Best Buy is Having the Worst Year

In spite of reports of rising retail sales this quarter, it looks like not everyone is reaping the benefits of increased customer spending. The electronics giant Best Buy is reporting that their third-quarter earnings fell much shorter than anticipated. Their quarterly profits dropped right along with their market share, which they expect will be down for the year. As you would imagine, their stock prices took a major hit after their announcement and already news reports are predicting Best Buys death.

So, even though customers are spending more this year, the question is, why aren't they spending it at Best Buy? There are many theories as to why customers aren't getting their electronics from Best Buy. One of them is that customers are opting to get their electronics from Amazon. For many customers, Amazon simply offers a wider selection of merchandise, both from their own warehouses and from other companies who sell their products on Amazon.com. It seems that most people want to have many pricing options and availability when they shop online.

Another theory is that electronic sales in general are down this year. Partly due to shoppers trying to cut out larger purchases and partly because new technologies have entered the market, lessening the demand for things like Blueray players and 3D television sets.

Still others say that the problem is that Best Buy doesn't offer the best prices anymore. With larger retailers like Wal-Mart and Target offering deep discounts on many electronics, it is hard for anyone to compete. But, I think that it comes down to the fact that customers want a good deal, and if you aren't going to be the cheapest then you need to at least offer the best customer service experience and have something to offer that makes the price difference worthwhile. And right now, Best Buy just doesn't have it.

Nonetheless, I think that it would be a mistake to count them out this early in the game. If I know Best Buy, you can be sure that we haven't heard the last of them. I hope that they use this experience as a wake-up call, and realize that in this very competitive retail climate, you can't get by on reputation alone. Riding the wave of your previous successes is the quickest way to hit the bottom. Innovation and working every day to earn customer's loyalty as if you were a brand new start-up is the key to staying relevant and successful. Hopefully, they will realize this, take the steps to make some corrections and come out with some great deals and even better in-store customer service to lure customers back in their doors.

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