Problems of Best Buy

2538 WordsOct 29, 200811 Pages
Overview: Best Buy Co. is a specialty retailer of consumer electronics, entertainment software, home office products, appliances and related services. The company operates both in the domestic and the international segment. Its domestic segment consists of all Best Buy stores and online operations within the United States, including the brand names: Best Buy, Geek Squad, Magnolia Audio Video, Pacific Sales Kitchen and Bath Centers and Speakeasy. Its international business covers Canada and most recently China. With only 42 years of existence, the company has come a long way since Richard M. Schulze and business partner James Wheeler decided to open an audio specialty store called Sound of Music. Only 4 years later they had reached…show more content…
It broadened its offerings under the Best Buy for Business umbrella, hiring full-time consultants to sell and help install and repair technology for small businesses. Hot Crisis: 2007-present With electronics chains CompUSA and Circuit City already struggling even before the brunt of the economic slowdown, larger retailers such as Wal-Mart and Target saw an opportunity to grab a piece of the lucrative electronics business. Wal-Mart, for example, greatly expanded its selection of high definition televisions and home theater systems. This not only threatens Best Buy’s market share, but applies some price pressure to Best Buy’s high-margin items. This seems to be a textbook example of why a market leader cannot sit on its laurels even when it appears to be the dominant player. Now that other tough competition has entered, Best Buy relies on its unique customer service features to continue to bring in shoppers. As the U.S. economy has slowed, bringing consumer spending down with it, nearly every retailer has felt some pain. Best Buy has managed this crisis better than its most similar competitors, considering that the slowdown all but killed Circuit City and CompUSA. Nevertheless, Best Buy’s stock fell 16% from December 2007 to February 2008, and has fallen another 12% since then, while low-cost retail leaders such as Wal-Mart have benefited as consumers seek out the lowest possible price for everyday necessities. Best Buy’s
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