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Best Buy Strategy – Less Big Box

04/15/2011

Retailing is tricky. There’s no such thing as a sure thing. Especially when consumers are uneasy about big picture subjects like the economy. Now, to make matters worse, spiking gas prices loom like an 800 pound gorilla (see my post “Gas Prices Force Consumers To Cut Back On All Purchases” of a few days ago).

Best Buy has announced a new strategy that – given the current circumstances appears to have solid merit. It intends to cut 10 percent of its traditional square footage in the US. Instead Best Buy will focus on growing its smaller, specialized Best Buy Mobile concept.

Additionally, the company plans to drive online sales from $2 billion to $4 billion in the next three to five years. Much of the growth coming from expanded product assortments.

The critical piece here is the fundamental shift from destination retailing. Cavernous, big box shells sparsely staffed are a pain for consumers. The big box concept surged in the ’80’s and ’90’s but has fallen hard of late.

Furthering Best Buy’s challenge is it retails in a sector where versioning and updates leads to obsolescence – nearly out of the box. The company’s “Buy Back” program (“Future Proof Your Gadget“) insures consumers that buying today’s version of a HD TV or tablet doesn’t automatically mean they’re stuck with yesterday’s news in a short amount of time.

Best Buy’s moves are smart, on target and essential for survival. Looks like they are here to stay!

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