Retail
Is Best Buy Making an Offer That Consumers Can't Refuse?
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Thanksgiving weekend shoppers, especially online shoppers, had their eyes squarely on deals for virtually all kinds of consumer electronics gear. And according to IBM’s Watson Trend website, the most talked about products were Samsung TVs, followed by Apple Watch, Sony TVs, and Beats by Dre headphones, also from Apple Inc. (NASDAQ: AAPL).
Where can you buy all this stuff? Lots of places, but one store that needs to get more than its fair share of consumer electronics sales is Best Buy Co. Inc. (NYSE: BBY). In a nutshell, the company’s third quarter sales were saved by appliances and big-screen TVs. Sales of smartphones, game controllers, and tables were weak and the company made some serious bargain offers on those items during the Black Friday shopping extravaganza.
Best Buy has said it expects revenue to decline in the low-single-digit range in the fourth quarter, with profit margins taking a hit of 25 to 45 basis points across the enterprise. Selling big-screen TVs at low prices that are not distinctive is not likely to overcome the projected weakness.
For example, Best Buy stores are selling 55-inch Samsung 2160p 4K Smart HDTVs for $1,000, a savings of $600 over the regular price. That’s a very good deal, but certainly not unique to Best Buy. Sears and Abt are selling the same TV for the same price.
Wal-Mart Stores Inc. (NYSE: WMT) advertises a Samsung 60-inch 2160p 4K HDTV for just under $900, a savings of about $800 off the regular price. Sears, Fry’s, and ABT are all selling the same TV for within $2 of Walmart’s price.
Can Cyber Monday help? By most accounts, online shopping has been the big winner this past weekend. Store traffic reports, though anecdotal, have been unenthusiastic. Can online sales make up the difference? Probably not for Best Buy and probably not for other brick-and-mortar retailers either.
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