What Happens To At&T Stock Price If Merger Is Approved Electronics Retailer: Company Profile: Best Buy

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Electronics Retailer: Company Profile: Best Buy

Shopping has become a part of everyday life for many Americans. Major retail outlets line the main thoroughfares of American towns and cities, attracting consumers’ attention with advertisements for goods that range from everyday necessities to flashy toys that promise hours of entertainment. While many stores sell entertainment products such as televisions, computers, game systems and mp3 players, there is one company that stands above the rest as the “dominant technology and entertainment retailer” (taitsubler.com) in the United States – Best Buy.

With gross revenues of more than $50 billion in fiscal year 2011 and net income of $1.227 billion, Best Buy Co., Inc has one of the largest market shares in the consumer electronics industry, as it should. Founded in 1966, Best Buy is an electronics retailer whose stores are filled with expensive electrical toys and tools. Stores are divided into departments, each department specializes in a certain type of equipment. Each store has Home Theater, Computers/Tablets, MP3/iPod, Gaming, Digital Imaging, Car Electronics, Music/Movies, Home Appliances and Mobile (Cell Phone) departments that showcase products and accessories.

In an effort to be a one-stop shop for customers, Best Buy also provides services that go along with their products. Through partnerships with companies such as Comcast, Dish Network, Time Warner and Clear Wireless, customers can leave the store with an Internet connection, cable or antenna TV and phone service. Thanks to the acquisition of Geek Squad in 2002, Best Buy is also able to offer repair and installation services for many of its products, such as televisions, computers and appliances. In fact, Best Buy now labels all of its warranty and installation services with the Geek Squad name and encourages customers to use in-store service desks where they can speak face-to-face with a Geek Squad agent about issues they’re experiencing with their technology.

Geek Squad isn’t the only brand owned by Best Buy. Product brands such as Dynex, Insignia and Rocketfish are owned by Best Buy. These brands are mainly manufacturers of accessories such as wireless mice (for computers), speakers, cables and cases, but Dynex and Insignia are manufacturers of larger products such as televisions. Having “house brands” is beneficial to the company because they lead to higher margins on those products, and Best Buy has more control over product inventory levels and more flexibility to create new products that match market trends. For example, Best Buy was able to respond to the release of the iPad by creating several iPad accessories, such as cases and stands, through its Rocketfish brand. Consumers have benefited not only from a greater range of accessories to choose from, but also from lower prices that have resulted from competition in the accessories market.

Other brands associated with Best Buy are Magnolia, the branch of the home theater division that sells high-end TVs and speakers for those customers who want above-average performance from their TVs and speakers, and Napster, which until earlier this year was an attempt Best Buy to enter the music streaming and download market. (Napster was recently sold to Rhapsody for an undisclosed sum.)

In November 2001, Best Buy acquired another brand – Future Shop. Future Shop was an electronics dealer in Canada and was renamed Best Buy Canada Ltd after being acquired by Best Buy Co., Inc. It operates as a separate entity from Best Buy Co., Inc, but has a strong domestic presence with over $5 billion in revenue.

Best Buy Canada is not Best Buy’s only international project; it has also opened stores in China, Turkey and the UK. Unfortunately, it was not successful in these regions. Best Buy recently closed all nine of its stores in China, but has plans to expand into the consumer electronics market with the opening of 50 new stores under the Five Star Electronics brand. Best Buy, however, has completely withdrawn from the Turkish and UK markets, closing two stores in the Middle Eastern country and eleven of its branches across Britain, with no announced plans to return to those markets.

Best Buy is facing increasing difficulty expanding domestically, facing stiff competition from other retailers such as Wal-Mart and Target, which have recently made efforts to expand their selection of electronics at increasingly competitive prices, as well as from online retailers such as Amazon.com and Newegg.com, which can offer a large selection at extremely low prices due to low overhead costs. Consumers refer to Best Buy stores as “Amazon storefronts,” using the blue-and-yellow retailer as a place to see and learn about products up close before ordering them from another company online.

However, former Best Buy CEO Brian Dunn is optimistic about his company’s strategy to compete with these other companies. Bestbuy.com is Best Buy’s answer to online competitors, and Dunn called it “extremely successful.” It also has an advantage over Amazon and Newegg; products ordered on Bestbuy.com can be picked up in-store, eliminating shipping costs. According to the Best Buy Gets Squeezed article, 40% of online orders are picked up in-store, which means consumers like having that option available to them. In addition, items ordered online can be returned to brick-and-mortar locations, which consumers find convenient and reassuring. “In the future, physical stores alone will not be enough. Digital stores alone will not be enough. What really matters is how they come together,” says Dunn (Best Buy Struggles with Global Ambitions).

However, Brian Dunn’s confidence is not shared by investors. The stock, which trades under the symbol BBY, has fallen from a high of $43.21 in less than a year to a low of $21.79, and while the stock is recovering slightly, it is now hovering around $28, representing just 65% of its previous level. were. Earnings per share also fell, with earnings falling from 47 cents a share to 60 cents, according to Best Buy Gets Squeezed.

In response, the company has cut seasonal hires for the year, reduced employee discounts (Best Buy currently has 180,000 employees, so it was thought to have a big impact on profits), and plans to reduce its retail space by 10% , which will reduce operating costs. Despite this, year-end profit expectations were lowered, and the company’s growth continued at a flat level.

The economy was to blame for the company, and the industry’s current woes. Americans have been spending more cautiously lately, and with electronics being seen as more of a luxury than a necessity, consumers have been spending less in this area over the past few years. Moreover, since the invention of HD and plasma televisions, there have been several must-have innovations in the electronics industry. The industry expected 3D TV to be the new HD, but consumers were met with skepticism and lack of interest due to a lack of content and the requirement to wear bulky and expensive glasses while watching.

However, there is some hope for the rise of tablets and on-the-go computing; and Best Buy responded by building large tablet displays in its stores and providing additional training for computer department employees. Mobile technology is an area where Best Buy is looking to expand market share. Best Buy Mobile and select retail stores have mobile phones and on-the-go Internet services (called mobile broadband). Sales in this department are extremely profitable because wireless companies such as AT&T and Verizon provide net compensation for each contract signed by Best Buy Mobile customers.

Best Buy Mobile customers are also likely to be repeat customers. Their cell phones are typically available for upgrade every two years, and Best Buy sends their customers a renewal reminder text message, inviting them to come in and check out the latest and greatest technology at the time of their renewal.

Text messaging isn’t the only way Best Buy interacts with its customers. It has a strong online presence, communicating with customers through social channels such as Facebook, Twitter and customer service forums (http://forums.bestbuy.com/). This constant, casual interaction with customers helps the company stay in the minds of consumers and excite them with the latest technological innovations. This enthusiasm drives customers into stores and drives the sales volume needed to break the current state of business.

Although Best Buy is going through tough times right now, it remains the largest electronics retailer in North America and is poised for significant growth. With the US economy slowly recovering, the holiday season looking increasingly positive for retailers, and technology constantly changing and becoming a larger part of people’s daily lives, Brian Dunn remains optimistic. “I think we’re at the forefront of an explosion around technology and people’s appetite for it. We are seeing explosive growth [ahead].”

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