A corporate strategy article by Thunderbird students Ahmed, Farrow, Goosen, Jones, Kortgard and Turra
Are the days of big box consumer electronics retailers coming to an end, or can Best Buy prove it has what it takes to adapt and compete in a changing global marketplace?
Rapid growth in the 90’s and early 2000’s propelled Best Buy to become the world’s largest and most successful consumer electronics (CE) retailer with global revenue exceeding $50 billion. However, myriad challenges have converged to create a hostile environment for traditional CE retailers. Accelerating commoditization of products and increasing acceptance of online purchasing are allowing non-traditional competitors, such as Amazon, to capture an ever-growing share of the global electronics market. Some Wall Street analysts suggest Amazon should purchase Best Buy to complement its online growth strategy and capitalize on Best Buy’s strengths, namely its 1,400 brick & mortar locations. Others argue that Best Buy will ultimately experience the same demise as Circuit City, CompUSA, and Borders. Hulking shells of former big box stores are a stark reminder of how global markets are evolving at rates never seen before. At best, the triumphant days of big box retail are being severely challenged. At worst, they could come to an end.