Best Buy Co., Inc, has recently closed almost 50 retail stores across the country. These closures will be permanent. The majority of these were closed by May 12, 2012. There will also be large cuts to the headquarters staff. Many are now wondering what effects the Best Buy closings might have on the local economies that they are a part of, as well as what will become of the retailer itself. The future is uncertain for this giant in electronics sales as it is forced to compete with the numerous online retailers now available.
The Best Buy closings will obviously leave many people without a job. Estimates put the immediate job loss to be about 4,000 employees. To their credit, the company is offering it's employees a transition to a position at another nearby Best Buy. If the employee does not want to or is unable to work at another store, they will be offered a severance package as compensation.
Despite whatever measures the company may take, many people will eventually be left without work. About 100 mobile stores are planned to open between 2012 and 2013, but these will not fill even half of the jobs lost in the current Best Buy closings. In any case, the stores will not necessarily be in the same locations as these store closings.
The presence of online retail stores that can provide any product a consumer might want is dealing a heavy blow to many physical retail companies. The Best Buy closings are not the only way this effect is being felt: Circuit City, which at one time was in competition with Best Buy, filed for bankruptcy not long ago, as did Borders Group Inc.
The online stores provide an exremely easy and convenient way to shop. Although people enjoy being able to touch and see products in person, the Internet industry is taking over. The ability to quickly search for products and compare prices from a number of retailers is unmatched at physical store locations. Until physical stores are able to offer something that online ones are not, this trend can be expected to continue as the Internet becomes more widespread.
The Best Buy closings are taking place during a time of internal scandal and uncertainty. The company recently lost two major players – the CEO Brian Dunn and the founder, Chairman of the Board, and largest shareholder Richard Schulze. Dunn was allegedly involved in an affair with another employee, leading to his resignation. On top of resigning as Chairman of the Board, Schulze has also announced that he is interested in selling his 20% share of the company.
Investor sentiment is currently poor for Best Buy. Low market shares and indications of poor management are making investors queesy about supporting the company. Some believe that the present confusion may lead to a more efficient management with better organization and a more succesful business plan. In general, however, analysts are advising against investment with Best Buy until they get on a firmer foundation. There is no telling what will happen next, but the fat lady has definitely not yet sung for Best Buy.