“Why Best Buy is Going out of Business…Gradually”

I clicked on the link for this article convinced I was wasting my time. I have nothing against Forbes, plenty of things against Best Buy (even if they were once a favorite destination of mine on pay day,) but I didn’t think this article would offer anything I didn’t already know.

I was right, it doesn’t; but, it is well written. It is a clear-headed, mildly annoyed piece that shills a bit too much for Amazon, even if it is correct to compare Amazon’s customer service to Best Buy’s customer service.

The implicit commentary in this article is: the major retailers who do not consider themselves responsible for their obviously self-destructive business practices will collapse.

Though, after reading the article, the conversation in my head led me somewhere familiar from an unfamiliar direction: large companies are making the recession exponentially worse by employing obnoxious and thoroughly destructive business strategies in order to survive the recession.

This is why Larry Downes’ comparison to Amazon is worth ignoring his incidental shilling. Larry is excited to shop at Amazon, and not excited to shop at Best Buy. In a time a world-wide depression, Amazon has continued to grow by large percentages, each year, and Best Buy has dwindled. The responsibility lies at the feet of Best Buy, no one else.

What I find more interesting, and barely implicit, is: how can Amazon do so well in such woeful economic times? Hasn’t every study during this recession proved that people are still willing to spend money, despite reports from companies that profits are down? Look at the list of the highest grossing films of all time, and see how many of them are from the last few years.

That’s not to say things aren’t terrible right now. They are. The job market is botch, companies everywhere are closing, and everyone is scrambling to grab hold of anything within reach. But whose fault is that if the vast majority of the populace is still spending tons of money?

A key passage from Downes’ article,

As a sometime business school professor, I could just imagine the conversation with the TV department manager the day before.  “Corporate says we have to work on what’s called up-selling and cross-selling,” the clerk was informed in lieu of actual training on either the products or effective sales.  “Whenever you aren’t with a customer, you need to be roaming the floor pushing our deal with CinemaNow. At the end of the day, I want to know how many people you’ve approached.”

Downes clearly hated his time at the Best Buy store because of this ineffective and invasive sales technique. That experience will prevent him from buying at that store, or from that company. The same is true for the issue of the impossible return policy. If enough people become disgruntled and cease to shop at the store, the store will no longer be profitable and it will close.

When the store closes, hundreds of people lose their jobs.

The company panics, and engages in even more obnoxious strategies deemed necessary because one store has already closed.

More people become more aggravated and cease to shop at the store.

Multiple stores close, and thousands, millions of people lose their jobs.

Obviously, things continue to get worse.

Panic, mixed with this repulsive approach to business, is making a bad situation worse.

But it’s not the fault of the consumer, because their money is still available and eagerly spent.

The retail industry has forgotten how to let people give them money.

As a side note, I didn’t see a single parking spot available at any Best Buy store I passed while I was in the suburbs.

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5 thoughts on ““Why Best Buy is Going out of Business…Gradually”

  1. On a related note, consumers kind of suck now, too.

    Retails stores have a hard time competing with online prices which is in part due to the overhead associated with maintaining a physical presence and more living people to walk the floor.

    Folks don’t seem to want to pay for that anymore now that you can “cut out the middle man.” I know I don’t buy accessories from a place like Best Buy. Cables, connectors, and other items that cost pennies have grossly inflated prices there. (Another predatory practice, imho.)

    But that’s a toll you have to pay for getting to see a real person and physically handle an item before purchase. That experience costs something and I think entirely worth it when you find a clean store with helpful (not pushy) employees. So who’s going to pay it?

    The dirty confession, though I’m probably not alone in this, is I will sometimes visit a store to see an item and chat about it only to walk out and order it online if satisfied. How terrible is that?

    The next time I go to that shop to take advantage and it isn’t there, is it really all the store’s fault?

  2. You’re right, in more ways than one. It’s a complex issue, obviously, It’s not fair of me to say that this is ONLY the fault of Best Buy. I went to Best Buy when the Chromebook was released because Amazon doesn’t let you touch them, and it was a new product which I hadn’t been able to get my hands on, but Best Buy didn’t have them (even though they were supposed to (they still don’t, from what I can tell.))

    I don’t think I would have bought the Chromebook in the store, which means that I’d have just been using Best Buy. But, if Best Buy wasn’t such an obnoxious place to go, or, forbid, a place with an informed staff where paying extra would be countered by an edifying experience, maybe I would.

    I’ve always thought that it would be in Amazon’s interest to open a display store that has tons of products (though, obviously not all) on display. That way the customer could visit an Amazon store, try out a product, or something similar, and then order that product from the store, to be shipped the customer’s home.

    Maybe that would work, maybe it wouldn’t. But let’s turn it around. Have you ever walked into an Apple store? The staff is friendly, helpful, informed, and they don’t force you to buy anything. You can get everything from Apple online AND in-store. Apple keeps opening up new stores, while Best Buy considers bankruptcy.

    Amazon and Apple expand while Best Buy contracts. There’s probably not a good answer, but I’ll offer this:

    both Amazon and Apple are run by very intelligent people who have a vision for their company beyond just making money (where Best Buy seems to be a cash grab.) Amazon and Apple have a vision for the service that they provide and a vision for its place in an evolving market.

    That makes a big difference, right?

  3. Concerning Scott’s very last point: Apple cannot be compared to Amazon and Best Buy in those terms. Amazon cannot really be compared to Best Buy either in terms of “vision.” Best Buy is a retailer. They provide a marketplace for products others design and manufacture.
    The Apple Store is not just the Store of the Apple Company. It is a thriving community of training, troubleshooting, and knowledge. Best Buy’s Geek Squad is something like that, but instead of being trained by the creators of the products they are selling, they are only as specialized as a super-consumer. Hence the difference in the names Geek Squad and Genius Bar.
    Amazon, though, is just a marketplace, right? It’s like the internet’s Best Buy, right? I disagree. The vision of Jeff Bezos required supreme intellectual prowess and innovation to launch. With the inclusion of the Kindle, Amazon is far more like Apple than they are like Best Buy. But even without that specific product, the Amazon marketplace was the Amazon product. They are a service provider, Best Buy is a retailer. That nuance is what is killing Best Buy.
    imho

  4. As far as the idea for a physical presence store so you can try online products before ordering, that one struck me a while ago too.

    (I wrote it on a napkin at the time and there was a witness, so the idea is mine and anyone who argues will be brought to suit.)

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