Best Buy (BBY) Looking to Sublease Extra Floor Space
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Best Buy Co. Inc. (NYSE: BBY), is planning to segment off portions of its brick-and-mortar stores in an effort to sublease the units to smaller retailers.
According to the LA Times today, Best Buy will aim for an average square footage of 36,000 per store, down from the current 45,000 average...an ambitious 20 percent shrinkage.
Although Best Buy survived the shift in consumer tastes and financial meltdown that led to the demise of Circuit City, continued soft sales if DVDs, music, and other segments, all being lost to online e-tailers like Amazon.com (Nasdaq: AMZN) and Overstock.com (Nasdaq: OSTK), are making it less and less viable for physical locations to be as large as they currently are.
A Keybanc Capital Markets analyst agrees, quipping, "Retailers just don't need as much space as they once did. Across the retail industry there is an effort to reduce the size of your stores as retail and purchases increasingly occur online rather than through brick-and-mortar stores."
In SoCal, Best Buy is looking to lease out about 4 to 15 thousand square feet at its 46 stores in the region. Competitors without shared interests (i.e. - RadioShack (NYSE: RSH), hhgregg (NYSE: HGG)) would be lead candidates. Think more along the lines of Kroger (NYSE: KR), Trader Joes, or Ulta (Nasdaq: ULTA).
Like Wal-Mart (NYSE: WMT), Best Buy is also looking to open smaller stores, dubbed Best Buy Mobile, which will focus solely on smartphones and tablet PCs, the hottest trends right now.
Humorously, another analyst said the old joke was that "Best Buy is Amazon's showroom." Let's hope Best Buy's new, focused plan helps to erase that from memory.
BBY is trading slightly higher ahead of the bell.
According to the LA Times today, Best Buy will aim for an average square footage of 36,000 per store, down from the current 45,000 average...an ambitious 20 percent shrinkage.
Although Best Buy survived the shift in consumer tastes and financial meltdown that led to the demise of Circuit City, continued soft sales if DVDs, music, and other segments, all being lost to online e-tailers like Amazon.com (Nasdaq: AMZN) and Overstock.com (Nasdaq: OSTK), are making it less and less viable for physical locations to be as large as they currently are.
A Keybanc Capital Markets analyst agrees, quipping, "Retailers just don't need as much space as they once did. Across the retail industry there is an effort to reduce the size of your stores as retail and purchases increasingly occur online rather than through brick-and-mortar stores."
In SoCal, Best Buy is looking to lease out about 4 to 15 thousand square feet at its 46 stores in the region. Competitors without shared interests (i.e. - RadioShack (NYSE: RSH), hhgregg (NYSE: HGG)) would be lead candidates. Think more along the lines of Kroger (NYSE: KR), Trader Joes, or Ulta (Nasdaq: ULTA).
Like Wal-Mart (NYSE: WMT), Best Buy is also looking to open smaller stores, dubbed Best Buy Mobile, which will focus solely on smartphones and tablet PCs, the hottest trends right now.
Humorously, another analyst said the old joke was that "Best Buy is Amazon's showroom." Let's hope Best Buy's new, focused plan helps to erase that from memory.
BBY is trading slightly higher ahead of the bell.
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