Best Buy misses out on initial iPhone sales craze
- Blog Post by: Thomas Lee
- September 21, 2012 - 10:14 AM
Best Buy is one of the world’s largest sellers of Apple products like the iPhone and iPads. But you would never really know that once you see the throngs of customers waiting to purchase the iPhone 5 outside of the 250 or so Apple stores across the country Friday morning, including the Mall of America and Uptown.
The debut of a hot consumer electronic product is sort of like the movie business. Everything depends on opening weekend grosses, which sets the pace for how the movie fares for the rest of its run.
Analysts expect iPhone 5 to be a big blockbuster, even though the device offers only relatively modest upgrades like an improved camera, 4G capability, and a longer screen.
Unfortunately for Best Buy, Apple’s decision to debut products like iPhone 5 at its own retail chain kind of steals most of the initial sales thunder from BBY stores. Oh sure, Best Buy will sell plenty of iPhone 5s. But one would think they would sell a whole more if Apple chose to debut the phones at a Best Buy.
Microsoft is also stretching its retail muscles. The company will reportedly debut its Surface tablets this fall at the roughly two dozen Microsoft stores. And borrowing a page from Target Corp., Microsoft will also open 32 “pop-up” stores at malls and shopping centers this holiday shopping season. (Even Amazon, Best Buy’s online nemesis, plans to open physical stores.)
All of this should worry Best Buy. Back in the day, retailers were retailers and manufacturers were manufacturers. Today, those lines are completely blurred. In the past, you would line up outside a Best Buy for the latest gadget.
Nowadays, the only time you see huge lines outside of a Best Buy is Black Friday, when the retailer offers huge day-after-Thanksgiving discounts to jump start the holiday shopping season.
New Best Buy CEO Hubert Joly has certainly thought about this. Best Buy must work with its key suppliers like Apple and Microsoft to create value and excitement, he said.
“As a major retailer, we are very important to them,” Joly told the Star Tribune in an earlier interview. “There has to got to be things that we can do for their benefit and our benefit. Ralph Lauren has its own retail business but also partners with Macy’s. There are lot of partnership opportunities. Is it exclusive products? Or other things? I don’t know yet.”
These days, brick and mortar stores use exclusivity to drive people to its stores. Without design partnerships like Missioni, Shops at Target, and Neiman Marcus, Target might be just another discount chain hawking pet food, toothpaste, and shower curtains.
It’s hard to think of any such equivalents at Best Buy. The retailer does offer several private label brands, including Rocket Fish, Dynex, and Insignia.
But “Best Buy has not aggressively marketed their own brands,” said Carol Spieckerman, president of newmarketbuilders, a retail consulting firm. The retailer has so far failed to offer something truly unique and experiential to shoppers, she said.
Best Buy still harbors hope that it can exclusively sell that next must-have gadget. The company operates a venture fund that seeks to invest in hot technology startups from Silicon Valley in exchange for first rights to sell that product.
Some new technology that will prompt people to line outside of Best Buy the same way they do for Apple.
Until then, Best Buy can only wait until the second wave of iPhone buyers hit its stores.
© 2013 Star Tribune