The Gradual Death of the Brick and Mortar Tech Store
Cutting_Crew writes "As we all know brick and mortar stores have been closing left and right recently. We had CompUSA, Borders and Circuit City all close their doors within the last 4 years. According to an article on Forbes.com, it is spelled out pretty clearly why Best Buy is next in line to shut its doors for good. Some of the reasons highlighted include a 40% drop is Best Buy stock in 2011, lack of vision regarding their online services, management too concerned with store sales instead of margins and blatant disregard for quality customer service."
Thank god we still have Radio Shack. I went in recently and found they were even selling arduinos. I've bought a bunch of components there for my electronics projects. It's not Fry's, but at least there's one 10 minutes away from my home in Nowhereville Vermont.
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Older stores in the 1990's like Computer City that was active in the USA and even Canada for awhile. I had worked at Computer City in Coquitlam, British Columbia from 1997 to 1998 and it was a very sad day to see the store close down and this was even before the internet and online sales really took off.
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I thought this looked familiar...this article was published on the Forbes web site on January 2nd. It's also a bit ranty rather than well-researched, though there's no doubt that Best Buy is not doing well.
Cutting_Crew...because Best Buy is doing poorly, its stock is down 40%. Its stock price is not one of "the reasons highlighted" for why it's doing poorly. Stock price is an effect, not a cause.
On a related note...is Fry's having problems?
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They have no concept of the competition that Amazon represents. They think in store purchases will keep them alive. They need to:
1. Fire half the staff, and only hire professional sales people (Not 30 seventeen year olds)
2. Reduce the store size by half or more.
3. Reduce prices by having less selection but enjoy the bulk purchase price point.
4. Stop high pressure pushing of accessories and service plans on people.
5. Work with vendors to have exclusive items made for them not found online (like a white or pink dyson)
Still doomed by their horrible reputation.
Because you can not go online and buy an apple product for 60% price of buying it in the store.
It is that apple control thing working for them.
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
Brick & Mortar will still serve a purpose for a while yet. There will always be times when you need some widget that day, and no amount of money will solve that problem through Amazon. It might not be Best Buy, but it certainly won't be WalMart either; we will have a large nationwide chain carrying electronics for people who need something now and don't mind paying a little more for it than they would online.
That said the complaints listed in the (over 1 month old) article are very similar to what was happening at CompUSA when they were in their death spiral; young kids were being hired with no knowledge of anything, and corporate suits with decision making power were being promoted who knew even less.
Damn_registrars has no butt-hole. Damn_registrars has no use for a butt-hole.
When there's Newegg? I mean, honestly: $25 USB cables and re-boxed returns vs easy return, no tax and better prices (even including shipping).
With consistently higher prices and terrible customer service policies, I can't imagine how Best Buy has stayed in business as long as they have. There's a reason I've always called them "Worst Buy". They usually are.
To give you an idea of their customer service, I priced a product online with Google, and it told me that Best Buy had it for a great price. I went there, and found that they had just raised their price by nearly a hundred bucks. I knew this because they had a recently returned unit available for less than their previous price. I bought the returned unit.
Unfortunately, it was defective (flaky HDMI output). At most stores, when a product is DOA, you can go in and they'll swap it out with a working one. Not at Best Buy. Because they didn't have any more customer-returned products from when the price was lower, my only option (at their store) was to pay an extra $120 to get a working product.
I pointed out that their new, higher price was about thirty or forty dollars higher than Fry's, just two blocks away, and over a hundred dollars higher than Amazon. Needless to say, I opted for a refund.
I then drove to Fry's. They matched Amazon's price, so I ended up getting it for almost exactly what Best Buy had been charging two weeks earlier.
Why anyone ever darkens the door of Best Buy is beyond me. I could see buying stuff like DVDs from Best Buy online (where you can price compare easily), but just walking into the store, your odds of getting even an acceptable deal are right up there with winning the lottery.
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The closest one to me is a good 40 min away, and when you get there its almost a circus of disorganization. Example when you walk into our location theres geek squad, and some networking on the first isle, then pens and paper and post-it notes, then printers, then celphone accessories, then laptops then camera accessories, oh then celphones, then laptop accessories and on and on until your in the back of the store looking for the power supply you went there for in the first place they are out ... even though their website says in stock in that store.
so while you are somewhat forced to check every fucking isle cause they are now interweaving departments, that way you wont miss some stupid gadget you dont want, you cant find anyone to answer a simple question cause all 3 of them are busy upselling the newest HP laptop and your wasting your time cause these people wouldn't know what they have in stock even if they were paid to.
Hm sounds just like compUSA doesnt it?
The only reason I ever go in there anymore is because once in a while you can find a openbox or floor model deal, which is why I have a stainless steel microwave that only cost 35 bucks, but its at the very bottom of my list to even consider when I am out to get something specific.
Ummm.... doesn't Microcenter count? Guess not according to Forbes, because in 2006 they had 19 stores, 20 in 2007, 21 in 2008, and in 2012 Microcenter has 23 stores. Sure that's slow growth, but still growth none-the-less, and they're much better than CompUSA, Circuit City (is Circuit City "tech"?) and Best Buy because Microcenter actually has competitive prices.
Want a new MSI Geforce GTX 580 video card? $500 from Newegg, $520 from Microcenter. Think I'd just pay that extra 4% to have the card TODAY and have a local shop to return/exchange it to if there's a problem and judging from the 13% 1-egg reviews I'd there is a good risk there could be a problem.
my karma will be here long after I'm gone
Don't forget the $100 Monster HDMI cables.
you are probably a hedge fund guy, or friends with a hedge fund guy, or some other type of person who makes money by buying and selling big chunks of other people.
you see a story about an electronics retailer.
they see a story about an opportunity to short sell or buy credit default swaps against a company's debt. imagine if you are sitting at a poker table and instead of chips you are playing with coins that each say '1 million dollars'. you can start to get an inkling of the mindset here. you dont care if the other people at the table are nurses, waiters, hairdressers, authors, poets, politicians, soldiers, etc. all you care about is what is in their hand, and which way the game is going to go, because you can get rich off of it, but more importantly, you can get the high you get from winning. thats what the "their stock price is down" thing means. it doesnt pretend to have any intelligent commentary on cause and effect. its poker information for poker players.
Best Buy is a horrible, horrible place. Those stores are typically overpriced, asshole-filled warehouses with a stench I can only guess is dead animals hidden in the car audio department. Lump all that in with morons on the sales team and even bigger morons in management and you have the reason this place will not be missed by most people.
If you are a Best Buy idiot (read: employee), I apologize for offending you... but you deserve it. Last time I went to a Best Buy was to buy a family member a flat-screen LCD television. I asked for help from no less than 5 people before someone ACTUALLY came back "in a couple of minutes" as promised repeatedly. It was a mistake, especially since the same set was $70 cheaper online. Too bad it was too close to Christmas at the time to bother ordering it online.
Good riddance, assholes.
P.S.
I am sure this will be modded flamebait or troll or whatever... I simply do not care. Especially since those titles (flamer and troll) are used to say "I disagree with you" these days, instead of what they are really meant for. Which is to label someone who actually IS trolling.
The Apple Store should disprove this, though: At $4,032 per square foot per year, the NYC Apple Store is the most profitable retail store per square foot in the world, period.
Wonder what the public key field is for?
TFA talks about loss of control over margins at Best Buy. Apple Stores are known to have some of the highest margins in retail. Their success demonstrate that people are willing to pay high margins for products if they feel they're getting good service for it--which is certainly not the Best Buy experience.
Also, it's rarely the case that there is a large advantage to purchasing an Apple product outside of their stores, due to their extensive price controls at all retailers. As you can also see from that chart, Apple makes an ever higher margin for the products they sell online. They could adjust their price to match the lower overhead and sell them cheaper direct. The fact that they don't is an interesting component to their overall strategy.
Yet Apple can't seem to open stores up fast enough. Go figure.
That's because Apple stores are not electronics stores. They're fashion stores that happen to sell electronics.
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I'd like to see a chart of the revenue growth of "brick and mortar" Apple stores over the last 10 years. Fry's also seems to be doing alright, and like Best Buy they also have questionable customer service.
Let's not forgot that this is the same place where if you go in citing a price on their website they will pull up an intranet site that is a clone of bestbuy.com with different prices to "prove" you wrong. Getting busted for that was the end of me shopping there.
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"Amazon showroom" ?
Even the Internet is starting same day delivery .
I guess I am one of the only ones that noticed the way Best Buy did business more than 15 years ago? As a child I remember them charging an exorbitant fee for diagnosing and repairing a radio, only to have replaced the batteries. Best Buy has always been a racket. In the early 00's, Monster Cables were apparently made out of Pixie dust and Myrrh, from the way their employees talked them up. The poor employees. They are hassled and forced to mess with customers, but they get no commission for being pushy salesman. Best Buy has an opportunity now to prevent failure. If they don't change, you can bet that someone is making money on their failure.
The theory presented is that Best Buy is dying due to lower than normal sales and lower margins. This is presumed to be caused by poor customer service based on personal experience with the writer's local Best Buy store and some inventory issues for items that NO retailer had in stock during the Christmas season.
The truth is actually more boring. Best Buy sales are down because the economy has been in the toilet. Best Buy margins are down because margins are down for all electronics. In addition, the mad rush to 3D that electronics manufacturers were hoping for never happened. Very little of this has to do with customer service.
Personally, I have never had a problem with my local Best Buy. I've been able to return items without question and they have been very helpful when I am looking for a particular item. Anyone who knows me knows that I am a big proponent of Amazon. But there are many people like me who just don't feel comfortable buying appliances and expensive TVs over the Internet.
Priced a product online with Google, and it told me that Best Buy had it for a great price. I went there, and found that they had just raised their price by nearly a hundred bucks.
The thing about Best Buy is that the price their advertise online is always lower than the price at the store. I learned this a while back, and as a result I always buy at their online store and choose "pick up at the store."
Usually I'll just avoid them completely, but if they do have a competitive price, or if I can't wait for the shipping from Amazon or Newegg, then at least I save myself the annoyance of going over there expecting a price only to see it 50% more expensive than the price advertised online.
Circuit City had the same problem. Years ago I needed a wireless keyboard, and they had a pretty good deal advertised online. I showed up, saw their in-store price was significantly higher. I figured, "hey, I'll just price-match it at the register," only to have the cashier tell me that they couldn't price-match online offerings, even if they were their own. So I walked to the side to make sure I wasn't blocking anyone else in line, pulled out my PDA and logged on to their website using their public wifi right in front of her (blast from the past, huh? It was before the smartphones took over), ordered the keyboard with pick it up at the store, showed her the confirmation number and asked, "can I pick it up now?"
Warning: Opinions known to be heavily biased.
I'm not always sure they even sell electronics. Have you tried to purchase something at one of them recently? It's nearly impossible to find someone to check out with.
The point is to show off shiny devices, and to have a local point-of-contact for in-person support. Actual sales are secondary.
'Sensible' is a curse word.
wtf is a printer cable?
As a former employee at Best Buy, I can tell you exactly why they make it difficult to buy that stuff. The three big times in the year are Chirstmas, tax time, and back to school. The seasons around each of these events takes up around 70% of the year. In that part of the year, there is only a finite number of an item available at the store you are at any given time. Best Buy will sell out of the hot laptop that everyone wants. Frankly they don't want you buying it if you don't buy the additional warranty or accessories or whatever. If you don't buy it, someone else will. I'm convinced that corporate would just rather have you shop somewhere else. They get shipments twice a week, but there is a million different variations that the public demands so it's hard to keep all of the stock flowing to the exact right places, so it's easier to make it a difficult experience for the grab and go customer who just want to buy four of the laptop with a $5 markup and leave none for customers who might potentially want to buy other items to go with it. Contrast this with Amazon, where they can ship your item from anywhere and it makes little difference to the customer. Best Buy has a pretty decent store transfer and warehouse ordering system, but customers often refuse to wait as they have waited until the last second to buy a gift and only budgeted for the laptop that has been on sale the last six days.
Okay, I just read most of the posts. There is much truth therein.
Out of my own ignorance and un-brightness I post a few thoughts.
Apart from general overhead (rent/lease/taxes, wages, utilities, whathaveyou) the single largest hassle as I see it is in inventory. This has always been a large factor in, for instance, hardware stores. With electronics all the problems of inventory are magnified - everything stocked is automatically obsolete before it even reaches the shelves, for starters. Don't even bring up things such as support, drivers, etc.
That's bad enough for old-fashioned business models. Complicating factors such as lack of awareness and understanding on the part of customers and staff only exacerbate the situation. Emphasizing 'bottom-line Friday' and 'get the sale' as distinct from establishing customer relations and developing accounts helps clinch the fail.
The owners and smart stockholders will always make out like bandits, especially if they've paid the slightest attention to the standard CYA aspects of law and tax law no matter what happens to the brick and mortar realities. The CEOs and such will do quite fine even if they technically "lose" some money due to bankruptcy/failure of the businesses they're 'in charge of.'
The only people hurt will be everyone else. [paragraph unwritten because it's obvious/transparent/redundant]
In the meantime, everyone who shows up to work has bills to pay - they all have need of income: their livelihood, and lives, depend upon it. Yet, as I've been saying for thirty years and more: if you show up for work and do not understand, janitor to CEO, that the only reason you have a job and the only reason there is a business is because you have customers. and act accordingly, you might as well turn around and go find something useful to do or kill yourself and remove a burden from the species.
One way or another, whether it be pumping septic tanks or working out of my real estate office, I spent half my working life in sales. While I was happy to have happy customers, to this day I prefer, and strove for, _satisfied_ customers; that is, people who knew I stood behind what I did or that the company for whom I worked did so. Everything else, IMHFO, is dross. YMMV.
That Best Buy is going down the tubes is simply a matter of time. Whether owners, management, and staff change their world view or no, perhaps it's just a matter of watching another species of dinosaur die. I'm young enough to be sad and old enough to simply try to make it through the next day. When the local hardware store and bookstore close, then, apart from the congenial tavern, should I be able to afford them, it'll be all she wrote apart from what's available to me on the 'Net.
Brave new world, indeed. Cheers.
Managers worried about numbers and goals over customer service....
I work as a mobile consultant for an office supply store that recently started in wireless sales. They sell electronics stuff including computers and tablets. Anyways, when im not selling phones i'll help customers with electronics and other things that i know about.
Just last week a customer comes in with a sales ad, and shows me the exact laptop they want. They dont need a sales spiel they just wanna buy. I go to a keyholder/manager to get the laptop and i get a "stern talking to" about how their tech associates have to reach goals on computer sales and warranty sales. The manager told me to send the customer to a tech associate(who has a queue of 5 or so customers because he cant multitask.)
I sure as hell dont care about their numbers and i know that the customer wasnt really willing to wait for a tech associate when i'm available to help right now. I went to someone else to get the laptop and ended up selling the customer on a 3 year warranty. Some managers can be so thick-headed
Being a former manager for Office Depot, let me explain their tech side. They make no money on tech. At all. They bring people in for the tech items, then make money by convincing them that they also need a package of pens or some stationary. It was never about tech -- tech just brought the people in. The markup on tech was typically 0-15%. The markup on 'supplies' (i.e. everything else, including furniture) was 50-95%. Copy center was the biggest cash cow, with a minimum 75% markup on everything.
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That seems to be a common thread among failing businesses: They all have well-reasoned excuses to intentionally inconvenience their customers.
Huh? Basically everyone there can check you out. What's impossible to find is cash registers because they don't have them. Or maybe they have one tucked away. But most transactions are done via credit card, and every employee has mobile devices which can help you check out.
Not to mention the fact that if you have an iTunes account and their store app, you can actually self-check-out without talking to anyone, except to maybe show the electronic receipt to someone on the way out the door.
It's easy to shit on Apple, and clearly it's fun, because lots of people do it. But to say something like "actual sales are secondary" in the face of outrageous success on their part is just pure silliness. It's not like people are just pointing to foot traffic and calling them a success for that--although that is one of the metrics getting played up--it's about dollars per square foot, and love them or hate them, they are indeed making more dollars per square foot than pretty much any other retail establishment.
If actual sales are secondary, then their success at whatever you think their primary goal is must be absolutely stellar.
The CB App. What's your 20?
Imagine how awesome Radio Shack could be if they started supporting local efforts of Makers to build things. Why is Radio Shack not offering modern electronics courses, along with rentals of some gear too hard to afford yourself?
They could really transform themselves into something powerful with a small twist.
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Maybe I'm off track here.
But maybe part of the flaw is using "boutique like locationing". Upscale mall branches, etc.
Most hobbyists wanting parts are men, right? Aren't we supposed to just want our parts and not overly care about the pretty cell phones?
Why not do the BJ's / Sam's Club approach to parts? Make it a little out of the way, and stock all the basics. Then if a real expert comes and stumps you, get really good at being a location for ordering parts.
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Never go to Best Buy on Black Friday. They're well-known to be full of bait and switch offers. In fact, there's really no reason to go out on Black Friday at all. Just wake up at / stay up until 4 AM and do all your shopping online. No lines, no up-selling, and the products get shipped directly to your door, at the same crazy Black Friday prices. I prefer Walmart.com for this sort of thing; there's remarkably little BS with which to deal. So far have bought a ~$400 42" TV and a ~$130 surround sound / Blu-Ray system, both of which were surprisingly quality.
By the way, the reps argue with you about buying the "advertised" items in Best Buys primarily because they don't get commission / do get yelled at if those items are what are sold, rather than the designated, higher-priced snake oil switched items. And God help them if they sell something without a warranty...
It's better to vote for what you want and not get it than to vote for what you don't want and get it.
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You've just described several incidents where items ordered online arrived broken, incomplete, or not-at-all. How is that hassle-free?
You have to wait for the item, then go through the RMA process, return the item, and wait for refund/replacement.
Meanwhile, the merchant has your money, and you have no product.
This assumes the merchant is reliable too. Amazon may not be bad for returns, but ebay/paypal can be pretty awful for both buyers and sellers.
For pricing, I've noticed that a lot of online merchants have gotten into the habit of "sales" that are more than the regular price elsewhere. Amazon seems to be pretty bad for this with books, and Newegg was selling REFURBISHED iPad 2's around Xmas as something like $200-300 off... at a reduced price of $699, except that $699 was the REGULAR price of the things elsewhere new...
I sometimes shop at a place in Sunnyvale called Weird Stuff Warehouse. They have great bins full of surplus and second-hand cards, connectors, keyboards, mice, power adapters, and components. Standard operating procedure is to buy at least two, preferably three, of everything and hope one of them works. But it's cheap enough you can afford to do that.