Best Buy profits, sales slide

Tuesday, December 14, 2010

Best Buy Co. Inc. has discovered that consumers care less about getting the hippest new gadget than they do about getting a good deal on a laptop or flat-panel TV.

"Essentially, Best Buy has been willing to give up market share in order to expand gross margin," said David Brennan, co-chair of the Institute for Retailing Excellence at the University of St. Thomas. "They're not willing to make those kinds of price cuts -- and the Wal-Marts, Targets, Sam's Clubs and Costcos of the world are eating their lunch."

Brennan noted that the consumer electronics category -- which includes televisions, digital cameras, e-readers and MP3 players -- dropped from representing 39 percent of Best Buy's business a year ago to 36 percent today. The company, instead, has put more emphasis on higher-margin items, such as motion gaming systems and high-tech televisions.

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Originally published: 12/14/2010, Star Tribune