Forbes Predicts Tough 2012 for Best Buy - KMSP-TV

Forbes Predicts Tough 2012 for Best Buy


Best Buy is one of the last surviving "big box" store chains, but are its days numbered? Forbes magazine seems to think so, and is predicting a tough 2012 for the Minnesota-based retailer.

It certainly wasn't the best Christmas season for the company after online customers were told days before the holiday that their orders, which had been placed around Thanksgiving, couldn't be filled.

Best Buy still snaps up about 20 percent of all consumer electronic sales, but their share of that market is slipping fast. That leaves the retail giant looking like a cautionary tale as people come to browse but buy elsewhere.

Online sales aren't the only thing that are eating into Best Buy's business. At the Mall of America, the Apple and Windows stores are bright and brisk, but Best Buy's store seemed empty and dim.

That perception may be a bit of a prophecy, because the future looks so dark that on Tuesday, Forbes, which had named Best Buy their company of the year just a few years ago, is now predicting bankruptcy within the next few years.

Wall Street doesn't seem to have much faith either, as the company's stock lost 40 percent of its value last year.

"They're kind of in a dangerous position," said St. Thomas business professor David Vang.

According to Vang, Best Buy has been slow to react, equating the situation with the sinking of the Titanic.

"They're still in the middle of course correction," he said.

Minnesotans have a special connection to Best Buy, because the big box retailer began here 45 years ago as Sound of Music, an audio supply store that grew to 1,000 locations. The campus headquarters I s located in Richfield and employs 4,000.

In a statement, Best Buy told FOX 9 News they plan to aggressively drive revenue and market share through promotions, expanding online sales and ensuring competitive prices -- meaning they need to live up to their name.

Retail experts say that's the right course, but also recommend offering classes and services that can bring people to the stores instead of buying behind screens.

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