Best Buy Had a BAD Christmas Season in 2013

by Lee Hernly, Editor
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Best Buy closed a bunch of big box stores back in 2012 including one of the Alexandria, Virginia stores.

My last time I was at Best Buy, I went to find a DVD and they didn’t have it. The clerk referred me to the website. What will the results from this past Christmas bring?

Via Bloomberg

Best Buy’s shares plunged this morning on news of its brutal holiday season. Yet Chief Executive Officer Hubert Joly says he’s going to continue the cost-cutting strategies that helped margins last year.

As I say, this is understandable, but ultimately, it’s hard to see how endless cost-cutting is going to keep Best Buy in business. It’s never going to get down to Amazon’s cost structure — especially because Amazon has other businesses, such as the third-party marketplace and its cloud computing services, that could be tapped for revenue to see the consumer electronics side through a price war. As I argued in a 2012 Newsweek feature, Best Buy is more likely to succeed by focusing on the areas that Amazon can’t match, such as top-notch service and carefully curated stock.

To be fair, that’s not an easy strategy to carry off. Getting the internal support to try would be hellishly difficult; a lot of jobs would be significantly changed, or eliminated, in the switchover. Then there are the stores to think about: A high-service, curated collection probably implies a very different retail format than the “giant box” stores Best Buy currently occupies. Unfortunately, Best Buy still has years to run on a lot of leases for giant boxes.

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