Best Buy Trimming Stores And Corporate Staff, Hoping To Cut Prices
RICHFIELD, Minn. (WCCO) – Outside Best Buy’s corporate headquarters store in Richfield, you can already see the signs of change: a banner hanging on the wall tells customers to expect something new in the months ahead.
The Richfield store and a location in San Antonio, Texas, will be used as trial locations for something the company calls “the connected store.” It’s Best Buy’s idea of a new way to sell electronics.
To customers like John Meier, who bought an Apple Mac Book at the Richfield store Thursday, the new test market store sounds a bit like the experience in an Apple store.
“I think it’s a good idea to try and meet what the current trends are,” Meier said. “It makes sense to me.”
Last year, Best Buy lost $ 1.2 billion on sales that declined 1.7 percent. Pressure is on company executives to stem the losses and falling stock price and turn the ship around. The company has announced plans to close 50 stores in the U.S. and cut corporate and support staff by 400 positions.
Closing big box stores and cutting corporate jobs will save Best Buy an estimated $800 million over the next three years. Part of that savings will be used to lower product prices in hopes of attracting cost-conscious shoppers who are being lost to places like Amazon, Wal-Mart, Costco and Target.
George John, a professor at the University of Minnesota’s Carlson School of Marketing, said he’s not surprised by the moves Best Buy is making.
John says the past 10 years in the electronics business were largely dominated by big screens TV’s and smart phones. But with demand leveling off and competition intense, Best Buy’s challenge is to find new ways to attract customers.
The company plans on doing that by opening 100 more of the smaller format Best Buy Mobile stores and concentrating on the digital transformation efforts.
“Our tastes change, and what we want to buy changes, the nature of competition changes,” John said. “Everything changes more rapidly in retailing than in any other industry.”
Best Buy announced Thursday night that of the 50 stores it will close, five of them are in Minnesota. They include the locations in Edina, Rogers, Brooklyn Center, Hutchinson and Lakeville.