Best Buy lost share for the first time in a decade, analyst says
More bad news for the big-box electronics retailer, which is facing stronger competition from online stores and other physical retailers.
The bad news keeps piling on for Best Buy.
As if theand a weren't enough, investment bank Canaccord Genuity said today that Best Buy may have actually lost market share for the first time in a decade.
This would marks a reversal share gains that Best Buy has made over the past years as other big-box retailers crumbled and faded away. While its advances haven't been as strong in recent years, Best Buy had continued to take business away from its competitors.
But the rise in online retailers such as Amazon, as well as other brick-and-mortar locations, is putting a squeeze on Best Buy, said Canaccord Genuity analyst Laura Champine. She said the company is expected to continue seeing slow revenue and earnings growth through 2012, and downgraded the company's investment rating.
"We believe the company is vulnerable to market share losses given its meager online presence at 1 percent to 2 percent of total sales," she wrote in research note issued today.
Best Buy is attempting to stave off the prospect of ending up like CompUSA and Circuit City, both of which filed for bankruptcy and eventually disappeared. Those retailers likewise had a small Internet presence and couldn't fend off the lower prices from the likes of Amazon.
Best Buy's market share trends started to head south in November, during a particularly aggressive period of holiday-related promotions. Champine noted that while Best Buy saw same-store sales declines in many categories toward the end of last year, online same-store sales posted a 16 percent increase.
The pressure has persisted through February, Champine said.
Part of the problem is its tepid online sales. Champine noted that Best Buy has the weakest online presence among the retailers that she covers.
Given the increased embrace of e-commerce transactions by consumers, Best Buy won't be able to turn itself around unless it gets its online act together.