Obviously been a while since I posted but a strange thing happened this week that shocked me. Best Buy’s market cap is now less than Groupon’s. Both are just under $7B at this time. Best Buy controls 19% of the sales in the US and it is being suggested they are on the ropes. Think about this for a moment, the biggest and best retail store in electronics over the past decade plus is now worth less than a company who has been public just over 6 months and has been on and off accused of being a ponzi scheme.
Best Buy is challenged and just lost its founder, which some people argue is a good thing. The challenges are steep given Amazon competition, Apple squeezing the market and inherent cost of retail space as well as dealing with “show rooming” products.
Best Buy would probably be best served with one of two strategies.
1) Create a truly value add set of services in the store. This will require an upgrade in staff training and people who can do more than sell you a warranty that you don’t want. This will be an information based play and will require making the store a place you want to be rather than something to get through. If they stay a retail store I would suggest a Starbucks like closed loop payment system and a strategy to create everyday purchases to get more foot traffic.
2) Split off the on-line division as a stand alone business and focus on excellent distribution and customer experience like Amazon. This is about reducing drag of the growth business but the strategy obviously backfired with Netflix.
Honestly not sure if either would work but this was a weird week in Commerce as Best Buy is starting to look like a “buggy whip” which is never good place to be.