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post #81 of 123
Quote:
Originally Posted by Pooch View Post

i'll shop at best buy, but it'll be an especially cold day in pinckney, mi, before best buy ever sees a penny of mine.
How exactly do you shop at Best Buy without spending money?
post #82 of 123
Quote:
Originally Posted by mstone View Post

That is a whole 'nother topic. Eventually they are going to make you pay the tax. Amazon is fighting it but they will eventually have to comply, even if it is just for California. The deal they currently have ends September 2012.

 

As a business we have to declare the purchases and pay the sales tax even though Amazon doesn't charge any.

 

I wasn't aware of the whole sales tax issue. After a little research, apparently Amazon is building two warehouses here in California, so they will have to start charging sales tax. I guess it's part of the agreement with California to withhold charging sales tax until the end of this year. Under the deal, Amazon said they would build 2 fulfillment centers here, which are under construction now. I guess I'll be shopping elsewhere. The sales tax rates here in California are high. 

post #83 of 123

I tried to purchase an iMac from BB several years back, at the height of the holiday retail season.  It happened to be an open-box return, which meant a nice discount.  But:

 

It took ten minutes to find someone who could get the item from a high shelf.  To purchase, I had to carry it myself to their Geek Center, where I was taken down a long garden path, including pressure to purchase an extended warranty (NOT AppleCare).  Total in-store purchase time: 35 minutes, and above-average irritation.

 

When I got the iMac home, I discovered they had not even bothered to wipe the drive. Since this was supposed to be a gift, I took it back (another 20 minutes in-store).

 

Then I did what I should have done anyway... straight to the Apple Store.  In and out, with a brand-new iMac in hand, in five minutes flat.
 

THIS is why I have forsaken major purchases at BB.

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post #84 of 123
Quote:
Originally Posted by mstone View Post

Then Amazon will be at a slight disadvantage because they also have to charge for shipping where as when you buy locally you just pick up the merchandise yourself. It probably will level the playing field a bit because warehouses are typically less expensive than retail space. I think they should charge the tax but it is complicated because for example in California every single city, county, and zip code charges their own tax rate and when you submit your sales tax it all has to be itemized for each district. Multiply that by all the other states and you have a lot of added accounting to deal with not to mention the added website functionality. There are lots of reasons why Amazon doesn't want to charge sales tax but mainly it just makes them less competitive.

 

What you say is true -- it is complicated.  But online stores like Apple do it.

 

I do woodworking as a hobby, and own a ShopSmith.  They have an online store and charge taxes for every state, although they are based in Ohio.

 

Shopsmith is a small company, SSMH (OTC) with a rudimentary web site and shopping cart -- yet they are able to deal with the complexity...  So, I assume that AMZN can handle it.

 

 

Finally, (I think this is still true) Nevada is a freeport which means that they do not charge any quarterly taxes on inventory warehoused in the state.  So companies with large inventories could benefit from warehousing in Nevada and direct or drop ship from there.

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post #85 of 123
Quote:
Originally Posted by franktinsley View Post

It's getting pretty insane how massive a divide there is now between the looks of Apple and a lot of other businesses. Apple looks current while other companies look straight out of 20 years ago.

It's the ties.  Seriously.  Ties go with suits (some times) but the shirt and tie look has been out of style for at least 20 years.  Maybe if they stop dressing their employees like Dilbert it would help.

post #86 of 123
Quote:
Originally Posted by Dick Applebaum View Post

 

I do woodworking as a hobby, and own a ShopSmith.  

You might be Microsoft's target customer for the the new Surface - its a tablet - wait its a laptop too. I don't particularly like ShopSmith but they were the 'cat's meow' to quote another old fashion 50s -ism.

 

Actually I still don't understand why they called the surface when that is the name of one of their other product that is not similar in any way shape or form. I can get even father off topic if you want.

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post #87 of 123
The CEO calls the store "experimental". Now that's real leadership. Maybe this will work, maybe? It is what makes Apple so sucessful, right?
post #88 of 123
Quote:
Originally Posted by kent909 View Post

The CEO calls the store "experimental". Now that's real leadership. Maybe this will work, maybe? It is what makes Apple so sucessful, right?

Apple was experimenting with removing the children's section and redesigning the Genius bar just last week. The BB store in the article is right next door to their corporate HQ.

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post #89 of 123
Quote:
Originally Posted by Chris_CA View Post


How exactly do you shop at Best Buy without spending money?

 

sorry. i failed to differentiate "shopping" vs. "buying". see this cnn article.
post #90 of 123
Quote:
Originally Posted by christopher126 View Post

Wow...that does spark the imagination. Imagine Apple going store by store and revamping it into an Apple store bit by bit. Wouldn't that be an ironic turn of events....you walk in and the main floor is all Apple and tucked back in the corner is MS/PC's! :)

 

Probably not going to happen, but nevertheless one of the most original ideas I've seen on these boards in years!  Good show!:)


I'm thinking more that all Best Buys will be converted into pure Apple stores.  The problem with this fantasy is that Best Buy has flopped in Europe and China, where Apple would want to grow more (in comparison to US).

post #91 of 123
Quote:
Originally Posted by Dick Applebaum View Post

What you say is true -- it is complicated.  But online stores like Apple do it.

I do woodworking as a hobby, and own a ShopSmith.  They have an online store and charge taxes for every state, although they are based in Ohio.

Shopsmith is a small company, SSMH (OTC) with a rudimentary web site and shopping cart -- yet they are able to deal with the complexity...  So, I assume that AMZN can handle it.

Exactly. It's not that hard. It's even built into a lot of modern software.
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post #92 of 123
Quote:
Originally Posted by mstone View Post

You might be Microsoft's target customer for the the new Surface - its a tablet - wait its a laptop too. I don't particularly like ShopSmith but they were the 'cat's meow' to quote another old fashion 50s -ism.

 

Actually I still don't understand why they called the surface when that is the name of one of their other product that is not similar in any way shape or form. I can get even father off topic if you want.

 

Ha!  The ShopSmith is a space issue -- in the space required for a typical bicycle, you have:

-- a circular saw

-- a drill press

-- a horizontal boring machine

-- a disk sander

-- a lathe

-- a router

-- a shaper

 

You are trading convenience/setup time for space -- but with a little planning, you can minimize the setups.

 

As for the Surface... it is so like MS to parley one meh/failure into another.   The trifecta would be: Windows 8/RT Surface - Vista/Zune - PlaysForSure

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post #93 of 123
Quote:
Originally Posted by jragosta View Post


Exactly. It's not that hard. It's even built into a lot of modern software.

Which software? I have implemented it on a our ecommerce website and our accounting application and it is constantly needing updates. We subscribe to a service that provides the data but they do not offer a SOAP, REST or Web Service and only update the data for all states quarterly not necessarily as the new rates become effective. Furthermore the tax zones are not that easy to define progammatically as they don't go by zip code.

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post #94 of 123

Just die already, Best Buy. DIE.

 

Best Buy re-focusing their stores around customer service has got to be the funniest thing I've ever heard. It would be easier to get a camel to fly Mach 2.

post #95 of 123
Quote:
Originally Posted by Dick Applebaum View Post

 

Ha!  The ShopSmith is a space issue -- in the space required for a typical bicycle, you have:

-- a circular saw

-- a drill press

-- a horizontal boring machine

-- a disk sander

-- a lathe

-- a router

-- a shaper

 

You are trading convenience/setup time for space -- but with a little planning, you can minimize the setups.

 

As for the Surface... it is so like MS to parley one meh/failure into another.   The trifecta would be: Windows 8/RT Surface - Vista/Zune - PlaysForSure

Is the router IPv6 compatible? wink.gif

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post #96 of 123
Quote:
Originally Posted by mstone View Post

Which software? I have implemented it on a our ecommerce website and our accounting application and it is constantly needing updates. We subscribe to a service that provides the data but they do not offer a SOAP, REST or Web Service and only update the data for all states quarterly not necessarily as the new rates become effective. Furthermore the tax zones are not that easy to define progammatically as they don't go by zip code.

But people have been doing it for years. I remember at least 15-20 years ago when I ordered something online, I was asked what county I lived it. I was told that my zip code was split between two counties and they had different tax information so they had to have my county to get the tax right.

It's not trivial - and it does need regular updating, but it's been done for at least 15-20 years.

Of course, it would be better if they rationalized the whole system and simplified the tax zones, but that's not likely.
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post #97 of 123
Quote:
Originally Posted by Pooch View Post

 

sorry. i failed to differentiate "shopping" vs. "buying". see this cnn article.

 

 

Interesting article...

 

I think it is possible to combat "show rooming" and maybe even use it to your advantage.

 

The stick and stucco store can convert itself into a showroom for its own online sales.

 

-- reduce SKUs carried based on demand

-- carry minimal inventory on site

-- schedule events/inventory for hot new products

-- have fewer more effective sales staff

-- offer after sale services and training

-- offer financing/payments

-- offer "show room" and online store instant [web] price comparisons

-- offer repeat customer discounts

-- offer discounts to visitors to your "show room" when they buy at your online store

-- offer in-store ("show room") pickup for online orders

-- offer in-store ("show room") returns

 

I am assuming that within a year (two at most) the sale tax playing field will be leveled for all online stores.

 

I wanted add to the list:

-- offer a bid/ask sales transaction

-- offer a wine and cheese tasting bar

 

Seriously, by being agile and paying close attention to resources and competition you could do quite well.  The point being is if you do the showing and selling, you should get the sale... and the customer.

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post #98 of 123
Quote:
Originally Posted by jragosta View Post


But people have been doing it for years. I remember at least 15-20 years ago when I ordered something online, I was asked what county I lived it. I was told that my zip code was split between two counties and they had different tax information so they had to have my county to get the tax right.
It's not trivial - and it does need regular updating, but it's been done for at least 15-20 years.
Of course, it would be better if they rationalized the whole system and simplified the tax zones, but that's not likely.

In California it is even worse because some counties have special tax rates within certain utility districts for school bonds, road reconstruction, etc. It is a PITA. We just estimate sometimes. It is almost impossible for the auditors to catch it so they let it slide.

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post #99 of 123
Quote:
Originally Posted by jragosta View Post


But people have been doing it for years. I remember at least 15-20 years ago when I ordered something online, I was asked what county I lived it. I was told that my zip code was split between two counties and they had different tax information so they had to have my county to get the tax right.
It's not trivial - and it does need regular updating, but it's been done for at least 15-20 years.
Of course, it would be better if they rationalized the whole system and simplified the tax zones, but that's not likely.

 

Yeah, where I live we have a BART tax but no BART trains... ftw

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post #100 of 123
Quote:
Originally Posted by mstone View Post

Consumers don't often buy TVs or home appliances over the Internet. About the only product I have purchased at Best Buy is a TV. Smaller less fragile consumer electronics are better suited for online sales. I am surprised how many iPhones they sell, at least according to the article. I would have thought more phones would be purchased at the phone stores than BB.

That's not actually true.   Amazon has tremendous online sales of large TVs because they don't charge for shipping, they send people to set it up and they guarantee that if you don't like it, they'll switch it out.   TVs have such small margins, I think Amazon probably loses money on every sale, but they're going for market share.   The big photo/electronics retailer B&H also does a very large amount of online sales. 

 

It surprises me that people are willing to buy large appliances online, but apparently they are.

 

----

As far as BB's problems go, I think the only way they have even a hope of surviving is to make the discovery and shopping experience so compelling that it makes consumers want the products so badly, they won't wait for online delivery.   But that means that every single product needs to be demonstratable and they need to setup "rooms" to demonstrate various combinations of home theatre, computers, Pads and MP3 players all tied together.   These rooms must simply blow people away.  Right now, aside from the TVs on the wall that are all in "blast mode", almost nothing in the store works and even stores with Magnolia tend to have only one or two demo rooms and it's almost impossible to get a sales rep to demonstrate anything.    And the computers are never connected to the web.     But even when the sales people do demo a product, there's a lack of demo software and none of the equipment has had the setup software run to EQ the system in the room.  So it all sounds like crap.   Is it any wonder that few buy?

 

But having said all that, Sixth Avenue Electronics actually had some really nice demo rooms (although still not setup like a living room) and they still went out of business.

 

The other issue is that even in large stores in New York City, most of the higher-end components are not in inventory in the store - they have to be delivered from a regional warehouse.     If people have to wait for a delivery, they'll order online.  The primary purpose of today's physical retail is instant gratfication.

 

When retail stores were smaller, the buyers had to choose the best products for the market.   This was especially true for media stores, like record stores.    The great record and book stores would hand-sell products.    When big-box stores came along, the opposite approach was taken as they try to inventory everything.   (Now they obviously don't have everything, but they have a very large selection.)   The problem with such a large selection is that if you don't know what you want, it's impossible to find.  And if you do know what you want, you can get it far less expensively online.    So I think physical retail needs to get back to "editing" their product lines and hand selling.    I remember when even large record stores like Tower used to have experts for each genre.     When I was a kid, I got my musical education from the radio and the record store.   Today, that doesn't happen.     Downloading is great when you know what you want, but not when you want to discover something.  It's too tedious to spend hours clicking through previews.   

post #101 of 123
Quote:
Originally Posted by mstone View Post

In California it is even worse because some counties have special tax rates within certain utility districts for school bonds, road reconstruction, etc. It is a PITA. We just estimate sometimes. It is almost impossible for the auditors to catch it so they let it slide.

 

Yeah... it's like the old routine of saving all your receipts for tax purposes and throwing them randomly in a shoe box.  When audited, the auditor gets to dig through the shoe box.

 

Now, I once lived in ChicagoLand.  In Cook County you did not pay your county taxes -- you bribed the assessor.  In McHenry County (where I lived) the the tax forms had printed on them something like: "Unlike other Illinois Counties, McHenry County residents are required to pay their taxes".

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post #102 of 123
Quote:
Originally Posted by mstone View Post

Is the router IPv6 compatible?

 

Not supported until ML wink.gif

 

I copied your smiley!

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post #103 of 123
One of my biggest gripes with best buy is what products they have in the store to sell you. If you go to there online site and find say like a hdmi cable that is 20 dollars for a six footer and it is the cheapest on there website then check for availability in there store no store stocks it and it is a 5 day to 2 week wait to ship that item to the store. Now if you check the most expensive six foot cable in there store like say a monster cable six foot hdmi that is 50 bucks they will always stock that in a local store.

I have found that almost without exception best buy stocks the top two most expensive highest margin items in there stores and the rest you have to order. There not interested in doing you any favors on price and always will try to push you into one of there stupid fixit contracts for anything they sell.
post #104 of 123

In politics, in business, in day to day life in America…  It's all about seeming.  We're so flooded with hype that we've forgotten the possibilites of the real.

 

One doubts it's even occurred to the overlords of Best Buy that Apple's reputation for excellent customer service has been achieved by providing excellent customer service.  No doubt they really do believe they can improve their situation by changing how things look.  It simply doesn't occur to most corporations that there might be something deeply, profoundly, repellently wrong with what they are

 

It's taken nearly a century, but HL Mencken is finally proved wrong: companies are going broke underestimating the intelligence of the American public.  Even if everything Best Buy stocks couldn't be purchased more cheaply and easily online, confronting their depressed, angry, exploited McWorkers is no one's notion of a pleasant experience.  

 

I don't blame Best Buy staff for their ignorance, apathy, and incompetence - their physical presence alone is more than their employer deserves.  I blame them for lacking the integrity to burn the stores they work in to the ground.  

post #105 of 123

apple copying or not they really do need to rethink their need for such large stores.   At all three of the Best Buys near me there are plenty of people looking at computers, phones, TVs and cameras, and then there's the other half of the store, with music and especially appliances.   I think if you walk through appliances your footprints will show in the dust built up on the aisles.  

post #106 of 123
Quote:
Originally Posted by kent909 View Post

The CEO calls the store "experimental". Now that's real leadership. Maybe this will work, maybe? It is what makes Apple so sucessful, right?

 

That a major retail chain considers customer service to be an experiment tells you everything you need to know about the corporation and why it is at its core a fundamentally bad idea.

 

In practice, corporations despise their customers the same way politicians loathe their constituents.  We like to pretend that capitalism consists of a network of mutually beneficial contracts, when in practice it's an infinite variety of diseased prostitutes rolling their stupid, greedy, mean clients.  This is why advertising is such shameful profession:  the only thing nastier than a hooker or a john is a pimp.

post #107 of 123
Is it just me or does the new store layout look even more like Buy More off of The defunct series "Chuck"? They had the same geek bar staffed by the techs set as front-center in this layout. The home theater room was also just to the left like this photo.
post #108 of 123

What the heck is wrong with the world? Why is everyone trying to copy Apple?

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post #109 of 123
Quote:
Originally Posted by Apple ][ View Post

Best Buy sells and offers far too much junk. When you walk around the store and see what's on the shelves, you notice that they have no standards at all. They'll accept any product it seems, which is probably why there are so many junky and cheap Android devices there. And most of them don't even work.

 

Hey, that's called choice to some people... lol.gif

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post #110 of 123
Quote:
Originally Posted by Dick Applebaum View Post

 

Yeah... it's like the old routine of saving all your receipts for tax purposes and throwing them randomly in a shoe box.  When audited, the auditor gets to dig through the shoe box.

 

Now, I once lived in ChicagoLand.  In Cook County you did not pay your county taxes -- you bribed the assessor.  In McHenry County (where I lived) the the tax forms had printed on them something like: "Unlike other Illinois Counties, McHenry County residents are required to pay their taxes".

Just to be clear, we have never been audited by any governmental agency. We have our own private auditors as well as auditors for workman's comp. We pay our sales tax religiously so they never question anything we report.

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post #111 of 123
Quote:
Originally Posted by Dick Applebaum View Post

 

Ya' know...

 

<snip>

 
There may be some things that BB could implement.

 

I always love your posts, however I have to disagree here because of 2 missing ingredients, that you humbly forgot to mention, probably because it's ingrained in you as much as it was in SJ.... and that is:

 

1) Passion

2) Perfection

 

Neither of those ingredients can be taught, nor can they easily be acquired in a mega-corporate atmosphere... UNLESS they were there from the beginning.

 

That is why you were successful, as is Apple to this day.

 

Hands-on entrepreneurial zeal, energy, and passion will beat widely held stock and performance-based corporations EVERY time!

 

Who at BB with a PASSIONATE stake in it's success, is going to "hand-pick" to PERFECTION, the locations, furniture, wall colors, staircases, shelves, employee attire, etc. etc.... and the list is VERY long!

 

That's why other companies are finding it difficult-to-impossible to implement anything even close to, or resembling Apple. It's all "just an experiment" and a facade, because that's all they see.

 

As with great food and wine... it's the "special ingredients" that you don't necessarily taste or see, that make them GREAT!

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post #112 of 123

I don't see BB being able to turn around their retail operations as it stands, just as I didn't when JCP hired Ron Johnson to do a retail turn-around for them. Retail at this level is dying a slow death across all industries and product categories. Thank the Internet and of course Amazon for that. In fact, I actually do.

 

However, there is one way... but it would mean completely changing their business model from big-box to boutique. It would basically entail exactly the points DA listed earlier... plus some of course. How to do that? Go to a franchise-styled business.

 

We have something similar here in Germany in many retail categories, however my experience is with 2 clients: electronics (Euronics) and food markets (Edeka).

 

Without going into massive detail, both of those retailers leave a lot of the marketing, service, specialty expertise to their franchisees... and provide simply the buying power. Both of my clients have original store designs, their own promotions, areas of expertise, even selling products outside of the corporate catalog.

 

They equally excel at offering top-notch customer service, hand-picked and thoroughly trained employees, assorted additional services and local products and produce. Many incentives for shopping with them rather than at the mega-store competition to say the least.

 

In the case of BB, I suppose they would be bumping up against Radio Shack or Fry's if they tried to do this. The question is: could they do it better? And, would it not be better to take Michael Dell's advice, and "shut it down and give the money back to the shareholders", and start over?

 

This time MD's advice just might be the best solution, unless there's a shunted/fired retail genius lurking around in their history.
 

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post #113 of 123
Quote:
Originally Posted by ThePixelDoc View Post

 

I always love your posts, however I have to disagree here because of 2 missing ingredients, that you humbly forgot to mention, probably because it's ingrained in you as much as it was in SJ.... and that is:

 

1) Passion

2) Perfection

 

Neither of those ingredients can be taught, nor can they easily be acquired in a mega-corporate atmosphere... UNLESS they were there from the beginning.

 

That is why you were successful, as is Apple to this day.

 

Hands-on entrepreneurial zeal, energy, and passion will beat widely held stock and performance-based corporations EVERY time!

 

Who at BB with a PASSIONATE stake in it's success, is going to "hand-pick" to PERFECTION, the locations, furniture, wall colors, staircases, shelves, employee attire, etc. etc.... and the list is VERY long!

 

That's why other companies are finding it difficult-to-impossible to implement anything even close to, or resembling Apple. It's all "just an experiment" and a facade, because that's all they see.

 

As with great food and wine... it's the "special ingredients" that you don't necessarily taste or see, that make them GREAT!

 

+++ Well said!

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post #114 of 123
Quote:
Originally Posted by ThePixelDoc View Post

I don't see BB being able to turn around their retail operations as it stands, just as I didn't when JCP hired Ron Johnson to do a retail turn-around for them. Retail at this level is dying a slow death across all industries and product categories. Thank the Internet and of course Amazon for that. In fact, I actually do.

 

However, there is one way... but it would mean completely changing their business model from big-box to boutique. It would basically entail exactly the points DA listed earlier... plus some of course. How to do that? Go to a franchise-styled business.

 

We have something similar here in Germany in many retail categories, however my experience is with 2 clients: electronics (Euronics) and food markets (Edeka).

 

Without going into massive detail, both of those retailers leave a lot of the marketing, service, specialty expertise to their franchisees... and provide simply the buying power. Both of my clients have original store designs, their own promotions, areas of expertise, even selling products outside of the corporate catalog.

 

They equally excel at offering top-notch customer service, hand-picked and thoroughly trained employees, assorted additional services and local products and produce. Many incentives for shopping with them rather than at the mega-store competition to say the least.

 

In the case of BB, I suppose they would be bumping up against Radio Shack or Fry's if they tried to do this. The question is: could they do it better? And, would it not be better to take Michael Dell's advice, and "shut it down and give the money back to the shareholders", and start over?

 

This time MD's advice just might be the best solution, unless there's a shunted/fired retail genius lurking around in their history.
 

Ohh… Boutique franchises… Entrepreneurs… I like the implications of that!

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post #115 of 123
Quote:
Originally Posted by ThePixelDoc View Post

I don't see BB being able to turn around their retail operations as it stands, just as I didn't when JCP hired Ron Johnson to do a retail turn-around for them. Retail at this level is dying a slow death across all industries and product categories. Thank the Internet and of course Amazon for that. In fact, I actually do.

I don't think it's as hopeless as all that.

Best Buy is not making tons of money, but they're not yet in 'death' mode. They're plugging along and managing to stay afloat. And that's with Amazon having a huge advantage in that their customers don't pay sales taxes. In some states, sales taxes are well over 10%. If the government ever decides to force national companies like Amazon to collect sales taxes, that advantage would disappear overnight, making Best Buy significantly more competitive in states that collect tax. A 5-10% price swing could be enough to restore Best Buy to reasonable profitability. And if they improve their customer service and emphasize the things that you need a local store for (service, etc), it could make a big difference, as well.

I've lived in states that bordered states with no sales tax. People will drive quite a way to buy things in the no sales tax states. In fact, I've watched people drive 40 or 50 miles to buy something that cost $20 or so - when the sales tax savings clearly didn't pay for all the extra mileage. Amazon's sales tax advantage is hard to overestimate.
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post #116 of 123
Quote:
Originally Posted by mavfan1 View Post

apple copying or not they really do need to rethink their need for such large stores.   At all three of the Best Buys near me there are plenty of people looking at computers, phones, TVs and cameras, and then there's the other half of the store, with music and especially appliances.   I think if you walk through appliances your footprints will show in the dust built up on the aisles.  

You are certainly correct on that!  But in my area, getting help in the appliance department is next impossible.  There is no one there. At all.  I found one BB that had very helpful and cheerful folks in the appliance department.  But problem? The freezer I wanted was not in stock and not in the warehouse. Great price, though... 

 

I went over the Lowe's.  They had a good price on what I wanted?  "Got one in stock?"  "Yes Mr Grizzly, we do. What is the delivery address?"  Upon hearing the address, the clerk responded "How's tomorrow between 4 and 6?" 

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post #117 of 123
Quote:
Originally Posted by mavfan1 View Post

apple copying or not they really do need to rethink their need for such large stores.   At all three of the Best Buys near me there are plenty of people looking at computers, phones, TVs and cameras, and then there's the other half of the store, with music and especially appliances.   I think if you walk through appliances your footprints will show in the dust built up on the aisles.  

 

That's because the appliance section at BB looks like an afterthought.  They don't contain enough models and no one in the store knows the difference between them.

 

Music is used to get people into the store.    It's of the, "Hey honey, let's get that Adele CD."   "OK, and it would be really nice to get a new TV for the den."     I agree that BB probably doesn't sell a lot of music, partially because industry sales (including downloading) are half of what they were in 1999 and partially because of the decline of physical media.   As BB starts to decrease the size of their stores, I bet the music department gets a lot smaller.     If they went to selling just the top hits, it probably wouldn't decrease their music sales by more than 5-10%.  

 

Meanwhile, Home Depot has decided to expand their major appliance departments.  From TWICE magazine:

 

 

Quote:
Atlanta - No. 3 majap chain The Home Depot is adding Whirlpool, Electrolux and Frigidaire to its brand roster and will expand its appliance departments in select stores in a major bid to grow market share.

The new brands, and the expanded 2,400-square-foot majap showrooms, will roll out to 120 locations nationwide by mid-fourth quarter. According to Bob Baird, Home Depot's appliances and kitchens merchandising VP, the first department remodels will begin appearing this summer.

...

Whirlpool joins sister brands Maytag and Amana at Home Depot, while Electrolux's Frigidaire, step-up Frigidaire Gallery and premium Electrolux badges are new to the chain. The new additions are presently available at home improvement rival Lowe's.

 

So BB has to either step up its game or get rid of the department.       (Although I wonder if the 2400 square foot number above is correct.  That seems awfully small for major appliances for a big-box store.)

post #118 of 123
Quote:
Originally Posted by jragosta View Post


I don't think it's as hopeless as all that.
Best Buy is not making tons of money, but they're not yet in 'death' mode. They're plugging along and managing to stay afloat. And that's with Amazon having a huge advantage in that their customers don't pay sales taxes. In some states, sales taxes are well over 10%. If the government ever decides to force national companies like Amazon to collect sales taxes, that advantage would disappear overnight, making Best Buy significantly more competitive in states that collect tax. A 5-10% price swing could be enough to restore Best Buy to reasonable profitability. And if they improve their customer service and emphasize the things that you need a local store for (service, etc), it could make a big difference, as well.
I've lived in states that bordered states with no sales tax. People will drive quite a way to buy things in the no sales tax states. In fact, I've watched people drive 40 or 50 miles to buy something that cost $20 or so - when the sales tax savings clearly didn't pay for all the extra mileage. Amazon's sales tax advantage is hard to overestimate.

Yes, but even without a national law, their sales tax advantage is slowly disappearing.   Most states now consider affiliate sales to constitute tax nexus even when the consumer doesn't buy through the affiliate (which I disagree with, but the states are getting away with it).   In some states, Amazon has killed the affiliate programs.   In others, they've bitten the bullet and now charge sales tax.    In addition, there is no question or debate that Amazon HAS to charge sales tax in any state where they have a physical facility, like a warehouse, and they've been increasing the number of warehouses they have across the country.     Amazon does charge sales tax in New York and I believe they finally worked out a deal in California to start charging sales tax next year.     

 

According to Wikipedia, Amazon has warehouses in Arizona, Delaware, Indiana, Kansas, Kentucky, Nevada, New Hampshire, Pennsylvania, South Carolina, Texas, Virginia and Washington.    I think I heard they were opening a warehouse in New Jersey as well.  Of these states, only Delaware and New Hampshire don't have a sales tax.  As I mentioned, they're already charging in New York and will be in California.   They have nexus in Texas and Pennsylvania due to the warehouses.     So that leaves Florida as the only really populous state where they're not charging tax.     But I think Congress will finally address this issue after the 2012 elections anyway.    The states need the sales tax money too badly to let this go on much longer.     

 

As far as BB is concerned, operating income for the 1Q (ending May) was down 43%, although diluted earnings-per-share was up 11%.  Operating income per square foot was down 13%.    They've had a series of executive resignations.    The stock is at 21.58 with a 52 week high of 32.65.  Its five-year low was about 18 and its five year high was about 53.   So yes, they're not going out of business tomorrow, but the future doesn't look great.   They're closing lots of stores, which should increase profitability, but there's also no viable plan for growth, IMO.    TV sales have peaked and are not expected to improve until the next generation of technology comes along in about three years.    Audio system sales have been in the dumper across the industry for years.    In 2010, CD sales were at 24% of their 1999 peak and it's gone down since.   Physical home video sales have been slowly declining.    YTD (across the industry), they're down 5.4%, calendar 2011 came in almost 13.5% below 2010 and 2010 came in over 9% below 2009.     They sell the iPhone and iPad, but since those products sell at list price, there's no reason to buy them from BB.      So what is it that BB is going to be selling profitably over the next few years, especially since manufacturers have been cutting retail margins?     Wholesale price on Nikon cameras is now only 10% below list.    

 

I think BB will continue to do okay in places where there's no competition.    In places where there is, they have to do a lot more than stick a desk in there and pretend it's a genius bar.      They have to completely rethink the purpose of a retail store and create a new, compelling model that not only copies what Apple has done, but goes way beyond it, because BB sells far more products than Apple does.    And they have to do that and prevent showrooming at the same time.    That's a hard nut to crack.  

post #119 of 123
Quote:
Originally Posted by franktinsley View Post

It's getting pretty insane how massive a divide there is now between the looks of Apple and a lot of other businesses. Apple looks current while other companies look straight out of 20 years ago.

 

It really is.  I helped open one of the Cincinnati Best Buys in 1995 and they talked about how the design they were using for our stores was the new 4th generation of their design, evolving from the caves like old Steinberg stores to the open and bright look Best Buy has had since 94 or 95 in all new stores.  There have really only been small tweaks for where some items in the store are positioned (CDs take up much less room, more for movies, etc, the addition of the large mobile phone section) and it's certainly time they tried something new.

post #120 of 123

I really hope Best Buy figures out a way to survive.  Yes, online ordering is convenient and cheaper, but nothing beats hands-on.  And the ability to do a same-day buy, return, and exchange is priceless (e.g., trying different wireless routers).  I dread the thought of only ordering online for all things.

 

I think the types of stores that BB needs to emulate are Whole Foods Market and REI (sporting goods store).  These stores offer multiple brands and the people love to work there (they show up on best places to work lists).  It's easy enough to imagine.  organic foodies work at WFM and the outdoorsy ones work at REI.  Employees come in already knowledgable and hungry to learn more, are passionate about the products, and likely get discounts on products that excite them.  I don't know BB's hiring policy but they need to only hire people who really get into electronics...whether it's phones or PCs or TVs or gaming or appliances. 

 

BB just needs to refocus, downsize, and implement some of the strategies suggested in these posts.  I saw some good ideas.  One that struck me as obvious was, when you go to a BB and they have an item out of stock, that they simply offer you free shipping - rather than just direct you to a store across town that will hold it for you.  

 

And yes, lose the ties! :)

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