Best Buy Closing 50 Stores

Source: Noozhawk

Original Article here

Best Buy has announced plans to consolidate in an effort to stay competitive, but some Santa Barbara businesspeople say it’s too late.

The big-box retailer announced Thursday that it’s closing 50 stores after recording a $1.7 billion net loss in the fiscal fourth quarter.

It has not released a list of store closures, so the fate of the Goleta store in Camino Real Marketplace is uncertain.

The company said it will eliminate 400 corporate jobs, cut $800 million in costs by 2015 and boost online revenue by 15 percent. Best Buy plans to open 100 smaller Best Buy Mobile stores that specialize in wireless products and accessories, according to a news release. There are currently 240 specialty stores across the country.

In the past 35 years in the business, Sean Hausken of Creative Stereo & Video has witnessed the demise of several electronics big-box dealers, including Silo, Good Guys, Comp USA and Circuit City.

“Every one has fallen, and more recently (they’ve fallen) because of the engine that the Internet and Amazon is,” Hausken said. “Best Buy is a showroom for people to go in and get a little product information. Then they go home and do a Google search to compare prices and have the item shipped to their house.”

When Hausken visited Best Buy’s TV displays, he checked out about 40 models. He said the big-box retailer’s vast inventory can work to its own detriment.

“Technology is very overwhelming at times, and customers want a trusting relationship,” Hausken said. “I don’t know if Best Buy can turn that around.”

The Internet has replaced and improved upon nearly every aspect of the shopping experience through chat interactive technology, search systems and rapid checkout, according to Noospheric founder Jacques Habra.

“If Best Buy is to compete with the standard online shopping experience in Amazon, it must focus on the single aspect that the Internet cannot yet offer, which is real-life demonstration of how a product works, sounds and feels,” Habra said.

While fourth-quarter revenue increased 3.4 percent to $16.63 billion, brick-and-mortar sales dropped 2.4 percent from last year. Best Buy said it will increase its employee training and provide incentives based on reaching customer-service goals. Improving customer service will help, but many big-box retailers haven’t had knowledgeable staff, said Alan Gold, owner of Santa Barbara Auto Stereo & Wireless.

“The big-box people just never had adequate customer service, the knowledge and someone that really understands,” Gold said. “Amazon hits from all angles, there’s no sales tax right now, and also it’s cheap. Me, on a smaller level, can deal with it because when my customers want to get a smartphone, I will sit with them and show them how it works and they know they can come back with questions.”

The largest big-box electronics retailer also announced that its Reward Zone Silver loyalty program members will receive free expedited shipping, a complementary Geek Squad house call, a 60-day “no-hassle” return policy and price matching.

It’s too little too late, said Performance Audio owner James Budow, who added that the only way Best Buy can stay competitive is if online prices are more regulated.

“They have been selling so much inventory so close to cost, and I think that’s catching up with them,” Budow said. “It is too big of an animal to change that fast. Their reaction time will be too slow.”

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