Brick and mortar will face some tough hurdles ahead
Anything that can be shipped economically will be shopped online. I see it with certain types of smaller furniture pieces, particularly imported stuff that's knocked down.
Customers walk in with printouts from websites. Selling that is all about price. BBY is facing the same trouble.
Same is true for 1/2 the stores in malls.
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DJ HEARD ON THE STREET: Best Buy Faces Better Buys
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By John Jannarone
A DOW JONES COLUMN
With fierce corporate rivalries, a competitor's bankruptcy represents the ultimate triumph. Or does it?
It took years for Best Buy to overtake Circuit City, once the dominant specialty electronics chain but now bust. Bed Bath & Beyond snagged many shoppers from bankrupt rival Linens 'N Things, so it might seem logical for Best Buy to benefit as well.
But before its demise Circuit City may have already been pushing shoppers into Best Buy's arms. Unlike Bed Bath & Beyond's products, electronics are usually expensive enough that consumers want to shop around.
With Circuit City and Best Buy often operating in nearby locations, shoppers could compare prices easily. Without Circuit City, many shoppers need to venture online.
Take televisions. Amazon, which often undercuts Best Buy's prices, gained 2.5 percentage points of market share for flat panels in the first quarter, compared with a year earlier. Meanwhile, Best Buy lost 0.7 percentage points, according to TraQline. Second-quarter data will be issued Tuesday. Amazon's latest quarterly results are due Thursday.
Recent data suggest the bleeding has continued. Sales at electronics and appliance stores including Best Buy fell 12.1% in the second quarter, according to the Census Bureau, sharper than retail sales' overall decline of 9.6%. For Best Buy, virtual challengers look likely to be harder to snuff out.
(John Jannarone is a reporter for Heard on The Street. He most recently was a reporter covering capital markets in Singapore. He can be reached at 212-416-4261 or by email at john.jannarone@wsj.com)
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(END) Dow Jones Newswires
July 20, 2009 16:13 ET (20:13 GMT)
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