Economics/Geekonomics

Ikea To Sell Electronics?

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It starts in Europe, but you know it’ll expand.

So it appears that Ikea is starting with a specialty-manufactured TV in China, and Magnus Bodesson, the guy in charge of living rooms (and who’s name may be as cool as Baldur Bjarnson and Richard Baldovin) notes the advantages Ikea has in pricing.

Ikea selling electronics actually makes sense:

  • They have the floorspace and warehouse space.
  • They do a lot of home elements that aren’t furniture despite their image as a furniture company.
  • They already promote their furniture with mockups of TVs, etc. in their stores anyway – and as they sell “complete sets,” electronics plays into it.
  • They have insanely huge reach.

So I’m pretty sure they’ll prototype this, it’ll work or break even, and they’ll go and try more.  You know who gets in trouble?

Best Buy.

Ikea could, with relative ease, throw in a lot of basic electronics and home goods.  They could do their own brands/rebrands, but it might also be easier to use local/popular brands.  They have a supply chain that works.  They have money.  People are already in a shopping mood when they come in.

So if they start moving TV’s and other home devices, Best Buy is the one that takes the big hit in my opinion.  Admittedly it’d probably take Ikea awhile to ramp this up (1-3 years), so there’s a chance for Best Buy to implode on its own.  But if they’re still playing in the home electronics space, this could be a finishing blow.

I never saw Ikea getting into this space.  Makes me wonder what else I’m missing . . .

– Steven Savage

 

 

Best Buy CEO Resigns. Now what?

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In case you were too busy posting pictures on Instabook or Facetagram, the CEO of Best Buy has resigned. This caused a lot of discussion and some weird stock fluctuations.

Bruce Upbin at Forbes says he felt Dunn had to quit, citing the famous Downes article on why Best Buy was going out of business.

My take?

  • The departure of CEO Dunn indicates that Best Buy plans to keep making massive shifts and is at least vaguely aware they have to. We haven’t seen it all yet.
  • Dunn’s background is telling. He literally worked his way up from sales associate in 1985 to CEO. He’s experienced – but also he may have been tragically old-school. Wether he can’t move with the times or his replacement is symbolic . . . his replacement is symbolic if you get my drift.
  • Best Buy is going to be fighting public opinion here since their challenges, cuts, and now this make them look quaintly old-school. This could be another case of a tarnished brand – and that’s a challenge they’ll have to overcome.
  • Best Buy’s challengers are many – sure there’s Amazon and Apple, but they were – and are – being nickeled and dimmed by others. Streaming replaces DVDs, DLC replaces in-store game purchases, Target is expanding to be an everything store, and you can still get your fancy appliances at a number of different places. There is, simply, no reason for Best Buy to exist as a unique entity.
  • The kiosk-like approach to stores may be viable, however. If they can leverage a few big warehouse stores and a lot of “starlets,” get some brand awareness, and find the right niches/services they may make it.
  • That being said, I see one advantage they may have being service, and it hasn’t been too impressive.
  • I still wonder what they can do in the age of vending machines for tech. I just don’t see them taking advantage of that.

In the end, I’ve got a gut feel that Best Buy is going to fade away in a Radio Shack like way. I can see a way out, but until I see what Dunn’s replacement does, I’m not going to count on it.

Now, ask what happens if they fade into obscurity. Who’s going to get blamed? Who will others target? Who will step into their place?

– Steven Savage

Best Buy Layoffs and A Sign Of The Future?

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Best Buy Lays off 400+ people, closes stores.

I know, I’ve been of the opinion Best Buy is in trouble.  I’ve agreed with those various analysts on the issues.  So on the surface, the fact I’m not surprised by this is, well, not surprising.  I figured it was coming.  In fact, I figure more will come.

But what is interesting is how Best Buy seems to be putting more focus on Best Buy Mobile, smaller, “Kioskesque” stores.  A focus on smaller stores, more on mobile and related gadgets?  There’s a lot to that . . .

  • First of all, this seems like a viable strategy.  Focused, organized, standardized stores that are small and cheaper to run make sense.
  • Secondly, these stores could be easily resupplied from a central location (suggesting to me that, much like the Safeway delivery service, stores could serve as warehouses).  This could mean big stores being repurposes may be a logical focus (and may limit layoffs).
  • Third, these smaller stories could get more easily set up or torn down as needed.  Limited risk, faster adaption, and faster to take on rivals.  These stores could even be piloted easy.
  • Fourth, and this may seem out there, but in an age where you have vending machines with iPods and DSes in them, I could see experiments with a Best Buy vending system.  If we’ve got automated convenience stores, Redbox, and iPod dispensers, this isn’t too outrageous.  Oh, and it’s 24/7 . . .

– Steven Savage