Best Buy 3.0? The big box reinvented

Best Buy reports earnings Tuesday morning. Amazon and other online sellers were supposed to have killed it off. That’s essentially what happened to Circuit City. But Best Buy’s stock has soared this year. It avoided death by cutting expenses, aggressively matching competitors’ online prices and improving its own website. But many potential challenges loom.

“The stock is flying sky high now and the question really is will there be another bump in the road,” says Harvard Business School retailing professor Rajiv Lal.

That bump might even rise out of the road Best Buy built for itself. It’s gotten praise for new partnerships allowing manufacturers to open flashy spaces inside its store. But that move can only be helpful up to a point.

“By having Samsung and Microsoft store-within-stores, you potentially give them a blueprint to take products directly to consumers with their own stores down the road,” says R. J. Hottovy, Morningtar’s director of consumer equity research.

It’s kind of like charging somebody to crash on your couch. You’ll make a few extra bucks, but regret it if they steal your stuff and run off.

Like all retailers, Best Buy is gearing up for the thick of the holiday shopping season. The chain is going all in, with most stores opening at 6 p.m. Thanksgiving Day and staying open through the night, all the way to the end of Black Friday.

Mark Garrison: Best Buy avoided death by cutting expenses, aggressively matching online prices and improving its own website. Harvard retail professor Rajiv Lal (ruh-JEEF laahl) says Wall Street likes it, for now.

Rajiv Lal: The stock is flying sky high now and the question really is will there be another bump in the road.

That bump might even form in the road Best Buy built itself. It’s gotten praise for new partnerships allowing manufacturers to open flashy spaces inside its store. Morningstar analyst R. J. Hottovy says that’s fine, up to a point.

R. J. Hottovy: By having Samsung and Microsoft store-within-stores, you potentially give them a blueprint to take products directly to consumers with their own stores down the road.

It’s kinda like charging somebody to crash on your couch. You’ll make a few extra bucks, but regret it if they steal your stuff and run off. Best Buy’s next test is holiday shopping and it’s going all in. Most outlets open at 6 p.m. Thanksgiving Day and will keep selling right through the night. In New York, I'm Mark Garrison, for Marketplace.

About the author

Mark Garrison is a reporter for Marketplace and substitute host for the Marketplace Morning Report, based in New York.

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