Last week, I traded some tweets with a friend that was looking for some advice prior to buying a new laptop. Instead of just saying, “Buy a Mac! They’re the best!” like everyone told me when I asked for laptop advice (for the record, I bought a Sony VAIO. No regrets. YOLO, right?), I suggested that she check out The Wirecutter’s best laptop research.
The next day I asked what computer she decided on and if she had made the purchase. She tweeted back that she had read the research, decided on a model and went down to the store to make the purchase. She was a consumer, cash-in-hand, excited, ready, and able to buy.
Except, it didn’t work out that way.
“I went in two stores (Best Buy and Office Depot) prepared to spend $1,000 and couldn't get any help. Everyone was busy. I went to the register and asked if they had it in stock, and they said ‘Yeah, go see that guy there.’ And he was the one I had already been waiting for. Still busy. So I just left. She said, ‘Did you find him?’ and I said, ‘Yeah, but he's busy,’ and just left. I mean, if he'd looked at me and said, ‘I'll be right with you,’ it would have made a difference. But I got totally ignored. I prefer Amazon anyway, so I just ordered it from Amazon. Should be here tomorrow. And I got a 3-year damage protection plan and a case too. I should walk in there with my Amazon box tomorrow and go, ‘Big mistake. BIG. HUGE. I have to shop now.’ I was so mad.”
In a nutshell, thisis why brick-and-mortar stores are going out of business. People are coming in with money in hand, ready to buy, and they are not getting the level of service they expect to receive. And instead of closing a slam-dunk deal that should have been a positive experience all around, they turned the interaction into a customer that left enraged.
The end result is these stores have perpetuated the modern shopping alternative: a human-less interaction now frequently seen as preferable, because an Amazon server is always there, ready and happy to take your money and complete your order.
The market consensus is also not good. Disappointing stock price, falling earnings, increased competition from "showrooming" all adds up to this Businessweek article from October of last year:"Best Buy is in trouble. In March it posted a $1.7 billion quarterly loss. Same-store sales comparisons have been declining, and a Bloomberg analysis suggests revenue will fall this year."
And while I have ragged on Best Buy in the past, I’m going to take what might be a slightly controversial position and say that, as much as we all might like to make fun of and deride them, it is actually in all our best interests that this Big Box retailer stays in business.
Here are 6 reasons why…
Boats Rise on the Tide
Having a competitor in town helps raise awareness of home electronics in general and what we do specifically. Admittedly, Best Buy is not really a direct competitor to most of us, but having them in town definitely encourages in-store shopping and exploring options, raising the overall awareness of audio/video technology, or installation services with Geek Squad. People that shop brick-and-mortar stores like Best Buy often want to see what other options exist, especially what exists that is better, and this frequently leads them to us. The fact is that if Best Buy were to go out of business, instead of sending more people to your store, it would likely just send more people to the internet
TV Margins Suck
Let’s be honest; when it comes to selling TVs, Best Buy has become our azazel. Unfamiliar with that term? Indulge me in a bit of Wikipedia for a moment…
“In modern usage a scapegoat is an individual, group, or country singled out for unmerited negative treatment or blame. A whipping boy, ‘fall guy’ or ‘patsy’ is a form of scapegoat. Scapegoat derives from the common English translation of the Hebrew term azazel which occurs in Leviticus 16:8. In ancient Greece a cripple or beggar or criminal (the pharmakos) was cast out of the community, either in response to a natural disaster (such as a plague, famine or an invasion) or in response to a calendrical crisis (such as the end of the year). In the Bible, the scapegoat was a goat that was la-aza'zeyl to be outcast in the desert as part of the ceremonies of the Day of Atonement, that began during the Exodus with the original Tabernacle and continued through the times of the temples in Jerusalem.”
Whether Best Buy brought it on themselves or not, we are now faced with a marketplace where selling TVs is often unprofitable, and Best Buy has become the industry azazel. How often do you quote a TV where you would actually lose money if you sold it near the prevailing price? Is it the consumer’s fault that we would actually lose money after shipping costs? No. But it doesn’t stop them from wanting that 46-inch set. So instead of abandoning them, what do we do? We say, “Just go up to Best Buy and buy it, and we’ll install it for you.”
The no-margin TV genie is out of the bottle, and the competition is so fierce, the pricing likely wouldn’t be resolved just by Best Buy leaving the picture. You would still have Costco, Wal-Mart, Sam’s, HH Gregg and others just waiting to step in to fill the void. The days of profitable video are over whether Best Buy is here or not.
Great for Local Pick-Up
Did you know that Best Buy has a “for business” division that will sell you things at a lower price and tax free? Yup. At first, every time I bought something from them it felt a bit like sleeping with the enemy. Sure, I made money from it, but I felt dirty in the morning. But after a while it became clear that working with Best Buy could actually help my business. Whether it's a TV sale that we make a couple of bucks on, or a last-minute pick up to help out in a pinch (like a commercial job where something arrived DOA or one of those “if it can’t be done by tomorrow then forget it!” deals) a local Best Buy store can be a great resource for solving an inventory dilemma.
No matter how big your store, there is no way that it can compete with Best Buy’s massive real estate, inventory, and the number of items on display. For example, we’re a Samsung SVP (Samsung Valued Partner) dealer, and yet we only have three Samsung sets on display. While this gives a representative sample of different models, this is a fraction of the number of sets that Samsung offers. Also, the total number of TVs that we stock in inventory for pick-up on any given day is zero. For the customer that wants to lay eyes on a specific model, Best Buy provides a great opportunity. If Best Buy disappears, then the chances for customers to see/compare certain models in person will likely disappear.
Currently 4K sets are expensive — do you have one on display? I know we don't, because investing $25,000 in a first-gen model is too much capital for many of us to invest. But you know who always steps up to display the latest tech, no matter the cost? That's right. When a new technology hits the scene, Best Buy usually goes all in to display it. This brings awareness to the marketplace, letting people experience the latest digital magic first-hand. And if someone is actually in the market for a $25k set, do you think maybe they are also interested in other tech? The kinds of things like high-performance audio and automation that Best Buy doesn't offer?
Makes Us Look Expert
How do you know when someone is an expert? You talk to some other people, gather a little bit of knowledge on your own, and then very quickly the real expert becomes apparent. An expert has a wealth of knowledge that they share in a way that is both honest and educational but not overwhelming or phony. When you’re the only kid in class, it can be tough to shine. How can people compare their encounter with you when there is no one else? It’s when you’re compared to others that it’s easy for the cream to rise to the top and for your expertise to become apparent.
We’ve all heard stories from customers of the, um, “tall tales” that they’ve heard at Best Buy. Things like the gas leaks out of plasma TVs and needs to be recharged. Or that 240 Hertz TVs need special cables in order to work. Or the shady practices that have been used to sell video calibrations. The client that visits a Best Buy “blue shirt” and then comes to your store is often blown away by the difference. Not only do they frequently end up purchasing from you, but they often share their experience with friends and family, becoming an advocate for your business.
What do you think? Will you dance on Best Buy’s grave, or will you mourn their passing?
John Sciacca is principal of Custom Theater and Audio in Myrtle Beach, SC.