This Retailer Tries to Stay Relevant
Maybe the retail store isn't dead.
Best Buy (NYS: BBY) recently announced that it will be buying out its British partner of its fast-growing mobile phone joint venture. With the announcement came news that the big-box retailer will be scrap plans to open Best Buy-branded stores throughout Europe, instead focusing on smaller format stores, similar to the numerous Best Buy Mobile outlets present in U.S. malls.
For investors, this deal won't be fully recognized until 2013, when the closing of British megastores and taking full control of Best Buy Mobile should add $0.35 to $0.40 a share to earnings. In the meantime, Best Buy is trying to drive traffic to its stores through various methods.
Big games drive big traffic
In successive weeks, Best Buy benefited from the most recent top-selling video games. First was the release of Electronic Arts' (NAS: ERTS) Battlefield 3 and its 5 million first-week copies, followed by the megaseller Call of Duty: Modern Warfare 3 from Activision Blizzard (NAS: ATVI) and its 6.5 million in first-day sales. Many stores held special midnight events prior to releasing the games, and lines formed for hours waiting for both games. GameStop (NYS: GME) could syphon some foot traffic away from Best Buy, but it cannot compete on the same scale with the pre-release events.
Black Friday becomes Black Thursday?!?
For people opposed to Christmas starting earlier every year, big retailers sure aren't helping that much. "Black Friday," the Friday after Thanksgiving, has historically been the unofficial kick-off for the Christmas season. Early morning sales have become as much a part of the Thanksgiving holiday as is falling asleep watching yet another Dallas Cowboys football game after gorging on turkey.
Many retailers have decided to move the start of Black Friday deals to midnight on Friday morning, mere hours after most people will finish digesting their holiday meal. Ambitious retailers, including Wal-Mart (NYS: WMT) , will be opening at 10 p.m. on Thanksgiving! Best Buy is joining the fray by opening at midnight on Friday, joining stores including Macy's, Kohl's (NYS: KSS) , and Target (NYS: TGT) .
Struggling to remain important
Will these short-term strategies help keep Best Buy relevant? Only time will tell. It has started to make a concerted effort to get smaller in some regards, opening more than three times as many Best Buy Mobile stores in 2010 than regular Best Buy locations. If this trend continues, as well as the closing more of its large-format stores, Best Buy could position itself to be sleeker and more efficient in the near future.
If you would like to keep an eye on Best Buy and its never-ending quest to stay significant, then click here to add Best Buy to your free stock watchlist.
At the time this article was published Fool contributor Robert Eberhard is a Premiere Silver Best Buy Rewards Member but owns no shares in the companies mentioned here. Follow him on Twitter @GuruEbby. The Motley Fool owns shares of Wal-Mart Stores, GameStop, Best Buy, and Activision Blizzard. The Fool owns shares of and has written calls on Activision Blizzard. Motley Fool newsletter services have recommended buying shares of Activision Blizzard and Wal-Mart Stores; writing covered calls in GameStop and Best Buy; creating a diagonal call position in Wal-Mart Stores; creating a synthetic long position in Activision Blizzard. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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