By Quentin Fottrell
When big retailers struggle, shoppers might expect to be able to swoop in and score stellar deals. But in the case Best Buy, the sales are unlikely to satisfy those searching for “Everything Must Go” style prices.
The retailer is in the midst of a massive restructuring of its business, closing and downsizing stores. Earlier Tuesday, it reported that its revenue fell 2.8% for the quarter ended Aug. 4, to $10.55 billion. The chain — which has struggled to compete with Amazon in recent years — also reduced its earnings outlook because of weaker sales expectations in the electronics industry as a whole and uncertainty surrounding new product launches. Yet closeout prices have yet to surface widely. “I have not noticed anything in their ads to suggest that they are lowering prices to boost sales,” says consumer advocate Edgar Dworsky.
In fact, big-ticket discounts at Best Buy have actually become more scarce since the start of the year, experts say. “Seeing a drop-off in the number of deals from any retailer that has traditionally been aggressive with sales is typically a sign that they are struggling to remain competitive,” says Brad Wilson, the founder of sale site BradsDeals.com. Only electronics regarded as mature — or traditionally harder to sell – remain on sale, he says. BestBuy.com currently offers 5% to 25% off selected HDTVs and 5% to 56% off cameras and camcorders. Meanwhile, more popular items like Apple’s iPad and iPhones have held their prices.
Best Buy says discounts will happen on a store-by-store basis. “If a store is being remodeled or closed, there’s always in-store inventory that goes on sale — and sometimes you can find really good deals,” says Best Buy spokeswoman Sue Busch-Nehring. In a move that analysts say is in response to the success of Apple Stores, Best Buy said in March that it’s closing 50 big-box stores in 2012, and will test run new store formats in San Antonio and Minneapolis. The Richfield, Minn.-based retailer also plans to increase worker training by 40% and cut $800 million in overhead costs. (Here’s the official list of store closures planned for 2012.)
If sales continue to decline and/or Best buy finds smaller retail spaces for existing stores, experts say bigger discounts are inevitable. For those looking for larger household appliances, like a refrigerator, dishwasher or vacuum cleaner, “keep an eye out for sales at Best Buy in the coming months,” says independent retail analyst Jeff Green. “They will start to edit their election to smaller goods.” However, downsizing isn’t easy. Some retail spaces don’t have enough storefront to be split into two stores, while others have long leases, he says. Failing that, a prolonged drop in sales would lead to a “sell off” among a wider variety of goods, Wilson says.