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Best Buy to shutter 50 stores as Apple's iPad strains margins - Page 3

post #81 of 111
Quote:
Originally Posted by jragosta View Post

- Best Buy stores are increasingly serving as free showrooms for online retailers. That is, customers view the product at Best Buy and then buy it online.

This is the real problem. Best Buy doesn't benefit from their overhead. Shoppers can test-drive at Best Buy, then buy online cheaper, with no sales tax, and get free shipping. Even if they provided exceptional customer service, they couldn't beat that triple threat.

I also think people have caught on to the ruse of their "extended store warranty" things. That used to be a lot of free money coming their way.
post #82 of 111
Quote:
Originally Posted by BigBillyGoatGruff View Post

This is the real problem. Best Buy doesn't benefit from their overhead. Shoppers can test-drive at Best Buy, then buy online cheaper, with no sales tax, and get free shipping. Even if they provided exceptional customer service, they couldn't beat that triple threat.

I also think people have caught on to the ruse of their "extended store warranty" things. That used to be a lot of free money coming their way.

I'm sure it will make Amazon and others unhappy, but I really feel that we need a formal policy for collecting sales taxes over the Internet. (Technically, they're not sales taxes - in most states, there's a use tax which is equal to the sales tax when you buy something over the internet, but few people pay).

I don't see any reason that the tax couldn't be collected and submitted at the time of purchase from online retailers. It's not fair that local retailers have to go through what you've cited above.
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Gatorguy 5/31/13
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post #83 of 111
Quote:
Originally Posted by Gatorguy View Post

Reading comprehension Jragosta. . .
I didn't say anything of the kind.

No, it wasn't you - it was the other guy I was responding to. Sorry.

In any event, he was just plain wrong - even after changing his story a few times.
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post #84 of 111
Quote:
Originally Posted by jragosta View Post


Your original post said that a company could not sell an iDevice for $20 less than the competition - and that was clearly incorrect.

No that was me, and I get it.


Quote:
Originally Posted by jragosta View Post

Best Buy sold iPads for $50 off just before the iPad 3 came out.

But that was only days before Apple dropped it by $100, and BB then followed, but a week later. Obviously BB has a certain situation where they can do this, but this was a rare thing. But why didn't everyone else do the same? They were the only retailer who did anything in lead of Apple's drop and no one else was really doing the same after the $100 drop that I saw.
post #85 of 111
Quote:
Originally Posted by Orlando View Post

The iPad might not offer BestBuy great margins but the killer is online competition. Why go to a BestBuy store when Amazon is usually cheaper?

So you can get "advice" from an underpaid 18-yo. Who is now going to be be directed to "push" video services. Brings back fond memories of DivX.
post #86 of 111
Quote:
Originally Posted by charlituna View Post

They need it to bring folks into the store to get them to buy other things

if they blame anyone it should be best buys buyers. stop stocking the store with junk and be a bit more discerning and thoughtful on what you carry. however, i don't believe even that is what is wrong (if anything). they have done like starbucks and opened too many stores.
post #87 of 111
Quote:
Originally Posted by Gatorguy View Post

If Apple's isn't allowing enough of a markup for Best Buy to realize an appropriate profit, then they should shutter the dedicated Apple area. I don't think Apple is too concerned whether they have a large retailer presence outside of their own company stores and on-line anyway.

Best Buy isn't going to be successful, at least in the near-term, in convincing Apple to share more of the device profits so why fight it? Really no advantage to Apple in allowing a larger discount as they'll sell everything they planned to anyway.

I hate Best Buy, but is this really what's causing them to shut stores?

Quote:
Originally Posted by jragosta View Post


Finally, if you go to the original article, it's clear that many other factors are getting the blame:
http://www.reuters.com/article/2012/...9?feedType=RSS
- Total sales are down across the board. Forget margins, their sales are off - which will hurt profits
- Best Buy stores are increasingly serving as free showrooms for online retailers. That is, customers view the product at Best Buy and then buy it online.
- Best Buy offered deep discounts across the board last quarter - presumably to try to bring in additional sales to address the previous point
- Best Buy big box stores are too large and expensive. Plans are to close 50 large stores and open 100 small ones.

Note that in the Reuters article, the iPad isn't mentioned at all.

That has been a problem for B&M in general. Regarding their scale, as an anecdote, the one here always seems fairly empty.

Quote:
Originally Posted by jragosta View Post

I'm sure it will make Amazon and others unhappy, but I really feel that we need a formal policy for collecting sales taxes over the Internet. (Technically, they're not sales taxes - in most states, there's a use tax which is equal to the sales tax when you buy something over the internet, but few people pay).

I don't see any reason that the tax couldn't be collected and submitted at the time of purchase from online retailers. It's not fair that local retailers have to go through what you've cited above.

I've expected such a thing for a long time. Many people aren't aware of use tax. Most of them don't even understand why they pay sales tax on some online purchases and not others. The way it is right now, it would truly suck for smaller retailers if they had to go through the annual paperwork for every state, but the current system for it isn't very good either.
post #88 of 111
Best Buy isn't just a computer electronics chain. It's a consumer electronics, movies, kitchen appliances, etc., chain and there is no way that chain is closing it's door due to Apple.

It's a dump and poorly managed, not to mention it's choice of 3rd party PC parts to build your own solutions for Linux, Win, etc., is utter garbage.

The likes of Newegg have been owning them for years.

If I want a quality refrigerator I go to a place in the PNW [Fred's Appliances] that like it's equivalence in Seattle provides Wolf, Bosch, all the way down to Magtag and Whirlpool. I can buy a $50k gas range or a $699 gas range. They're experts in what they do--commercial to consumer kitchens and laundry rooms.

I don't go to WalMart or Sears for such stuff, what makes me think Best Buy?
post #89 of 111
Quote:
Originally Posted by Soundvision View Post

Consumers are getting smarter and know how to research products on their own and purchase from the lower price available. Customers don't mind paying MSRP at a local store if they experience and quality of service is there, which is exactly why Apple has been so successful.

This paragraph is so true. This trend began 20 or 30 years ago and it now truer than ever. As a salesman of other products it is harder and harder to stay ahead of the customer in knowledge. You just cannot fill a service niche if you are not skilled and knowledgeable. The internet has played a huge part in this transition.

I'm not complaining, this climate is making me a better person and it's sorting out the idiots pretending to be in sales.


Quote:
Originally Posted by macxpress View Post

The only thing I go in Best Buy for is to look at a product and then I go buy it elsewhere.

I find many things to shop for at Best Buy, including a great refrigerator. It's not all bad.
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post #90 of 111
I tend to think that people only buy from Best Buy because they approve ANYONE for their Credit Card.
They're no Different than FINGERHUT
post #91 of 111
Quote:
Originally Posted by Orlando View Post

The iPad might not offer BestBuy great margins but the killer is online competition. Why go to a BestBuy store when Amazon is usually cheaper?

I can tell you why worst buy is failing, there recent debacle with the iPhone 4S preorders. Is one example.
I preordered a 64 gig 4S through them and after they forced me to put 50 down on it they tell all the preorder people that they will get there orders filled after the walkin's get there orders filled on release day. Then if after the walkin's all get there iPhones and there are any left they will fill the preorders. Then they change there mind and say that is not the case and say the preorders will be filled first. Then they have no iPhones available on launch day with no eta when they will be in. The order taken said they could fill it 3 weeks from the launch day. So I wait 3 weeks and no phone. Then they just plain say we don't know when we will get iPhones in. I got so tired of waiting I went to the store made them refund the "50 dollar gift card" they made me buy to get the preorder and bought one at the apple store the same day in my city. They had plenty.

This problem above was not a local problem. It was nation wide.

Another example is there prices. I get e mails for sales from them because I'm a silver premier member to get that you spend 2000 a year or more with them. One sale I got recently had a car stereo I was interested in on sale for 50 off. I shopped on there online sight and a few others and found that the stereo that was on sale at best buy was 110.00 higher than amazon! Even on sale. Same stereo!

This happens all the time with them.

Another reason is when browsing there online store for local store items there local stores only stock the highest priced items in a particular category. The cheaper items are always 5 day order to store or more time.
I have quit shopping there and won't darken there doorstep again because of being rapped on prices and poor, poor, poor customer service.

One caveat from dealing with them this is a systemic problem at a corporate level. The local people for the most part were ok to deal with (people in the stores).
post #92 of 111
Quote:
Originally Posted by sflocal View Post

As usual, blame Apple. Why not blame...

I blame AI for using shutter as the title of the article again. Say close/close down or just shut even... something
post #93 of 111
Quote:
Originally Posted by Splash-reverse View Post

I blame AI for using shutter as the title of the article again. Say close/close down or just shut even... something

Their usage makes sense to me.
shutter |ˈʃədər|
verb [ with obj. ]
- close the shutters of (a window or building): the windows were shuttered against the afternoon heat | (as adj. shuttered) : barred and shuttered stores.
-- close (a business): the city was gripped by economic forces that were squeezing its tax base and shuttering its factories.

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post #94 of 111
Is Best Buy your guy's largest electronic store? I would love to have a large electronics store like that in Switzerland.
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post #95 of 111
Quote:
Originally Posted by Magic_Al View Post

In fact resellers can sell at whatever price they want, otherwise it would be price fixing and illegal. However many brand-name manufacturers restrict advertising of lower prices. In such cases a lower price can still be offered during the shopping process.


Yes, but wouldn't you agree that one never would experience an Apple dealer chopping another $50 off of an $1,800 MBP during the shopping process just to seal the deal at your suggestion the way they would a $700 Asus?

Non Apple Store dealers do Apple a great service in areas that don't have Apple Stores by having display models. But either way, whatever non-Apple Store dealers are willing to sell them at, forget Best Buy, even with MBPs selling through the roof the best computer stores barely move any OSX hardware these days, it's Apple Stores or Amazon.
post #96 of 111
Quote:
Originally Posted by jlandd View Post

Yes, but wouldn't you agree that one never would experience an Apple dealer chopping another $50 off of an $1,800 MBP during the shopping process just to seal the deal at your suggestion the way they would a $700 Asus?

No, I wouldn't agree. I've had an Apple authorized retailer offer me a discount on a computer when I said I was going to go home and think about it.

Congratulations - you've managed a 100% record - of being wrong.
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Gatorguy 5/31/13
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post #97 of 111
"We've been selling the world's most popular product for the past few years and hence our profits are less"
post #98 of 111
Quote:
Originally Posted by Relic View Post

Is Best Buy your guy's largest electronic store? I would love to have a large electronics store like that in Switzerland.

Depends... The experience is not great. CompUSA, Best Buy, Circuit City... Pretty average when I was in the US. Fry's was the best.

The Australian equivalent is Dick Smith, JB HiFi (which 10 years ago seemed to be a discount CD and record shop?) which has enough of your basic needs, but these kinds of chains are like convenience grocery stores while Apple Retail is Tiffany's.
post #99 of 111
I must be in the minority since I like Best Buy. I have bought a few big ticket items over the years from them. The only complaint that I do have is the annoying attempt to sell me extended warranties on everything that I buy.
post #100 of 111
Quote:
Originally Posted by neosum View Post

A gas station owner can tell you that they only make pennies on a gallon of gas. The bulk of their revenue is from food and coffee.

The "strain" that ipads are having on Best Buy probably refers to the reduced sales of their other higher margin electronic products. They just need to upsell their ipad customers on accessories and whatever else they can push. The ipads bring in the visitors, just as the as gas brings in customers to the gas station, but their revenues depend on those customers buying other stuff.

Upsell and Cross-sell is never a reliable model without a strong core revenue. Sure, the icing is nice, but the cake has gotta make some money.

For years retailers got lazy depending on upsell and cross-sell to the point where they stopped making any money by, you know, selling actual stuff people want, rather than trinkets, warranties and other nonsense.
post #101 of 111
Best Buy with all their products and the range of products they carry. TV's, stereos, home theater systems, DVD's, cameras, phones, small and major appliances, etc. Not to mention computers, parts, peripherals, etc from many different brands.

Closed stores because of the iPad.

Wow.
post #102 of 111
Quote:
Originally Posted by Gary54 View Post

Best Buy with all their products and the range of products they carry. TV's, stereos, home theater systems, DVD's, cameras, phones, small and major appliances, etc. Not to mention computers, parts, peripherals, etc from many different brands.

Closed stores because of the iPad.

Wow.

It's just rubbish isn't it? What sort of lack of mental faculties does one need to suffer to believe this stuff from Best Buy/ the media?
post #103 of 111
Eliminate two thirds of the crap you sell, and reduce the size of your stores. Do you really need to offer 9 models of a dishwasher? Do you think that offering 30 digital cameras is a great idea? How about stock the top three sellers and dispense with the others. Give me a break. The iPad is very least of your problems.

Best Buy is living in the last century like most big box retailers.
post #104 of 111
Quote:
Originally Posted by axual View Post

Eliminate two thirds of the crap you sell…

You mean the $30 "setup plans" that involve plugging things in, the $40 "get ready" packages that involve watching the startup movie and giving your account a username, and the $50 6' HDMI cables?

Quote:
Do you really need to offer 9 models of a dishwasher?

Yes.

We're in the market for one, and I'm not going to buy an appliance based on pictures I saw online. I'm going to go to an overpriced store, check the controls, the design, the capabilities, the size, the internal organization, make a decision for myself with some actual information, and THEN go home and buy it online.

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post #105 of 111
Quote:
Do you really need to offer 9 models of a dishwasher?

Quote:
Originally Posted by Tallest Skil View Post

Yes.

We're in the market for one, and I'm not going to buy an appliance based on pictures I saw online. I'm going to go to an overpriced store, check the controls, the design, the capabilities, the size, the internal organization, make a decision for myself with some actual information, and THEN go home and buy it online.

You're right Tallest Skil, this way of thinking reminds me of our local public transportation system. Even with the high cost of gas they can't take advantage of people wanting/needing to take mass transportation in to the city to cut their travel costs. Thus they are way over budget. So what's their solution? Instead of making buses or trains more accessible, they are cutting back on their schedule and raising the rates.

If you want to sell washers and dryers you better give people a selection and offer it at a competitive prices unless you offer some stellar service to justify a higher price. If you're not going to do those things then get out of the business because you will fail.
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post #106 of 111
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Originally Posted by Gatorguy View Post

Of course I am Mel.

I saw your spin after your original post was questioned. In essence you really didn't mean to say what you said initially, but instead meant that other products could get discounted unlike Apple products, so their actual margin is really the same as Apple's. . . depending on IF the retailer chose to discount the product heavily. Did I get that right?

I think that most people understood what I meant. Fake margin isn't margin at all. There are very few products that aren't sold with very large discounts. We all know that.
post #107 of 111
Quote:
Originally Posted by newbee View Post

They are both retailers who maintain brick and mortar stores and have an online presence. That's the common factor between the two. Just because Apple designs and controls the building of what they sell and is wildly successful at marketing it and BB is not ..... takes nothing from the fact that they are indeed in the same marketplace, competing for the same consumer $$$ and sometimes, even on the same products.

Again with the hyperbole .... retail everywhere ? Really ? In that case I guess I'd better stock up on ...... everything.

There, I fixed it for you.

And who decides to discount the 40% margin on those products. What you are seemingly not understanding is that every retailer makes it's own mind up about what kind of company they are going to be and then develop a philosophy/plan to make it happen. The whole tone of my post was to point out the two different philosophies of retail marketing.
I guess that I didn't make that clear enough for you .... or maybe you were in too much of a rush to tell me how, in your opinion at least, I was wrong .... multiple times.

Wrong. Apple and BB are not really competing. Both companies know that in areas where there are Apple stores, BB will be getting the overflow. In areas where there aren't Apple stores, they will be filling in. Apple is a very specialized operation, while BB is scattershot, offering everything, pretty much including the kitchen sink. They have very different customer bases as well. People who shop at Apple's store simply wouldn't go to BB for those products unless they had no choice. So competition is very low between. Is it 100% different? Nothing is, but it's close enough.

But. Most of apples business is in design AMD manufacture, an area in which BB has nothing. So if you think the business are competing, it might be over 1% of their businesses where they overlap, but that's all. It hardly matters.

Your attempt to be sarcastic would be better if it weren't so lame.

I understand retail better than you will ever. A big part of my business was retail, I've experienced it for almost 30 years, how about you?
post #108 of 111
Quote:
Originally Posted by melgross View Post

I think that most people understood what I meant. Fake margin isn't margin at all. There are very few products that aren't sold with very large discounts. We all know that.

Fair enough Mel.
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post #109 of 111
Quote:
Originally Posted by Gatorguy View Post

Fair enough Mel.

This gives some of the idea of the problem, and what some companies are trying to do about it. Of course, it doesn't show the breath if the problem, as it extends to appliances, and pretty much very other product line, but it's interesting.

By the way, I wonder if the government might think this is conspiring to fix prices. What do you think? I'd like to know.

http://beta.fool.com/tdalmoe/2012/04...tcnnlnk0000001
post #110 of 111
Quote:
Originally Posted by melgross View Post

This gives some of the idea of the problem, and what some companies are trying to do about it. Of course, it doesn't show the breath if the problem, as it extends to appliances, and pretty much very other product line, but it's interesting.

By the way, I wonder if the government might think this is conspiring to fix prices. What do you think? I'd like to know.

http://beta.fool.com/tdalmoe/2012/04...tcnnlnk0000001

If they conspired together to restrict prices, I could see the government taking an interest. A bit different than the Apple and bookseller's claims since that involved a willing distributor supposedly conspiring with producers to restrict pricing to any other distributor or seller, but close enough that I wouldn't bet on it passing muster. Then again I'm no lawyer nor versed in the details of of the Sherman Act and how it's been interpreted. In any event I don't see how it benefits consumers in any way.
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post #111 of 111
Quote:
Originally Posted by Gatorguy View Post

If they conspired together to restrict prices, I could see the government taking an interest. A bit different than the Apple and bookseller's claims since that involved a willing distributor supposedly conspiring with producers to restrict pricing to any other distributor or seller, but close enough that I wouldn't bet on it passing muster. Then again I'm no lawyer nor versed in the details of of the Sherman Act and how it's been interpreted. In any event I don't see how it benefits consumers in any way.

Like everything, it's complicated. The Apple issue is a strange one as well, because proving a conspiracy will be difficult, but it seems to be going in a different direction.

This is definitely an act by several companies to hold pricing. How it will work out isn't known as its just begun. The only way it could affect consumers it to keep large, and I suppose, smaller retailers in business so that people can actually go in, see and handle something they may want to buy. It certainly won't make things cheaper to buy, though it may also help manufacturers stay in business.
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