Best Buy: Cautious optimism for the future

Earlier this week, I discussed how utterly appalled I was at the (lack of) value a local Circuit City store offered me in my area during its "liquidation" sale. But that's not the whole story.

Right across the street from that Circuit City is a Best Buy. For years, I have gone back and forth to get the best price out of both stores. More often than not, it was Best Buy that would earn my business, thanks to its salespeoples' greater willingness to match the best prices of any competitor in the area.

Competition breeds results. I liked that CIrcuit City was across the street from Best Buy because it kept both stores' managers on their toes and more willing to do whatever they could to keep me in the store and ensure that they earned my business.

But now, that competition is gone. I'm starting to worry that Best Buy may not be as willing to match pricing any longer. I'm starting to worry that Best Buy will get complacent and stop doing everything it can to earn my business. Most importantly, I'm starting to worry that Best Buy won't be able to compete on any level with the Web.

Now that Best Buy is practically alone as the last major big box electronics retailer, it has a new enemy that it probably can't beat all that often: the Web. Let's face it: sites like Amazon.com and Newegg.com don't have the overhead Best Buy does. They don't need to worry about renting space for stores, paying salespeople, and paying sales tax to every state. Online retailers have s a significant advantage.

Maybe Best Buy won't need to worry about the Web because it is the last big box retailer standing, and there will always be people who don't like to buy online or would rather have a product as soon as possible.

For people, like me, getting more comfortable with online purchasing, I simply don't know what would stop me from using Best Buy as a research center. I can go to the store, check out a new camcorder or surround sound system and then decide if it's something I want. If it is, I'll ask the manager if they can match Amazon's deeply discounted price. If he can, I'll buy it at Best Buy. If not, I'll go home and order it online.

Realizing Best Buy probably can't afford to match Web pricing indefinitely, how does the company respond? Will my local store decide that it will no longer match Web pricing? If so, what would stop me from buying everything I see at Best Buy online? It makes little sense for me to waste my money because I don't have any patience.

Before Circuit City died, Best Buy did everything it could to ensure it didn't lose my business to the big box store across the street. Now that Circuit City is gone, it must do everything it can to ensure it doesn't lose my business to the price leader online.

In order to do that, Best Buy needs to capitalize on what it does best: customer service. It can't compete on price all the time, but it can inform the public and provide each customer with the single retail element Amazon can't: guidance. After all, you can't ask Amazon which digital SLR would be best for you, right?

Best Buy also needs to realize that pricing is still a major concern and it must match every other retailer in the area, like Walmart and Target, and make every effort to get as close to online pricing as possible.

And maybe that's where its online division, with much lower overhead, can play an important role in the company's future. Along with the ability to offer lower prices, BestBuy.com also offers a significant advantage over online competitors: you can have many of the products Best Buy offers online immediately, thanks to in-store pickup. If Best Buy can make those prices competitive and offer in-store pickup where possible, my desire to use Amazon would diminish, since I could have a product from Best Buy in twenty minutes, compared to five days from Amazon.

Although Best Buy is now alone in its fight with the Web and I'm concerned that it may become yet another victim of the Internet, the company has some advantages that it can exploit: Its people are an asset that can provide guidance, its willingness to match pricing is a plus, and its online division can offer cheaper prices and in-store pickup.

The future might not be clear for Best Buy at this point, but one thing is certain: it has a chance to be the first major electronics retailer to do what Circuit City and CompUSA couldn't: compete with the Web.

[HlLLARY CLITON]

Wal Mart has slowly been getting higher quality electronics over the years, look for a fierce Wal Mart - Best Buy battle to come. Wal Mart will win in the end

[atalexa]

The problem with that theory is that Best Buy has a greater emphasis on customer service than Wal-Mart and the folks on the sales floor at BB are much more likely to know what they are selling.

[aztec92154]

I cant get high-quality electronics at Wal-mart.... Costco on the other had has no sales people but great deals on electronics and an excellent return policy. Best buy has the best customer service, but you pay more for electronics.

[johannon]

I'm surprised at the quality of products Wal Mart has been getting but it has a long way to go before even beginning to approach Best Buy's selection. Most of the time the savings on identical products is less than $10 on big ticket items. I don't think they're intentionally trying to trick people, but they usually carry older model or lower end products that look nearly identical to the newer or higher end products. For example, Samsung makes several LCD tv's that are the same size, look identical externally, have similar model numbers, but are very different in performance and features. Because of this, people often think they're getting a steal when, in fact, they aren't even buying the same product they saw at Best Buy. Also, it's actually kind of funny trying to someone at Wal Mart to give accurate details about a product or correct advice on proper accessories or the best way to hook up your TV. They just aren't trained properly. It will be a very sad day indeed for consumers everywhere if Wal Mart ever forces Best Buy under. Hopefully we, as consumers, won't let something like that happen just to save a couple bucks.

[rmva]

Hillary is right. The average customer will not be able to recognize the "slightly differentiated quality" of the name brand products sold at Walmart and will jump at the $100 price break.

[johannon]

Unfortunately, you're right. But that wouldn't be the case if the people at Wal Mart knew how to hook up the products for the best performance. With the proper accessories and hook up, there can be huge audio and visual improvements, even for "off brand" products, that you'd have to be blind or deaf not to notice. Sadly, the vast majority of people buying electronics from Wal Mart never get to experience the full potential of their product simply because they never knew that it could be better. They might have purchased the nicer model if they had known or seen what it was capable of doing when set up and configured properly. The TV wall in Wal Mart is incredibly awful. I really wish people would demand more and refuse to buy from somewhere that can't even show and explain to them the basic functions of most of their products. If we did this then, and only then, would Wal Mart be forced to become a store worthy of being decent competition to Best Buy. Even if you could get $100 savings, if you have no idea how to get the most out of your purchase, was it really worth it?

[willcasp]

Thanks for promoting a total lack of ethics! It costs Best Buy money to give you access to products to make your purchase decision. That should be worth something. If you don't need to view, handle, or ask about a product, great; purchase it on line for the best price. Think of that Best Buy charge as a consulting fee that lets you make your purchase decision.

The values that you are promoting are the reason why we cannot find sales folks who know anything about products (customers won't support the increased costs), or stores with a variety of quality products!

[Last_of_the_Gray]

You're right! you know.. all retail stores should charge for entering their stores and looking at their products. That'l teach people for wanting to know what they are buying. I'm sure It will go over well for best buy in the long run too...

[willcasp]

reply to Last_of_the_Gray
... the charge to look model works great for Costco, Sams, Direct Buy... maybe it is the right model for Best Buy.

BB doesn't give any service as it is. Once had to wait over 30 min just to get someone to go behind a counter to pick up a camera for me. Put the damm boxes out where customers can get them themselves and have people at the cash registers or else you will be the next CC!

[Lethality]

Best Buy has the worst customer service on earth. I would frequently drive an additional 4 miles to Circuit City specifically because of this. I haven't bought anything from Best Buy in 5 years or more, and I am not going to start now.

[mattjew04]

So why wouldnt you give best buy another chance, they are a completely different store now! 5 years ago they didnt have the dominating factor they do now, there is a reason that they won the circuit city/best buy battle.......but at the same time you are the type of customer who causes problems at a store because you want to return an open CD......

[Lethality]

Why would I give them another chance? They should find a way to actively seek me.

I like all of the in-cognito Best Buy employees in this thread.

Best Buy absolutely sucks, deal with it.

[MongooseProXC]

I completely agree!

[johannon]

I'm a former Best Buy employee who left the company for greener pastures after leading my store's computer department to number 1 in the company while our department manager was out on maternity leave. I received next to no recognition for this while upper management basked in glory, and all my attempts at promotion past my senior position were denied for stupid reasons. Ultimately, they wanted to keep me in a position where selling was still my main job. I bring this up because, despite that resentment I have for Best Buy, I can still say without question that Best Buy is not only the best customer oriented electronics store out there, I don't think I've ever seen any kind of store that was as concerned with helping the customer and getting them what they need than Best Buy. I still shop there because I want the best service and the best products. Maybe the problem you have doesn't come from Best Buy but rather from unrealistic expectations and "me first" mentality. Before and after Best Buy I have worked in customer service industries and have always done my personal best to help the customer. Only at Best Buy did I also feel that nearly everyone I worked with had the same dedication as me. I did learn, however, there are some people you just can't help and some that just don't want to be helped.

[forkboy]

I for one completely agree with willcasp's comment. How can any brick-and-mortar establishment hope to continue to survive if customers only come in for free advice and to handle the merchandise? It's patently absurd to take advantage of Best Buy (or any other brick and mortar retailer) in this fashion.

Certainly I do not want to pay more for a product than I need to, but I recognize the need to reward a firm who provides me the sort of services that come at a place like Best Buy.

If you remove folks like Best Buy from the equation you will be left only with online shopping and I don't think that is truly what you want. After all, who then is going to advise and guide you? Who is going to let you play with the equipment so that you can determine what feels best/right in your hand?

I have a long-standing rule about this matter: if I engage a sales person at a physical store for help in determining what product to purchase I will bit the bullet and purchase from them even if I can save money online. However, if I commit to doing all the research myself (and almost exclusively online) then I have no issue with purchasing online.

I think to do otherwise is both disingenuous and selfish.

As for Lethality's comment, I'm sorry to read you feel that way. My family has always had far superior service at Best Buy stores, but to each their own.

[polaris13]

So you would pay more because the teenager at best buy gave you advice and held you hand? I've learned through painful experience that you need to educate yourself on ANY purchase you're going to make and NEVER rely on the salesperson since they often don't know what the hell they're talking about.

If you really do your research online before buying any product I can bet you 100% you will be much more informed than the salesperson helping you. The only reason circuit city died is because they were more inept than best buy not because best buy is so good.

[Don Key]

Don't forget that Amazon doesn't charge tax. In California, if you buy something for $1,000 at Best Buy I'm going to have to pay $87 dollars in tax. But if I buy that same item on Amazon, most times I get free shipping (all the time with Amazon Prime) and no sales tax.

Most times, these items are way over priced and barely... barely will I find a good deal at Best Buy that I can't find better on Amazon plus Amazon returns are a dream. Also, most times BB doesn't have items the day they come out like Videogames. They only get put on the shelves a few days after the fact where Amazon will have it at my house/work the day the street date is released.

These stores really need to step it up if they want to compete with online.

[aztec92154]

Amazon.com stuff isn't tax free. Amazon prime is not free. Amazon returns have restocking fee's.

- When you do your taxes, there is a box (people ignore) where you're supposed report this purchase.
- Amazon Prime => $79 per year, which isn't free
- Both Amazon.com and Amazon Market Place Sellers can charge a restocking fee and shipping for returned items. For example, "Computers purchased from Amazon.com which have been opened are subject to a 15% restocking fee to be deducted from the total amount the customer is refunded". Costco is an example of a brick and mortar store that doesn't charge restocking fee's. I'd call Costco's return policy a dream.
-

[Don Key]

-Like you stated yourself "people ignore" and they do. I've never, ever been charged tax by Amazon.com

-Amazon Prime is not free but the vast majority of items shipped from Amazon are eligible for free shipping without prime

-I've NEVER been charged a restocking fee on a damaged item and I've been buying from them for years. I'm always shipped a replacement the second I report the item. I even bought a set of nail clippers for my pet and returned them when my dog was afraid of the noise and there was no restocking fee.

Amazon is the best. Recently I went to a Borders books on my lunch and saw the Watchmen book there for $40. So I got back to my desk at work, ordered the book for $26.37 ($13.50 off) with no tax, and the very next day it was sitting on my work desk. You really can't beat this over brick and mortar.

[youtim]

Amazon is going to start collecting tax in states as more states pass the "Amazon Tax" that New York just passed.

[bdaughtry]

>> In order to do that, Best Buy needs to capitalize on what it does best: customer service.

Don, are you on drugs? You can not use the term "customer service" and Best Buy in the same sentence. Circuit City went out of business simply because they were MORE inept than Best Buy.....not because Best Buy has better customer service. Period.

When I make a retail purchase, I too bought more often from Best Buy. But, the reason was they actually had what I needed at the moment. But, I only buy from them when I can not find it any where else. If I have the time, I order from Newegg or other sources. But, if I need something now (like when my wireless router died), Best Buy was my last choice. They are pathetic when it comes to customer service. They're just less pathetic than some others.

[onebluephish]

Best Buy's customer service sucks-there have been too many times over the past 10 years where I've walked into a location only to have to look around forever to get help with something. Oh, and they also screwed me over by telling me my finance plan for my tv was 2 years same as cash with no payments until 2010. Yeah, learned the hard way by dealing with HSBC.......which I will never finance another thing through again. EVER.

[josh81]

While far from perfect, I think that BestBuy as a whole does a pretty good job in both service and pricing. Sure, there are some clueless idiots that work there (as there are anywhere, at any type of store), but there are plenty of folks who work there who do a great job. I am very tech-saavy myself, but when I recently bought my HP Mini at BestBuy, the associate that helped me was very knowledgeable and was able to answer some questions about the specific model that they carried, and was even able to tell me about the included memory stick and the RAM upgradeability (HP says its a 1GB max, but the BB assoc. knew they could take 2GB - I've tried and it can). Also, when the price was reduced by $50 the next week, a BB CSR on the phone was able to refund me the difference, even though I couldn't come in to the store (I live 2 hours away from the nearest BestBuy).

Now, don't get me wrong - I've dealt with plenty of boneheads at BestBuy, too. But they're not ALL bad... you just have to look around a bit sometimes. And if you get a bonehead, talk to someone else. I buy lots of stuff from BestBuy - their prices are usually pretty good and they're usually willing to match, but the kicker for me is interest-free financing. It's always at least 90 days, usually six months, and often up to 3 years. That sure helps make a big purchase easier.

[onebluephish]

I faced the same quandry when I found a really good price for my brand new Samsung tv on Amazon.com listed 1k cheaper and with free shipping compared to Best Buy's. All you need to do is print off the price where they double check it and then match it once confirmed.

You are also leaving out the fact that Target, Wal Mart and other existing retailers will pick up the slack (or competition) Circuit City left against Best Buy. The game is far from over.

[upsman92]

This article is spot on. My local Best Buy does not match online retailers. I will browse Best Buy, search my iPhone for a better price and ask the salesman for a price match. The last thing I did this with was a Slingbox. I ordered it from Amazon shipped it 2nd day air and it was still 50 bucks cheaper. Best Buy is not going to last.

[paulimusmaximus]

Best Buy may not last, but it will be around for a long time. You're forgetting that many people, especially the older generation still don't like to buy big, or expensive items online. I personally buy about 70-80% of my electronics online simply because it is so much cheaper. But when my parents, or other family members are planning on purchasing, I will show them how much cheaper they can get the items online, but they always say they are concerned about things like TV's getting broken in shipping, or just a general fear of not being able to return the item easily if it is broken. Also, Best Buy always seems to have deals with their credit card like no interest for 18 months, which you don't really see online, and occasionally will give you free geek squad set up and delivery of higher priced tv's or audio systems.

[polaris13]

Best buy is expensive more so than circuit city was. and as for guidance thats a laugh. The average best buy floor person is a pimple faced teenager that knows next to nothing about what they're selling. the average well informed consumer (i.e. cnet readers) know much more about their planned purchase than any best buy employee.

I will use best buy for the "look & feel" of my planned purchase and order online. There are only a few items I wouldn't buy online such as an HDTV. I don't want amazon shipping me a $1500 tv. If there is a problem I dont want to rebox and ship back. But aside from that I would purchase any other electronic item from amazon, buy.com or newegg

[MongooseProXC]

Best Buy is garbage, plain and simple. Buying a computer there is like purchasing a new car. They sold me for the undercarriage coating and everything!. By the way, how much does a HDMI cable go for nowadays?

[youtim]

Your article is confusing on one point. Why did you cross shop Best Buy and Circuit City for the past 5 years without bringing in Amazon? If you were just after the lowest price you would have already been asking for Best Buy or Circuit to match those prices. Now that Circuit is gone all of a sudden Amazon is an option?

I have no problem with customers price shopping and it is free to browse a store and then go home an order but if you played that out to the Nth degree eventually we will be back to the age of the Sear's Catalog. You can look but you can't touch and you have to wait until its delivered. All of the brick and mortar stores will close and where would that put us?

Either you value being able to purchase on the spot, get some advice or help finding what is right for you or you don't. But prices should reflect the entire package that is being delivered not just the cost of the product.

[ccmike72]

Customer service is in general in a permanent decline due to the removal of experienced sales persons via a live able wage and brick and mortar stores confronting online retail. Stores cut wages and axed commission to cut costs and the availability of information on the internet creates less demand fro knowledgeable sales people. I was never a of best buy's customer service when i was a consumer or when i worked for CC, but they stand alone in electronics retail. Yes Walmart is after some market share and target as well. Walmart has to do a lot to get me to step into a store where i know i will find now help, face long slow lines, generally a bunch of unorganized junk. Target is marginally better with prices that can't compare and poor selection.

CC failed due to bad management and their late push into the very profitable services area. Its also failed largley due to the credit crises making it impossible for their weak company to get credit and hence product.

Best Buy will be a solid business for a while as they have step stroingly into services with geek squad comp services and in home installations of home theater. Also their is a huge portion of the public who primarily buy in person at brick and mortar locations. However, as time passes the online retailers along with time and younger consumers will chip away at this group and slowly convert the market to a more internet based shopping. In order to stay relevant long term Best Buy must find a way to keep the high ground whether its creating a more liberal price matching policy, making a more competitive online push, or another solution all together.

[blaeric84]

My comment is more of a question, if Bestbuy fall where do you get quality answer for your products

[johannon]

While I agree with most of this article in principle, there are some major reasons that Best Buy will continue to win most of my business regardless of any effects Circuit City closing down may have. First of all, the service plans at Best Buy are awesome. There's no way Amazon, or any other "deep discount" online store, is going to offer me a plan that will replace or fix free of charge, my laptop, or camera/camcorder if it is accidentally damaged...ie. dropped or spilled drink. Even though this is a further expense added to an already higher price, I have to ask myself if that relatively small online savings is worth me having a product only protected by a short term extremely limited manufacturers warranty. Even in the rare event you can buy an online plan somewhat resembling the Best Buy plans, they're just going to hire some "cheapest bid" contractor to help you out if you have a product failure instead of you dealing with the store in person with people you can trust. To me, its a no brainer, and I've never had anyone present an argument otherwise that would change my mind. Second, dealing with online purchases, especially if you need to return a product, is a daunting process in my opinion and potentially expensive if shipping charges come into play. Lastly, especially in our current economy, paying in cash is one of the best financial moves a person can make and, last time I checked, there isn't box to check for cash payments on your online checkout screen. Yes you could go purchase a prepaid credit card but that's just more hassle and with additional charges as well. I'm sure many people reading this would argue different points based on their opinions but, that's just their opinion and it wouldn't change my mind anyway. In my opinion, your money is best spent in a "brick and mortar" store where you can deal in person and have the option to purchase service plans, not extended warranties(they're very different), on your products. In conclusion, depending on the product and significance of savings, I do occasionally make online electronics purchases, but this is usually because it's something I can't find anywhere else. I also do the opposite of the above....I "shop" online, getting product details and specs. that are hard to get at the store, then I go to the store to check it out in person and make my purchase.