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Best Buy Closings 2012: Electronics Giant to Close 50 Stores

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Electronic retail giant Best Buy announced Thursday that it will close 50 big box stores in the United States and cut as many as 400 jobs at its corporate headquarters in an effort to improve its bottom line.

According to The Christian Science Monitor, Best Buy, once recognized as the discount king of consumer electronics, is caught between high-end brand stores like Apple Stores and low-cost Internet retailers like Amazon.

“Customers have been increasingly migrating online where they often find better deals, forcing Best Buy to figure out a reason why shoppers would need to visit an actual store,” the CSM report stated.

Last year, Best Buy lost a staggering $1.2 billion as it deeply discounted merchandise to keep pace with rivals Amazon and Wal-Mart.

Sue Busch Nehring, a spokeswoman for Best Buy, said the company has not revealed any detail about the locations of the 50 stores it plans to shutter, adding that the retailer will announce the specific store locations and timing for closings “once they are finalized.”

“We are quite deliberate and thoughtful when we make such decisions,” she said in an e-mail message. “We are working to ensure the impact to our employees will be as minimal as possible, while serving all customers in a convenient and satisfying way.”

In light of the job cuts and store closings, Best Buy plans to use the savings — $250 million this year and another $550 million by 2015, according to company projections — to convert its big boxes to smaller “connected stores” which will sell more connections and services with more focus on mobile phones, tablet computers and e-readers.

The company will experiment with the new store models in San Antonio, Texas and St. Paul, Minnesota.

Forbes writes:

“The renovation would reduce store square footage by 20%, and should be finished by next Christmas. These new so-called ‘Connected Stores’ will focus on selling cell phones, tablet computers and e-readers, as well as service plans not offered by Amazon and Wal-Mart. Best Buy employees in these new stores are expected to show customers how to connect electronics in the home.”

According to the IBTimes, Best Buy shares dropped 14.8 percent in the past year, wiping out about $4 billion in market cap. In that same span of time, the S&P 500 index was up 6.4 percent.

With news of the Best Buy store closings, the company’s stock fell nearly 7 percent, or $1.85, to close Thursday at $24.77.

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Comments

16 Responses to “Best Buy Closings 2012: Electronics Giant to Close 50 Stores”

  1. Jose Slurpnutz

    I'm sure their problems have nothing to do with their horrible customer service, the fact that you can only bring back a broken item within 30 days, and their constant pushing (up-selling) of useless and expensive extended warranties. Not to mention a smaller and smaller product line, the ability to find most things I go to Best Buy for at Radioshack and not Best Buy, which has too many employees standing around unable to help because they don't even know what speaker wire is.

  2. Todd Burritt

    It has nothing to do with the fact that their gaming rewards program is a joke and they don't carry 90% of the products in stock that they send you coupons for.

  3. Neil R Swanson

    So very true they r killin themselves.gonna b anotheer circuit city closure.and the economy is still a major.
    factor. as consumers cant spend money the way the used to god help us all.

  4. Sally Laseter

    Don't know which stores are closing but the customer service was horrible and the staff couldn't answer questions. The store wasn't stocked well. Texas

  5. Amy Kazan Goodchild

    Maybe if they had better customer service, they'd do better business. It's consistently terrible.

  6. Rob Nielsen's Top 10: Worst of Everything.

    Ever go in the audio dept. in Best Buy and ask the 19 year old kid "where are your turntables?" my favorite reply from an employee was "we don't sell household furniture". Maybe if the company had invest some time/money into training their staff on the products they sell and improving the horrid customer service, people would have came back.

  7. Neil R Swanson

    HI Swamy i agree i liked best buy for years but recently had bad luck with buying computer s there nothing worked.had 2 return.HH GREG is our new big chain ..so it s sad that our retail stores are bombing out . also K MART AND SEARS in chicago area r closing stores they can t compete with WALLMART LO. god bless takecare NEIL!

  8. Luke Yeager

    the problem is they sell the "junk" of the computer world. Low end video cards for high prices… slow ram for the same price as the best ram on websites. they sell you a monitor for 400 then drop the price to 325 a few days later without telling you so why would someone shop there… the problem is bad management and people with no knowledge of computers or what parts people want to buy.

  9. Luke Yeager

    Shane Yeager like i said.. bad management the main cause of job loss. owners are to rich and lost the need to worry about profit so close the stores and keep the money.

  10. Micky Hone

    how about an hdmi cable that costs 50.00 and you can buy on internet for 2.00, or a cord for laptop for 75.00 on internet for less then 5 dollars.

  11. Chad Zalewski

    It simply comes down to the loss of marketshare to online retailers such as Amazon. Why pay a higher price plus 7% sales tax, when you can get free shipping and avoid tax online?

  12. Equal Parenting -Fathers Initiative

    The problem doesn't have anything to do with the fact that, they did whatever they could to knock Circuit City out of business. Even if they had to sell items at a loss, they wanted to topple C.C. at any cost.