In 2012, Best Buy was reeling from a management scandal and stiff competition from the likes of Amazon and Wal-Mart.
“The general consensus was that Best Buy was on the road to bankruptcy,” says analyst Anthony Chukumba with BB&T.
Chukumba says Best Buy’s chief executive, Hubert Joly, has done a good job of reducing the company’s bloated costs since taking the reins in 2012. And Joly’s helped the retailer compete with rivals through initiatives such as a price-matching program.
“If you walk into the store and a TV is $1,000, and you go on a smartphone and see it’s $900 at Amazon or Wal-Mart or Sam’s Club, they will match that price right in the store,” he says.
Morningstar analyst R.J. Hottovy says Best Buy still dominates the consumer electronics market with its 16 percent share. But he estimates that Amazon, which does not provide data on its consumer electronics segment, likely has a market share in the high single digits. And Hottovy thinks the gap between the two is shrinking.
Hottovy says some of Best Buy’s initiatives, such as a private label brand of electronics, may not go far. Amazon has a private label, too.
“It may just be more of a situation where they’re just keeping up with their peers as opposed to actually moving the needle,” he says.
Plus, Hottovy notes, Amazon’s locking in a lot of customers as Prime program members, and it might be tough for Best Buy to woo them away.
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