Consumer electronics is driven by mobile devices retailed by manufacturers like Apple, telecommunications companies like Verizon and AT&T or traditional retailers such as Best Buy and AVB Brandsource.
Smartphone sales are slowing, however, as consumers hang on to old devices rather than trading in for the latest model. What isn’t happening is “the next big thing.” One nominee was virtual reality, which was supposed to jump-start when Sony introduced its first VR system last fall.
Best Buy jumped on the bandwagon, opening 500 Oculus VR demo stations departments in its stores, but the boom failed to materialize. In May, Oculus closed its VR film story studio.
The lack of hot sellers in the category has taken its toll in the form of hhgregg’s bankruptcy in March. Best Buy has also been challenged by the lack of exciting new products. The company has let three top marketing executives go and merged the remaining personnel and functions with the merchandising team.
Best Buy has been down this road before as online retailers pushed into consumer electronics with aggressive pricing. It has survived by exploiting the phenomenon of showrooming.
“Best Buy’s done a good job of reinventing itself,” says David Schick, an analyst with Consumer Edge Research. It could benefit to some extent from the demise of hhgregg as well as the failure of Radio Shack to avoid bankruptcy for a second time. Analysts estimate Best Buy could capture between $300 and $350 million in sales that would have gone to its erstwhile rivals. After finishing its last fiscal year on an up note, Best Buy plans to intensify omnichannel strategies this year as well as enhance services and accelerate growth in Mexico and Canada.
Source: Kantar Retail