Yellow’s recent failure to fill Black Friday orders by Christmas and subsequent feeble non-apology of a press release show that the company is in a state of denial, refusing to acknowledge its real problems with inventory, fulfillment, and having a vague idea of what customers want.
Even if you don’t normally click through to source articles, take the time to check this one out: it’s a quick and engaging read (even if Forbes stretched it out to five pages to milk it for even more pageviews.)
Why Best Buy is Going out of Business…Gradually [Forbes] (Thanks to everyone who sent this in!)
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There is absolutely a place for a good brick and mortar electronics store that’s an alternative to online retailers, but Best Buy has done everything in its power to not be that store. Pricing isn’t even the issue–Best Buy can be fairly competitive with online dealers for a lot of things. The biggest reason I don’t go to Best Buy (and I suspect it’s the same for many people) is that that I don’t feel like being harassed by constant up-sells from the moment I walk in till the moment I leave.
Best Buy has made a conscious decision to tie its profitability to warranties and service–to build its basic business strategy on hounding customers to try to squeeze more money out of them. Instead of, say, just giving them what they want and making it a pleasure to shop in their stores. Or, even, god forbid, positioning themselves as superior to online purchases by, say, offering easy, no-hassle returns as a core policy (like Costco). Or including tech support in the price of the purchase. You know, things that would actually make people think seriously about buying at Best Buy over saving a couple bucks online.
Instead, by focusing strictly on harassing their customers, Best Buy has taken its one advantage over online dealers–the experience of physically being in a store–and turned it into a liability. Kudos!
The world will be a better place when they’re gone too.
People still shop at Best Buy? Dont forget to get your system pre-configured, with an extended warranty, and Geek Squad to setup and screw-up whatever you bought up when you purchase something from there….
AND I’d better use those stupid Gift Cards I got for Christmas from there STAT!
I purchased a Nikon Coolpix S9100 for my wife, just before Christmas. When she opened it, I saw that the camera box had been opened, the camera had been used and then returned.
The lithium ion battery was missing it’s protective cover, it had been charged, the wrist strap was missing, and the Quick Start Guide was wrinkled.
They had simply put a security device on it – to make it look unopened and put it back in stock.
I took it back and made sure I got a new product. They took it back but It’s this kind of deceptive crap that is killing Best Buy.
I purchased a Nikon Coolpix S9100 for my wife, just before Christmas. When she opened it, I saw that the camera box had been opened, the camera had been used and then returned.
The lithium ion battery was missing it’s protective cover, it had been charged, the wrist strap was missing, and the Quick Start Guide was wrinkled.
They had simply put a security device on it – to make it look unopened and put it back in stock.
I took it back and made sure I got a new product. They took it back but It’s this kind of deceptive crap that is killing Best Buy.
Best Buy’s problem has always been that they are over-priced and have lousy service. You can have one or the other, but not both. You want to be a Costco? Fine, drop your prices. You want to be a B&M Crutchfield, etc.? Fine, leave prices high, but improve your service.
As others have stated they’ve been preying on the ignorant for a long time. However, with each new generation, shoppers are becoming smarter (about products) and savvier. So, BBY’s customer base will continue to shrink until they execute a new strategy.
They will be overtaken by regional chains such as PC Richard and Son that is spread around the Northeast and HHGregg which is spread across the midwest and South. They still use the commission system for their employees, so at least are more knowledgable. Doesn’t stop them from hawking the usual overpriced cables and protection plans though.
Oh please, HHgregg, at least around here, is even worse than Best Buy. The employees either latch onto you like a parasite or never go near you and their selection outside of TVs and big appliances is almost nonexistent. On top of that, no media department at all. They sell mattresses of all things instead.
PC Richard and Sons I know little to nothing about, beyond that they have a decent video game clearance every so often on their website. Got the Legendary edition of Halo 3 with all the parts for $20 a few years back.
And even if the customer is outside the return window or is otherwise technically not entitled to do what she’s asking to do, [Amazon] bends over backwards to bend its policies in the interest of happy customers and the on-going customer relationship.
I know this. I downloaded an album and the download didn’t complete, but the payment did. I meant to email them about it but I got busy and forgot, until almost a year later when something else happened and I found the error message still in the downloader. I emailed them something like “I’m so sorry, this is my fault for not coming to you sooner, but I paid for this order and it was never completed. Is there any way I could re-download the album? I still really want it. If not, I understand. Thank you.”
They emailed me back immediately and said in effect, “Sure, we see the order, and we see it didn’t download. It’s kind of old, but we’ll let you redo it. Go ahead.”
Whee! Think BB would do that? NO WAY JOSE.
And even if the customer is outside the return window or is otherwise technically not entitled to do what she’s asking to do, [Amazon] bends over backwards to bend its policies in the interest of happy customers and the on-going customer relationship.
I know this. I downloaded an album and the download didn’t complete, but the payment did. I meant to email them about it but I got busy and forgot, until almost a year later when something else happened and I found the error message still in the downloader. I emailed them something like “I’m so sorry, this is my fault for not coming to you sooner, but I paid for this order and it was never completed. Is there any way I could re-download the album? I still really want it. If not, I understand. Thank you.”
They emailed me back immediately and said in effect, “Sure, we see the order, and we see it didn’t download. It’s kind of old, but we’ll let you redo it. Go ahead.”
Whee! Think BB would do that? NO WAY JOSE.
My wife and I once tried to spend $4000-5000 on appliances at best buy (fridge, washer, dryer).
At three different stores, we couldn’t find an sales associate who didn’t act annoyed at us for taking up his time and we couldn’t get them to turn off the damn rap music thumping out of the subwoofers over in the stereo department. We’d walk over there, turn it down, ask a sales associated if they wouldn’t mind keeping it down for 20 minutes or so, only to hear them turn it up again as soon as we were walking away. Bass really carries and it was fucking annoying. We ended up taking our business to home depot.
Want to know an odd reason that I don’t like going to Best Buy anymore? The stores smell like a dirty locker room. (But that’s also the reason I use for not going to the gym so . . . do with that what you will.)
Very good reading on Forbes, if you substitute the word “Sears” or “Kmart” everytime you see the word “Best Buy” you get a pretty good idea where those companies are going.
- “Forced” optimization services in sale laptops,
- Bleak Squad Black Eye Deception plans,
- Confirmed Black Friday orders no-stocked 30 days later,
- Judge (and jury) Judy (no) return policies,
- Poor store management,
- Poorer “sales” staff,
Equals
+Amazon business exploding, warehouse club a much better and friendlier alternative
Equals
Et tu brute. Circuit City is waiting to greet you in ………………..
HA! you got that POORER sales staff right. Most of those kids have 2nd jobs.
I like Microcenter for my computer/electronics needs.
Ok, gotta chime in here.
Compusa (retail stores), Circuit city, Ultimate Electronics all HAD a very similar M.O.
Low payed sales people not trained well.
Weird anti consumer policy’s not designed to make your shopping experiences better but much, much worse.
Prices that are often not the best deal.
Very bad customer service.
Then there is Best Buy, which has adopted all of the worst traits of the above mentioned stores.
All 3 of the retailers, Compusa, Circuit & Ultimate electronics all flopped around (much as Best Buy is doing now) and ultimately died a slow painful bankruptcy death.
Best Buy will go this direction because like the others mentioned here, they can’t seem to change and stubbornly keep doing the same things, again and again.
One last thing, all the companies I have mentioned have one more trait in common.
They were (are) all very arrogant and self assured.
Reading this got me thinking about why I used to shop at Best Buy, when I held a positive opinion of them. I think it boiled down to a few points:
1) They had a variety of things that I wanted in one place (movies, games, music, computer peripherals) with a greater selection than what I could get at a big-box or department store
2) Their prices were competitive (or seemed so)
3) The stores seemed nicer (Circuit City stores always seemed to be in dumpier shopping centers and didn’t seem to be as well-kept or organized inside)
#1 is trumped by the Internet. The selection is “whatever specific thing you want”
#2 is also trumped by the Internet. I can find it cheaper, even when shipping isn’t free.
#3 is a mixed bag. The Best Buys I’ve been in lately aren’t decrepit by any means, but the layouts change often enough to be frustrating and you have to put up with the upselling, which is annoying.
A couple of reasons that never played into it:
1) “Knowledgeable employees”. The only times I’ve ever gotten advice or opinions from a Best Buy employee turned out to be misleading or incorrect, and one of those times led to a purchase that cost me their irritating restocking fee when I returned it for the product I really wanted.
2) Product Protection Plans. Ugh.
So what reasons do I have for occasionally frequenting Best Buy though I have a relatively negative opinion of them:
1) Someone gave me a gift card and I like to physically browse a selection of products
2) As implied above, the ability to physically compare two similar products (although online reviews tend to allow a decent gauge for this)
3) I can’t wait for something to be shipped and/or don’t want to pay for it to be expedited
To me, those are their only remaining strengths: you can see the products before you purchase them, and you have it in hand immediately. Unfortunately for them, many if not most of their products are not “need it today” purchases.
To stay relevant, they’d need to do some things that I don’t think they can do.
- They’d need to be competitive on price. I don’t think this is possible for them with a B&M model, especially when so many online retailers are offering free shipping, which used to be the gotcha for online purchases; something would be cheaper until the shipping was tacked on.
- Educate their employees, or hire educated employees. Get competitive on price and THEN pay qualified individuals or pay to train their existing “summer job” force? Even if they trained aisle monkeys to defer questions to a smaller staff of “product experts”, I don’t think they’ll ever overcome the reputation they’ve earned.
- Previous point aside, even a simple “Can I help you find anything?” near the doorway would go a long way. This would overcome some of the frustrations with the store layouts. The customer is there to buy a product. Help them do that. Do NOT focus on convincing them do something they do not want. People appreciate helpful. They do not appreciate being sold.
Even if Best Buy as a corporation manages to survive, their current model can’t. The days of the “retail destination” are fast receding into the mists of history.
For me the problem is the enviroment but the prices. I am tech head so customer service is irrelevant because I probably know more about much of what they sell then their employees do so never bother to ask anything other then “what area is X located?”
I use to buy CDs, DVDs, and video games there all the time. However, in the last few years, Toys R Us usually has the best game deals if willing to be patient, CDs replaced by online buys, and DVD/BR are usually cheaper at Wal Mart or Target (which rarely buy now as most not worth it and really tired of the double dipping game of the studios with multiple releases of the same movie). Basically between the lack of deals and the now common American companies practice of trying to make more by providing less I have developed new buying habits that have made Best Buy useless to me.
It’s nice to have some good news after a long day!
Best Buy Retail Mortality Checklist:
* Push overpriced proprietary video format Cinema Now – check. (Hey gang! Remember Circuit City’s “DIVX” player and discs about 12 years ago?
* Grossly overpriced accessories and extended warranties – check.
* A service department (Geek Squad) from HELL – check.
* Near minimum wage sales help who don’t know their ass from a hole in the ground – check.
* Hiring Neo-Nazis to write and enforce their return policy – check.
* Higher prices than many direct competitors (Fry’s, Amazon, etc.) – check.
* An attitude that – since the death of Circuit City – thinks they’re the only game in town – check.
Just like A&P, Sears and Kmart, it’ll be a slow, painful death.
Okay, i’m going to break down each one of your bullet points here.
- CinemaNow isn’t a video format, it’s just an alternative streaming media service. The DivX example is not the same.
- What brick-and-mortar retailer doesn’t have accessories with a bunch of markup? Not every business can have monoprice’s prices for cables, and the majority don’t.
- The next two are entirely dependent on your local areas’ locations. Of course we always hear when someone gets an incompetent worker here or a bad repair, but for every one of them there’s got to be more good employees and times when repairs went smoothly and without hassles. It’s assuming that bad is the norm that’s the problem.
- Not going to mince words, that’s harsh. Things like that are in place so the store doesn’t get burned by people stuffing a ream of paper into an Xbox box and returning it. Also, for receipt-checking, how many time do we go over this on this site? Either walk on by or deal with it, not that big of an inconvenience.
- Uh, price matching policy? I don’t know about others but my local store matches Amazon and online sites no problem.
- Okay, I’ll give you that last one. Most areas don’t have a direct competitor to Best Buy and stores like HHGregg don’t really count, as they’re focused slightly different. Only where the Fry’s, Microcenters, etc. exist does BB have anything close to a competitor.
As a former employee and manager, I can agree with many of the author’s points. Being a manager and having direct P&L responsibility, I saw the company’s many desperate attempts to squeeze more dollars out of every customer.
1. we went from explaining optimization to every customer and actually doing a good job of it in the precinct to hooking up 50-60% of all laptops to remote agents that did an absolute shit job of cleaning up machines and giving clients a much faster unit.
2. we went from being able to just work with people and be human in Geek Squad to having most of our tools taken away and our hands tied. We used to have copies of most OEM discs so if a customer needed a restore, we could do it in the precinct. They took them all away and customers had to get/make their own. This made the repair process longer and more expensive.
3. turnaround time in Geek Squad became a huge deal that instead of letting some truly talented Agents actually work on machines, we were encouraged to do destructive restores
4. the PSP/GSBTP plans were often a lifesaver for customers, but the process was painful and drove many customers away from being loyal or repeat customers. A TV with parts on backorder has to go unrepaired for 45 days before we can start a process to junk it out and get it replaced. Between the customer calling for an appointment and realizing this is happening, people would be without a functioning TV for 2-3 months. Even when I would call our warranty company and beg them to approve an exchange, they rarely did.
5. every metric, and I mean every single little thing in the store was measured and in any given week or month, we had a different priority. When everything is a priority, nothing is. One week it was optimizations, the next week it was calibrations, the following it was memory cards. We didn’t encourage our associates to actually get to know customers and find out their needs as much as we told them to make sure everyone “needs” something.
6. the prices on accessories are outrageous. The company needs to make profit, but the mark-up was truly insane, 400-500% on most things, especially store-branded items.
7. customer service was a crapshoot for our customers. If they got a good associate, they got amazing knowledge, service and care. If they got a moron, well, they got a moron. We had MECP level 2 audio installers, audio and video experts and professional photographers who worked with us, but we also had some absolute idiots who didn’t bother to learn anything.
8. managers, especially young and uneducated males, were paid ridiculously high salaries (our GM in a medium store made 83K a year in a town where you can live extremely well on 40K). As such, all they cared about was maximizing their bonus no matter what. Cheating, lying, making shady deals, etc.
9. the company knew that customers hated being pitched, hated being lied to, and yet openly encouraged associates to lie, cheat and essentially steal to meet targets. The magazine scam is the biggest culprit. We lost more repeat business to this bullshit program than to anything. The operations managers and supervisors were constantly hounding cashiers about their numbers.
10. and on and on and on…
BBY has tremendous potential, but it has to become more flexible by getting rid of 20-30% of their square footage, tripling their online inventory, and becoming fanatical about resolving supply chain and service issues. There are too many people who rose to their ranks via attrition or luck who are clawing to keep their positions because they’re wholly unqualified to do anything else. BBY needs to compete with Amazon on Amazon’s turf: online. B&M stores should become small showrooms for specific segments of products while most of the inventory should be carried online. Shifting their business to 70% online will reduce costs in both fixed facility, amortization, SG&A, etc. This company has too many people writing recipes and not enough people cooking.
Brian Dunn, I’m looking at you. Start treating your employees like human beings, quit pushing some bullshit metric (close rates! RPT! comps!) and start being fanatical about doing anything and everything for your customers. Until then, you’re a nice guy who acts like an asshole.
Thank God there’s a Nebraska Furniture across from BB. Great staff & service. Buy my Apple computers there as they have a slight discount. But wait, there’s more. 3 years interest free on purchases over $500.
Downside, I’ll be dead and still owning them for all the purchases. Needed a new printer so I had to buy an iPad to get the free interest. Think I should have just bought backup printers.
I don’t own a T.V. So I don’t need cable or a dish. An XBox, a PS3, or a Wii isn’t usable without a T.V.. I don’t need a stereo (I have an iPhone). I’m a mac user, so I purchase all my software on-line (including video games). I can’t use a DVD or Blu-Ray player (no T.V.), so I don’t need the discs that go with them (I’m an iTunes eco-system guy). Since I don’t have any consoles, I don’t need any games or console peripherals. I buy Apple products (hardware) from the Apple store. I’m trying to think of a reason I would go in Best Buy? Time to cancel my Best Buy card… (and no, this isn’t an Apple is better post, you could get the same results by not owning a T.V. and shopping at the Windows store, they have one in the same mall I go to that the Apple store is in). Most of the time, I just order on line.
I don’t own a T.V. So I don’t need cable or a dish. An XBox, a PS3, or a Wii isn’t usable without a T.V.. I don’t need a stereo (I have an iPhone). I’m a mac user, so I purchase all my software on-line (including video games). I can’t use a DVD or Blu-Ray player (no T.V.), so I don’t need the discs that go with them (I’m an iTunes eco-system guy). Since I don’t have any consoles, I don’t need any games or console peripherals. I buy Apple products (hardware) from the Apple store. I’m trying to think of a reason I would go in Best Buy? Time to cancel my Best Buy card… (and no, this isn’t an Apple is better post, you could get the same results by not owning a T.V. and shopping at the Windows store, they have one in the same mall I go to that the Apple store is in). Most of the time, I just order on line.
I hate reading stuff like this, because it’s all true. The company is going downhill, slowly but surely, and it frustrates the hell out of me because I have quite a few ideas that I think might help, if only I knew where to send them.
For Christ’s sake, starting internally and getting functional systems for employees to use would probably be a huge step in the right direction. I can’t tell you how embarrassed I get when a customer calls and I have to tell them, “I’m sorry, I can’t find the answer to your question because the programs we use are so convoluted and don’t communicate with each other.”
It’s also terribly embarrassing when a customer in the store stops me and asks where something is located, and I have to hunt around and ask three other employees before I can tell the customer, because one of the quarterly “transformations” just happened.
These are just two examples of things that customers see/hear that keep them from coming back, and I don’t even work on the sales floor, I work in the warehouse. I really like the work I do, and the people with whom I work, but the company as a whole just really frustrates me, and I have no clue what I can do about it.
I hate Best Buy, I hope they die in a fire. Their high-pressure sales makes me want to start throwing sledge hammers. I went in there a couple days ago because a coffee shop is across the parking lot and had a really long line that I didn’t want to wait in. I was asked if I needed help like 3 times in 4 minutes, it was annoying. I could probably school any single one of them on their own gadgets any day of the week.