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Larry Downes wrote a story for Forbes.com in which he opines that Best Buy is slowly running itself out of business:
Electronics retailer Best Buy is headed for the exits. I can't say when exactly, but my guess is that it's only a matter of time, maybe a few more years.
Consider a few key metrics. Despite the disappearance of competitors including Circuit City, the company is losing market share. Its last earnings announcement disappointed investors. In 2011, the company’s stock has lost 40% of its value. Forward P/E is a mere 6.23 (industry average is 10.20). Its market cap down to less than $9 billion. Its average analyst rating, according to The Street.com, is a B-.Those are just some of the numbers, and they don't look good. They bear out a prediction in March from the Wall Street Journal's Heard on the Street column, which forecast "the worst is yet to come" for Best Buy investors.
Click the Read link below to view the full article, which goes through many convincing justifications for his position. It's well worth reading. It's enough to make an executive at Amazon.com smile with pride more than just a little.
While it almost seems as though Best Buy is "too big to fail," it's not all that unrealistic when you really think about it. Retail stores have been hurting for years, and recent history is littered with road kill of other big-name retailers that couldn't make it. Just recently, retailing giant Sears/KMart made headlines because of announcements about store closures and concerns about wholesale collapse.
Personal experience can be the best indicator of all, even if it is anecdotal. The problem comes in when a negative personal experience is repeated and people start sharing horror stories, and getting an overall negative impression of the company.
At a time when "buy local" is a catch-phrase that could be leveraged, retail stores that can't figure out how to serve their customers well will indeed run the risk of becoming the next flattened carcass on the road. In business, there's always someone out there that is willing to eat your lunch if you're not paying attention. I would love for Best Buy, and Sears for that matter, to figure it out before it's too late.
What do you think?
What have your experiences been with big box retailers like Best Buy and Sears? Do you buy from Amazon even if your local Best Buy has the same product for the same price? Ever been burned by the retailer's web site that made a promise that the local store couldn't keep?
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