Why Does Best Buy Sell $1,000 Refrigerators?

By Douglas A. McIntyre Updated Jan 13, 4:25AM EST · Published Aug 21, 9:13AM EDT

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Why Does Best Buy Sell $1,000 Refrigerators? — © Michael Rivera / Wikimedia Commons

Best Buy is supposed to be a consumer electronics store. Its shelves and bestbuy.com are supposed to be filled with PCs, video games, cell phones, cameras, and home theaters. However, it also sells appliances, which makes it an odd but direct competitor to places like Kmart

Best Buy’s own description of itself would seem to rule out refrigerators and dishwashers:

Best Buy is a leading provider of technology products, services and solutions. The company offers expert service at an unbeatable price more than 1.5 billion times a year to the consumers, small business owners and educators who visit our stores, engage with Geek Squad Agents or use BestBuy.com or the Best Buy app. The company has operations in the U.S. where more than 70 percent of the population lives within 15 minutes of a Best Buy store, as well as in Canada and Mexico, where Best Buy has a physical and online presence.

But, there the appliances are–Samsung – 24.5 Cu. Ft. Side-by-Side Refrigerator with Thru-the-Door Ice and Water – Stainless Steel for $1,094.99. That is a $250 savings. Or Whirlpool – 24″ Tall Tub Built-In Dishwasher with Stainless Steel Tub – Monochromatic Stainless Steel for $699.99. Free delivery. Financing plans

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One can only guess why Best Buy is in the appliance business.The first reason might be that appliances have extremely large margins. The other is that Best Buy wants to be a more complete retailer beyond racks of smartphones. Why go to Sears at all?

One of the troubles that bricks and mortar retailers have is balancing what inventory they will have in stores. Floor space is precious. Training sales people on the benefits of new product types in not cheap. Shipping and installing huge appliances is nearly a business unto itself

Go to Best Buy, and get a dishwasher. The deals may be great, but why?

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.