Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Best Buy: Grasping at Straws

forbes.com

Post reply on HN
Print view View original

11–20 of 33 posts

Re: Best Buy: Grasping at Straws

#11

Post by apinstein »

I remember thinking during class at business school (1992-1996) that the internet was going to cause a major shift in retail. To survive in the internet age, retail would need to morph into basically a manufacturer showroom, with very knowledgeable staff and where most goods were ordered in-store or online and just drop-shipped.

Why? Because the retail industry had devolved into essentially a real estate business; manufacturers bought shelf space from retailers. Manufacturers had essentially no control over the person-to-person sales/education experience for their own goods. Manufacturers hated it, especially new entrants, since it was so hard to introduce a new and actually better product.

It's taken about 20 years, but this is finally starting to happen at scale. Companies like Sony and Dell tried it, but they didn't really invest in the right floor salespeople or retail experience to make it anything other than a Sony store vs a Best Buy. Apple is really the first company to nail it, and it's paying off big time. It is really cool to see, as I think it's such a move in the right direction for both manufacturers and customers.

Re: Best Buy: Grasping at Straws

#12

Post by rdl »

jrockway wrote: post #4
rdl wrote: post #3

Maybe they should charge a membership fee, like Costco, and sell their products close to cost. Especially once Amazon has to start paying sales tax, this might be enough to make it work. Although, I had a gift card or something which required I make a $25 purchase (batteries) in person at a Best Buy, and the experience was horrible. I'd pay 1.2-1.5x as much to buy from Amazon and not have to deal with an icky store,…

Amazon charges sales tax in NYC, and I still prefer them to Best Buy. The problem is that Best Buy never stocks high-end items, only overpriced low-end items. So there is just no point in visiting unless I want to pay $60 for a shitty USB cable, which I never do :)

NYC has B&H, so I don't understand why the issue of where to buy AV equipment is even an open question :)

Re: Best Buy: Grasping at Straws

#13

Post by thedragon4453 »

I think there are several problems with Best Buy.

* only seems to stock the cheap crap with high markup. You quickly learn to avoid this (looking at you, monster cable.) * Staff is not knowledgeable. There is not a lot of imperative to buy at Best Buy, since you get the same level of help as you do at an online retailer - at best, none. At worst, misinformation. You generally figure it out based on reviews and research either way. * The corporation aggressively pushes things that will cause ill will. Lying about HDMI cables, high warranty costs, upselling way beyond the customer's need, etc. * Its usually more expensive than an online competitor.

I still think that there is a place for a brick and mortar retailer of electronics. In fact, done well, I think it could thrive. I'd pay a couple of extra bucks to talk to someone who knows what they are talking about, and to be able to get something I want now. But Best Buy is predatory. Somehow treating your customer shitty while charging more isn't sought after. Odd.

Re: Best Buy: Grasping at Straws

#14

Post by shalmanese »

I don't know if the economics of this make sense but it's always seemed to me that the logical end goal of this is that brick and mortar stores should refocus as marketing arms of manufacturers. That is, they should price goods basically at cost such that they're economically indifferent to whether a sale is made or not but charge manufacturers a significant sum for shelf space and promotion.

Lots of goods genuinely do require an in person experience to evaluate whether to buy but can be had cheaper online. What ends up happening is that people go to the stores to handle the goods & chat with the salespeople, then later buy online. In effect, B&M stores have been giving a huge, inadvertent subsidy to online stores the entire time and I can't help but imagine that's what's really crippled their businesses.

I think perfumes will be one of the early indicators of how these new business models will play out. The entirety of the experience of a perfume is how it smells and that's something impossible to convey online. At the same time, all perfumes of the same brand are guaranteed to be chemically identical and shipping costs are a minor part of total costs so it's perfect as an online good.

Re: Best Buy: Grasping at Straws

#15

Post by jballanc »

When I, and Ron Johnson, still worked for Apple, he told a story that has stuck with me. As he told it, he was talking with the CEO of Williams Sonoma who was complaining about the difficulty of getting people to make return visits. "If you need a pot, you come in to the Williams Sonoma, buy a pot and leave. You don't come back unless you need another pot or something else for the kitchen...and how often is that?"

Johnson's replied that the key to return visits is to make each visit an experience. "Put on cooking demonstrations, teach classes, provide samples. Then people will go to the mall just to visit the Williams Sonoma."

Sure enough, every time I'm near a Williams Sonoma, I make sure to stop inside.

Of course, it's easy to follow the MBA handbook and talk to investors about "changing compensation schemes" and "reducing cost, improving product mix, blah, blah, blah". To get ahead, you have to be daring...a little crazy even.

For example, the "Apple Creative" program was one of Johnson's ideas: hire top-notch trainers, and charge people $99/yr for weekly lessons.

What?!? That's positively INSANE! Have you ever looked at what it costs to take lessons with a certified Final Cut Pro trainer? And yet every Apple Creative was certified in at least one of the pro products. How on earth could such a plan make any money?

How on earth could such a plan result in a $100 billion bank balance?

How indeed...

Re: Best Buy: Grasping at Straws

#16

Post by mcphilip »

tzs wrote: post #2

Someone at Reddit pointed out something interesting, in response to a different article covering much of the same information. Back when Circuit City was around, Best Buy was aggressively responding to Circuit City opening new stores by trying hard to put a Best Buy near that Circuit City. They would do this even if there was already a Best Buy within a few miles of that location. Now that Circuit City is gone, Best…

Maybe that's true in some sort of a common sense perspective, but the closing of those stores still translates to diminished growth from an investor's perspective which will tend to really punish the stock price and put more pressure on the leadership for cost cutting and/or restructuring.

Re: Best Buy: Grasping at Straws

#17

Post by jrockway »

rdl wrote: post #12
jrockway wrote: post #4

Earlier quoted context omitted.

Amazon charges sales tax in NYC, and I still prefer them to Best Buy. The problem is that Best Buy never stocks high-end items, only overpriced low-end items. So there is just no point in visiting unless I want to pay $60 for a shitty USB cable, which I never do :)

NYC has B&H, so I don't understand why the issue of where to buy AV equipment is even an open question :)

This was a big shock to me when I moved from NYC to Chicago. Stores in NYC actually stock things I want to buy, and the employees actually care about their customers. It's very, very strange.

(My first experience was buying shoes from the Asics store. I walked in, asked for a Gel Evolution 6 in size 11 2E, and they had it in stock. Never in my life have I been able to buy shoes at a store...)

Re: Best Buy: Grasping at Straws

#18

Post by zred »

If you want to see how consumer electronics can still be sold in retail locations, just spend ten minutes in an Apple store. They are selling some of the same products as Best Buy, but the two experiences couldn’t be more different.

I think the comparison to the Apple Store is unfair. Apple doesn't have to compete on price. A MacBook Pro costs the same regardless of where one purchases it and so Apple can create a store that's a joy to be in and know that customers will purchase there. If you're going to be paying the same price, why not shop where the experience is the best.

On the other hand, most of what Best Buy sells can be bought in a competitive market. If I go to Best Buy to buy an Asus computer, I might find better prices elsewhere. I'm going to buy it at Best Buy if they have the lowest price. As such, if Best Buy spends money to make that experience of buying an Asus a joy and has to charge a bit more because of it, I might browse there and buy elsewhere.

It's Apple's tight control of the pricing of their products that allows the Apple Store to be a viable business model. Apple doesn't have to worry about MacMall or Target or Best Buy undercutting them.* They don't have to worry about a customer asking their trained staff all of the questions and then going to Best Buy to actually make the purchase. Best Buy does need to worry about that on the majority of their products. If Best Buy puts money into smart staff members to explain my different laptop options, I can easily go elsewhere to make the purchase cheaper should those staff costs appear in the price.

It's a lot easier to provide a great experience when you don't have to compete on price.

*Yes, Amazon and B&H do offer discounts on Apple computers, but those discounts are usually small compared to the overall price and small compared to the variation in PC pricing.

Re: Best Buy: Grasping at Straws

#19

Post by jballanc »

Reading the article and the comments here... I have to say it's rather sad how many are completely ignoring the single biggest differentiator between brick and mortar retail and online shopping: human interaction.

Re: Best Buy: Grasping at Straws

#20

Post by ryanhuff »

mcphilip wrote: post #16
tzs wrote: post #2

Someone at Reddit pointed out something interesting, in response to a different article covering much of the same information. Back when Circuit City was around, Best Buy was aggressively responding to Circuit City opening new stores by trying hard to put a Best Buy near that Circuit City. They would do this even if there was already a Best Buy within a few miles of that location. Now that Circuit City is gone, Best…

Maybe that's true in some sort of a common sense perspective, but the closing of those stores still translates to diminished growth from an investor's perspective which will tend to really punish the stock price and put more pressure on the leadership for cost cutting and/or restructuring.

I don't think I agree that slower growth due to closing stores necessarily leads investors to sell the stock. A typical metric in retail is same-store-sales. If you close a BB store that is in close proximity to another BB store, its possible (probable?) that the surviving store could see a jump in same-store-sales. Investors may see this as a good thing.
Post reply on HN