Jan 16, 2014

It's the economy, stupid

I can't find the article I read earlier today, but it was a sob story from BestBuy (NYSE:BBY) regarding a poor holiday season and the resulting drop (about 30%) in stock price.

The high muckey-muck they interviewed said they had expected a 2-3% increase over last year's receipts, but instead posted a 3% decrease. Finger-pointing ensued; issues with maintaining/obtaining inventory, online shopping, and such.

I wrote about their woes almost two years ago, and my perception is that very little has changed.

The last few times I was in Best Buy - which was before I left New York in early summer - I was faced with unhelpful staff, long lines, general ineptitude, and an overall sense of a worn-out store.

BB (and Target, and others) have started trying to price-match online merchants - Amazon.com in particular - but I don't think it's made a huge difference. If it's an item I need Right Now Today, that's good to know. If I'm thinking or pondering, or I can wait two days (thanks, Prime!), then I'll save the eight to ten percent sales tax.

I really don't foresee BestBuy hanging around much longer in its current incarnation; they haven't drastically changed their business model in the last fifteen years beyond adding a much larger mobile-phone section. The world has evolved past them, and they will be another MediaPlay if they don't do some serious catch-up.

Beyond that, of course... It's the economy, stupid. Workforce participation is at an all-time low. Unemployment rates are kept artificially low because people who are no longer seeking work aren't counted as unemployed. People who have jobs are facing budget cuts.

Budget cuts mean no raises. Unfortunately, inflation doesn't care about that... so those of us who aren't seeing raises have less money to spend on luxury items - and BestBuy is a luxury store, no question about it. When someone is worrying about how to fill the fridge and gas tank, things like a new TV are a distant second.


Geodkyt said...

Well, when I buy things on Amazon now, they charge me the sales tax from my home state. . . so that advantage is gone.

On the whole, it's still advantageous because I didn;t have to drive to the store and deal with people, locate the item, etc.

Old NFO said...

Good points all, and as far as I'm concerned, not a great loss...