Will Best Buy follow Circuit City into oblivion now that they’re poised to close a fair number of stores?
When Circuit City bit the dust, retail analysts went into overdrive predicting that Best Buy would become the unchallenged king of the hill in the world of electronics retailing.
But then WalMart started expanding its electronics departments, and both Costco and Sam’s both started selling a greater amount of electronics. Not to mention the competition Best Buy faced from the online sellers.
In fact, retailing is in such turmoil because of Internet shopping. In particular, Best Buy is facing the showroom shopper challenge.
Showrooming is the name for what people do when they go to a retailer, browse around and find something they like. Then they take out their smart phone, take a picture of the barcode and, using any of a variety of apps, get instant price comparisons from other nearby retailers.
More likely than not, they buy that item online or maybe at a competitor. It’s a huge problem for traditional retailers that have to paying rent, pay employees and pay for inventory.
Exclusive lines represent the future of retailing
Now that Best Buy has announced they’re shutting down stores, they’ve got to reassess how to connect with the customer. In the past, they tried private labels, with a high-end label called Insignia and a low-end label called Dynex. But that hasn’t worked.
So what you’re going to see in retailing across the board is an effort to move a step beyond private labels. You’ll see more tie-ins with brand name people and designers, much like Target has done with designer Isaac Mizrahi. Meanwhile, Sears is now doing a tie-in with the Kardashians for clothing and bathing suits.
That’s the future of retailing. Creating something unique that’s tied to somebody’s name that you can’t get anywhere else. Best Buy hasn’t figured out how to do that yet. But they’re smart and willing adapt. And they’re not going to follow Circuit City into oblivion!