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Best Buy

The End of the Big Box Store?

CBC has a story on the changing landscape that Best Buy and Future Shop is facing today

Brick-and-mortar outlets “have become less relevant,” he said, and as a result “the handwriting’s on the wall” when it comes to selling electronics in a big-box format.

Another factor is that electronics are being “downsized” as technology advances, making it less necessary to maintain huge stores, and cheaper for retailers to sell goods online and ship them to customers, Williams said.

While a big box is good for things like television, there really isn’t an advantage when it comes to other items.  The Source is every bit as compitive on a lot of items.  Even today I went to Best Buy and then actually found what I was looking for at The Source for a lower price.  That happens quite a bit.  It’s especially a big deal with The Source having locations all over the city.  I often find it really easy to wander in and find what I am looking for on a break or while I am out and about.

The other issue is especially with Apple products is that I can buy direct from Apple and if it is over $50, I get free shipping and I don’t have to pay tax.  I am looking at replacing my iPod with a new iPod Nano and it’s cheaper to buy direct from Apple than it is from anywhere in the city.  The same thing when I buy from MEC.  Expect others like Microsoft and even brands like Dr. Dre to do the same thing.  Even if they don’t, shopping from Amazon is so easy and with Amazon’s low margins, it’s almost the same thing for an established brand.

In the end the big box stores use the format to compete on price and if they can’t compete on price, they bring very little else to the table (unless they can create an in-store experience like Cabelas) As online retail continues to grow, look for smaller stores with better customer service, and easy access to make a comeback.  It isn’t just electronics.  Stores like Rona are asking the same questions about how easy is it to compete with Home Depot and Lowes on a large scale when they may have the supply chain efficiencies and infrastructure to do it.

The other part of the retail discussion is Sears laying off 700 people in Canada.  I wasn’t surprised.  Several times I have been the only customer I could see in a Sears store and when I walk through it I have to dodge rack after rack of discounted goods.  While The Bay has rallied around the voice and leadership of Bonnie Brooks, Sears seems to just be drifting with empty stores, an aging demographic, and no real leadership.  I can’t see them being around in five years time.