An Investment Of Best Buy

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An investment in Best Buy would be a complicated decision. Although Best Buy’s shares have historically declined due to increased e-commerce competition and poor holiday sales, we believe that this presents an unprecedented buying opportunity. The current trend within the electronic retailing industry makes Best Buy’s current capabilities and resources ever more relevant in developing a competitive advantage. We believe that Best Buy has the following resources and capabilities that could be further developed to become sources for competitive advantage: customer services, Best Buy Mobile, international presence, and private label. As technology advances, the electronic retailing environment is trending towards more…show more content…
Due to shift of consumer preference, online retails, such as Amazon is gaining considerable market share while retailers such as Best Buy are constantly losing sales. In addition, competitors such as Walmart and Target are forcing Best Buy to cut prices, which is lowering Best Buy’s profit margins.

. Best Buy is currently underperforming due to factors such as lagging retail sales, increasing e-commerce activity, low margins, and poor holiday sales. For retail sales, for the past two years, sales have a decreased at a rate of 7.1% in 2012 and 13.1% in 2013. In addition, in 2014, the expected retail sales decrease is 1.9%. Further, operating income for Best Buy dropped 41.0% in 2012 and 28.7% in 2013. However, Best Buy’s operating income is expected to increase 19% in 2014, according to analyst’s estimates1. Against competitors, Best Buy is not at a competitive disadvantage because the entire retail industry is being affected as a whole. Best Buy has been forced to lower prices in an effort to keep up with more discount retailers such as Walmart, Target, and Amazon. With the increasing popularity of mobile phones and Internet activity it has become increasingly commonplace to price compare, even while in a Best Buy store. Best Buy has recently implemented a plan where they will price match any product from local
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