Best Buy & Apple in the News Again- Guess Who is Floundering?

The latest news story from the St Paul Press/twincities.com expanded on the blog post here on December 20th: Best Buy: A Retailer Loses Its Way.  This time, writer Tom Webb contrasts the companies’ complex co-dependency and competition.  With Apple Retail winning the Customer Experience and Service strengths, Best Buy’s Mike Vitelli seems to believe that Best Buy’s advantage will come when tablet (read that as “iPad”) competition increases across multiple manufacturers. “A lot of those dollars are going outside of Best Buy this minute, because there’s a very limited number of manufacturers and products in that space. But that’s going to rapidly change. … When there’s a broad array of products and suppliers available, we’ll do great.”

Really?  Best Buy will “do great?”  It seems that Best Buy is betting on becoming the retailer of choice for tablet customers by winning with a broad assortment to compete against single-branded outlets.  It is the same as Best Buy’s approach to winning in the cell phone space by offering all carriers and brands instead of a single format like you would find in a Verizon or AT&T store.  Or Apple store…which now has two carriers.  Come to think of it, how has this strategy worked for Best Buy in the cellular space?  Best Buy has less than a 5% market share.

(Apple’s 4.2% market share accounts for 51% of all profits in the space.  See this Apple Insider article for more.)

Best Buy is losing its hold on the most lucrative part of a technology product’s lifecycle: the early adoption phase.  By selecting a strategy to be competitive once a product has moved into the mass appeal stage, Best Buy is choosing to relinquish its most profitable target market: early adopters who will pay almost any price to have the latest and greatest.  The very same strategy that WalMart, Target and Costco have.  I worry for Best Buy.  It has lost its way.

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