Will Best Buy Brand Suffer From Price War With Amazon And Wal-Mart?

Posted by Abe Sauer on November 24, 2009 02:36 PM

Poor Best Buy. The way things have been going, the brand will soon be forced to rebrand to "Just Kinda' Good Buy."

As Black Friday approaches, Best Buy is being forced into a price war with retailers like Amazon and Wal-Mart after suffering through a 77% seasonal earnings drop in 2008. It already started with pre-Black Friday "early doorbuster" deals on hot items like HDTVs. And it's losing:

"In a price comparison of 50 overlapping non-TV products, which included Blu-ray Disc players, Pali Capital analyst Stacey Widlitz found that Wal-Mart and Amazon lowered retail prices 3% and 1.3%, respectively, while Best Buy increased prices 2.1% since a similar price comparison Nov. 2."

Forget that the brand is already smarting from an embarrassing bout with a now-seasonal war-on-Christmas-type "outrage" over a circular wishing potential Best Buy Muslim shoppers a Happy Eid al-Adha. Reminiscent of the brouhaha Gap recently faced when religious groups charged its holiday marketing wasn't Christmasy enough, Best Buy was forced to do the public contrition thing in the face of boycott threats. But... Happy Holidays!

In the current economy, consumers will be looking for lower prices more than ever. This is good for those brands that define themselves on lowest price. Best Buy does not.

If the brand drags itself into a holiday season price war, it may harm its positioning as a place where consumers can get advice from on-site branded-expert groups like the Geek Squad or Blue Shirts. Of course, if it doesn't play along, it may not survive to find out.

More about: Retail, Holidays, Best Buy, Amazon, Wal-Mart, Gap, Blu-ray, Black Friday

Robert Becker says:

The article incorrectly posits that Best Buy competes with Wal-Mart and Amazon on price. If that were true, Best Buy would have already followed Circuit City into the gutter.

In fact Best Buy competes not on price, but on service. Unfortunately they are failing in this dimension as well. Their stores are cluttered with ordinary merchandise that can be purchased anywhere. Their sales associates are nominally competent and their retail brand is unfocused.

Of the three companies mentioned, I believe Amazon offers by far the best service and equal to the best price. Wal-Mart offers convenience along with best price. Best-Buy does not excel in any dimension I can think of.

November 25, 2009 08:16 AM #

Abe Sauer says:

I believe the focus is that Best Buy shouldn't, and usually does not, compete directly with Wal-Mart etc., but that this season it is and that is bad for its brand. I agree completely that Best Buy is failing in its brand promise.

November 25, 2009 11:07 AM #

Stephen says:

Best Buy today announced plans to offer digital entertainment online, available to consumers to rent or purchase in partnership with Sonic Solutions. The ambitious retailer will offer on-demand movies and entertainment, powered by Sonic's Roxio CinemaNow service, through various consumer electronic devices -- citing set-top boxes, portable media players, Blu-ray Disc players, mobile phones and PCs -- produced from a variety of manufacturers.

December 3, 2009 04:43 AM #

prefabrik says:

I am agree with Robert Becker. He wrote good and true things about the post.

March 12, 2010 01:49 AM #

louis vuitton says:

2222 Best Buy today announced plans to offer digital entertainment online, available to consumers to rent or purchase in partnership with Sonic Solutions. The ambitious retailer will offer on-demand movies and entertainment, powered by Sonic's Roxio CinemaNow service, through

April 13, 2010 12:18 AM #