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Today’s society is fast-paced and is only getting faster as time moves on.   The need for products to become smarter, faster and easier to use is growing at an enormous rate.   Such a shift is actually having negative effects on Best Buy.   It was only a few years ago that this electronic store giant seemed as if nothing could slow it down.   The company is still producing average returns, but the growth has dramatically slowed.   Although they are still turning over profits today, there are a few reasons why it may not last long.
The first, and maybe the biggest, of these factors is the effect of digital distribution.   The industries of video games, music, movies and books are all riding the digital wave recently.   There is a much greater ease of purchasing these items and not even having to leave one’s house.   Apple scored big a few years ago when it released the iTunes Store and began selling music exclusively online.   In just a short time iTunes became the largest music retailer in the world.   Now, the ever expanding Apple has added another wrinkle to the industry by selling “apps” through the iTunes Store.   The thousands of apps on the iTunes Store include games, learning tools, news articles, etc.   Amazon also recently released their e-book, the Kindle.   Although many of the books sold online to use on the Kindle could be bought elsewhere, about 15% of the top sellers were exclusive to Amazon.
Several years ago, as Best Buy was starting to pick up and gain a good share in the market, they started to purchase high priced real estate.   The reason behind this was primarily for the great locations.   Consumers could easily access these Best Buy stores in major market areas.   The company definitely prospered from the move, but it could be coming back to get them now.   E-Commerce has put the company’s sales at a low growth point, so prime locations aren’t nearly as important as they once were.   Yet, Best Buy has to still hand over big money for the land they’ve... [continues]

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