Want CNET to notify you of price drops and the latest stories?

Best Buy: Cautious optimism for the future

Can Best Buy hold its own against the onslaught of online retail?

Don Reisinger
Former CNET contributor Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.
Don Reisinger
4 min read
Best Buy

Earlier this week, I discussed how utterly appalled I was at the (lack of) value a local Circuit City store offered me in my area during its "liquidation" sale. But that's not the whole story.

Right across the street from that Circuit City is a Best Buy. For years, I have gone back and forth to get the best price out of both stores. More often than not, it was Best Buy that would earn my business, thanks to its salespeoples' greater willingness to match the best prices of any competitor in the area.

Competition breeds results. I liked that CIrcuit City was across the street from Best Buy because it kept both stores' managers on their toes and more willing to do whatever they could to keep me in the store and ensure that they earned my business.

But now, that competition is gone. I'm starting to worry that Best Buy may not be as willing to match pricing any longer. I'm starting to worry that Best Buy will get complacent and stop doing everything it can to earn my business. Most importantly, I'm starting to worry that Best Buy won't be able to compete on any level with the Web.

Now that Best Buy is practically alone as the last major big box electronics retailer, it has a new enemy that it probably can't beat all that often: the Web. Let's face it: sites like Amazon.com and Newegg.com don't have the overhead Best Buy does. They don't need to worry about renting space for stores, paying salespeople, and paying sales tax to every state. Online retailers have s a significant advantage.

Maybe Best Buy won't need to worry about the Web because it is the last big box retailer standing, and there will always be people who don't like to buy online or would rather have a product as soon as possible.

For people, like me, getting more comfortable with online purchasing, I simply don't know what would stop me from using Best Buy as a research center. I can go to the store, check out a new camcorder or surround sound system and then decide if it's something I want. If it is, I'll ask the manager if they can match Amazon's deeply discounted price. If he can, I'll buy it at Best Buy. If not, I'll go home and order it online.

Realizing Best Buy probably can't afford to match Web pricing indefinitely, how does the company respond? Will my local store decide that it will no longer match Web pricing? If so, what would stop me from buying everything I see at Best Buy online? It makes little sense for me to waste my money because I don't have any patience.

Before Circuit City died, Best Buy did everything it could to ensure it didn't lose my business to the big box store across the street. Now that Circuit City is gone, it must do everything it can to ensure it doesn't lose my business to the price leader online.

In order to do that, Best Buy needs to capitalize on what it does best: customer service. It can't compete on price all the time, but it can inform the public and provide each customer with the single retail element Amazon can't: guidance. After all, you can't ask Amazon which digital SLR would be best for you, right?

Best Buy also needs to realize that pricing is still a major concern and it must match every other retailer in the area, like Walmart and Target, and make every effort to get as close to online pricing as possible.

And maybe that's where its online division, with much lower overhead, can play an important role in the company's future. Along with the ability to offer lower prices, BestBuy.com also offers a significant advantage over online competitors: you can have many of the products Best Buy offers online immediately, thanks to in-store pickup. If Best Buy can make those prices competitive and offer in-store pickup where possible, my desire to use Amazon would diminish, since I could have a product from Best Buy in twenty minutes, compared to five days from Amazon.

Although Best Buy is now alone in its fight with the Web and I'm concerned that it may become yet another victim of the Internet, the company has some advantages that it can exploit: Its people are an asset that can provide guidance, its willingness to match pricing is a plus, and its online division can offer cheaper prices and in-store pickup.

The future might not be clear for Best Buy at this point, but one thing is certain: it has a chance to be the first major electronics retailer to do what Circuit City and CompUSA couldn't: compete with the Web.