Samsung, Microsoft (MSFT) Still Need Physical Presence; Enter: Best Buy (BBY)
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Best Buy (NYSE: BBY) hit an annual high of $36.13 today as sentiment behind the big-box retailer remains positive following recent Q2 results.
Some of the move today might be stemming from a long TheNextWeb article. In the article, the author delves a little into the future of Best Buy as it relates to a retail store versus a combination package of online and physical presence.
Despite millions being spent on promotions and multiple tech sites and writers reviewing and jotting down experiences after using a new device for a while, there's still a part of the customer which would rather go out and see a certain product (smartphone, TV, computer, etc.) first hand before plunking down hundreds of hard-earned dollars. That's a feeling that probably won't leave the human psyche for a while.
Thus, names like Apple (Nasdaq: AAPL), Microsoft (Nasdaq: MSFT), and Samsung have been spending lots of time trying to get little shops put into Best Buy locations, which still still thousands of shoppers meander down the aisles each year. The companies think that this will promote a better experience with products versus placing them with a third-party retailer like RadioShack (NYSE: RSH) or a Verizon (NYSE: VZ) store. Those products tend to be clumped together, but not segmented off with a dedicated sales team.
The future for Best Buy is then to have smaller stores within stores. The Inception of electronics retailers, if you will.
It isn't really a surprise that Best Buy is going this route, with CEO Hubert Joly saying in part this last quarter that comps were down partially due to
Investors don't mind either; shares are up at annual highs and popped 16 percent when Best Buy announced its partnership with Samsung. TNW notes that Apple and Samsung account for nearly 20 percent of combined (online and physical) sales for Best Buy, meaning the bets are largely working.
In terms of online, Best Buy has made an initiative where if something is out online, there's a back-up plan letting the shopper get the same price, but go pick it up at a local store. This keeps the customer in the sale and out of the hands of Amazon (Nasdaq: AMZN), eBay (Nasdaq: EBAY), and others. Right now, however, just over 10 percent of total sales are generated online, something the retailer is no doubt working to improve.
On pricing, Best Buy also benefited last quarter from issuing a price-match guarantee versus online competitors. Instead of customers simply browsing Best Buy and using it as a showroom until they ultimately buy online, the retailer is matching prices in a strategy that seems to be working out.
One intangible which might not be considered by analysts is the expanded time factor. Though consumers might travel to see the next TV, smartphone, or gaming system in person, there are still a lot of other items (cables, ink, paper, video games) that many would rather purchase while at home/the office versus making a special trip and fighting traffic just to get. It's small, but still a factor to consider.
Shares of Best Buy are up 2.8 percent Monday.
Some of the move today might be stemming from a long TheNextWeb article. In the article, the author delves a little into the future of Best Buy as it relates to a retail store versus a combination package of online and physical presence.
Despite millions being spent on promotions and multiple tech sites and writers reviewing and jotting down experiences after using a new device for a while, there's still a part of the customer which would rather go out and see a certain product (smartphone, TV, computer, etc.) first hand before plunking down hundreds of hard-earned dollars. That's a feeling that probably won't leave the human psyche for a while.
Thus, names like Apple (Nasdaq: AAPL), Microsoft (Nasdaq: MSFT), and Samsung have been spending lots of time trying to get little shops put into Best Buy locations, which still still thousands of shoppers meander down the aisles each year. The companies think that this will promote a better experience with products versus placing them with a third-party retailer like RadioShack (NYSE: RSH) or a Verizon (NYSE: VZ) store. Those products tend to be clumped together, but not segmented off with a dedicated sales team.
The future for Best Buy is then to have smaller stores within stores. The Inception of electronics retailers, if you will.
It isn't really a surprise that Best Buy is going this route, with CEO Hubert Joly saying in part this last quarter that comps were down partially due to
short-term disruptions caused by the retail deployment of the Samsung Experience Shops, Windows Stores, and floor space optimization.Down the line, those costs are likely to ease as the process gets smoother or analysts already work costs into the equation.
Investors don't mind either; shares are up at annual highs and popped 16 percent when Best Buy announced its partnership with Samsung. TNW notes that Apple and Samsung account for nearly 20 percent of combined (online and physical) sales for Best Buy, meaning the bets are largely working.
In terms of online, Best Buy has made an initiative where if something is out online, there's a back-up plan letting the shopper get the same price, but go pick it up at a local store. This keeps the customer in the sale and out of the hands of Amazon (Nasdaq: AMZN), eBay (Nasdaq: EBAY), and others. Right now, however, just over 10 percent of total sales are generated online, something the retailer is no doubt working to improve.
On pricing, Best Buy also benefited last quarter from issuing a price-match guarantee versus online competitors. Instead of customers simply browsing Best Buy and using it as a showroom until they ultimately buy online, the retailer is matching prices in a strategy that seems to be working out.
One intangible which might not be considered by analysts is the expanded time factor. Though consumers might travel to see the next TV, smartphone, or gaming system in person, there are still a lot of other items (cables, ink, paper, video games) that many would rather purchase while at home/the office versus making a special trip and fighting traffic just to get. It's small, but still a factor to consider.
Shares of Best Buy are up 2.8 percent Monday.
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