Best Buy Closures Surprise No One

Last week’s news that Best Buy Canada had closed 15 of its super-stores (seven under the BB banner, and eight Future Shop stores) may have come as a shock to some. But deep down, I don’t think anyone in the industry was surprised. It was sort of like an aged relative finally expiring: a shock to be sure, but hardly a surprise.

Huge 27,000-square-foot big boxes may have made sense when categories like flat-panel TV and digital imaging were booming. Now that they’re in decline, those big spaces (and the overhead that goes with them) are millstones, especially when there are stores under the two banners in close proximity. No surprise then that BB wants to build smaller stores and close the giant ones.

The business press has been full of analysis about the fate of bricks-and-mortar stores in the face of competition from online retailers, notably Amazon. In the U.S. particularly, retailers like Best Buy are combatting the showroom phenomenon, where consumers visit local stores to check out product, then conduct online searches to get the best price.

Price isn’t the only factor when people are shopping for a new electronic toy. Look, feel, performance, features are all important considerations. So is availability. Most people, when they’ve settled on a new toy, want it right away. They want instant gratification; and I think they’ll pay a modest premium to get it.

But instant gratification means nothing if the shopping experience is bad; and I think it often is at BB and FS. All too often, the sale seems to be more about add-ons like extended warranties than about the product itself.

I’ve blogged about one Best Buy shopping experience. I went to the store in Newmarket, ON during Boxing Week a few years ago to buy a notebook PC for my daughter. We settled on one that was listed in the flyer, and the salesperson confirmed that it was in stock. But when I declined to buy an extended warranty or have the computer set up, the product was mysteriously out-of-stock (even though the store’s inventory system reported that there were more than 30 on hand). After I insisted that the manager call another location and have one set aside for me, the store miraculously found they had a unit in stock after all. Friends have told me of similar experiences.

My first full-time job was in CE retailing; and I worked as a salesperson (not a particularly good one, I confess) for several years before moving into technology journalism. I would hate to be working in a big-box retailer today.

Reading a Marketnews feature article a year ago on extended service plans, I was struck by the creepy totalitarian training regimens that purveyors of these plans employ. One executive boasted of forcing sales associates who were deemed “under-performers” to undergo repeated role-play training after hours.

I’m aware of the need for attachment sales with low-margin products, and I’m sympathetic to the situation. But probably more than any organization, BB/FS bears responsibility for the practice of advertising low-ball prices and banking on these add-ons to bolster margins. They’re not the only offender, but they are the largest, and I suspect the longest-term as well.

So here’s the question: how likely is it that customers who have been treated like this will shop there again? What’s the point of instant gratification when it leaves such a sour taste in your mouth?