The Future of 'Big Box' Retailers

I started at Best Buy as a seasonal digital camera sales rep in 2002 and ended as an agent of the Geek Squad in 2010, just shy of eight full years. Among the many, many things I learned about retail, technology, people, customers and business, the one question I constantly asked myself (and still do to this day), is how much longer can outfits like these survive?

In our morning meetings, we often heard the latest reports about what our competitors were doing and how we were supposed to respond to changes in the market and I remember a specific statement that was said about Walmart. It was along the lines of ‘People are using [Best Buy] as a means to get informed and then taking this knowledge to Walmart to get the better price.’ What struck me more about this than its truth was that I was also doing that very thing! The difference for me, however was that I was spending my money online. What made me think about all this was I happened across an article about the future of Best Buy and in it, Don Reisinger said:

“For people, like me, getting more comfortable with online purchasing, I simply don’t know what would stop me from using Best Buy as a research center. I can go to the store, check out a new camcorder or surround sound system and then decide if it’s something I want. If it is, I’ll ask the manager if they can match Amazon’s deeply discounted price. If he can, I’ll buy it at Best Buy. If not, I’ll go home and order it online.”

The answer to the implied question is the only thing that would stop someone from doing that would be a price match. I doubt even great customer service can save them in the end.

Online Shopping

So what makes people shop in a store rather than shopping online for the convenience and cost-savings? The short answer might be trust. I think we still have a large group of people (mostly in the older generations) that don’t have a full grasp of the concept of the Internet and people are naturally fearful of what they don’t understand. You mix this in with the horror stories of online identity theft, items that ship broken or bad eBay experiences and you get a recipe for disaster.

In my opinion, it’s actually safer/more economical/better to shop online! There…I said it! Let me explain why I believe this:

  1. Credit Cards: Shopping online requires the use of electronic payments and therefore you’re not lugging around a wad of cash or an antiquated checkbook into a store that can target you for theft (or loss).
  2. Fraud protection: Check with your credit card company…I can promise you that if you use your credit card online and there is even the slightest hint of fraud, you will get your money back.
  3. Price: No or low overhead (stores, sales people, etc.) equals lower prices.
  4. Co2 footprint: Reduce your carbon emissions by not driving to the store and sitting in traffic.
  5. Convenience: Patience is a virtue and even though you have to wait for your items to arrive, the added bonus of being able to use your iPhone to make a purchase while you’re waiting for your kids to get out of school is much better.
  6. Availability: Sometimes online shops do go out of stock, but not nearly as often as a regular store.
  7. Selection: Try walking into Best Buy and choosing from over 13,000,000 songs like you can on iTunes.

Above all, the deciding factor for me is simply price. It’s very hard to find a product in a store that can’t be found online for less. Plus, online, you sometimes have the option of buying overstock models, discontinued items, lightly used items and refurbished products–all of which can knock off lots of dollars. In my case, I worked at Best Buy and they give all their employees an employee discount. In case you were wondering how much, it’s cost plus 5%. This equates to whatever the cost Best Buy paid for the item and an additional 5%. Anyone who knows retail knows that low margin items such as computers, anything made by Apple, music cds and older DVDs don’t give you much of a discount where as higher margin items like printer and video cables, accessories and some software can range dramatically.

Interestingly enough, I found that my discount actually cost more than some items online! In other cases, if something was on sale (like a new DVD release), I would end up spending more if I processed the transaction with my employee number!!

Anyway, having a brick and mortar store is nice because if offers these advantages:

  • Physical product you can touch and play with or test out.
  • Live human beings you can talk to and ask questions or hear opinions.
  • A real shopping cart you can stand on and fly down the aisles.
  • Instant delivery of product.

If all those matter to you, maybe shopping at an actual store is your style or maybe you just like to use a store to do research and then take your money elsewhere to get a better price like the rest of us! At any rate, I’m not proposing that Best Buy simply shut down and disappear, but I do think there’s something to be said about the convenience and selection of stores like Amazon.com.

In fact, their new slogan is, “Earth’s largest selection.”

2 thoughts on “The Future of 'Big Box' Retailers

  1. Sometimes people are intimidated by the fact that they are going to pay some site on a computer and when they click on send, they really do not know what will happen next. Did they buy it? Will it never come and I will still be billed for it. There are many questions why a person would rather buy in a store.
    Another big reason is that the web is relatively new and older people are used to going in a store, paying for an item and immediately getting that item.
    I have tried to make online shopping a little easier. I have a setup with Amazon that is real easy to follow and takes some of the red tape out of shopping, Check me out at meggazon.com. You will have to copy and paste it into your browser. Thank you…hope you visit me. Al

    1. I understand how the older population can get confused with how things work, but I could never relate. Maybe I'm biased because I come from this generation where doing things online is not so scary, but I still can't imagine someone doubting so much the processes of online stores that they actually won't end up using them. It's an interesting point though.

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