I think its all relative. Its been a while since I was directly involved with MAV or MHT. But a few years ago I was quite surprised at how many people were more than happy to buy Denon or Martin Logan at a Best Buy. I was shocked to see the volume of orders for 5 series Denons a few years ago. Certainly not big numbers, but the quantity was much higher than expected given the cost and that they were not displayed on the sales floor. Again, if you consider MHT as an aggregate internationally and not just the individual locations in your backyard, the volume adds up quickly.

Before you dismiss Best Buy or MHT as a competitor again, don't forget about things like Reward Zone, Best Buy credit cards, financing, and appliances. When you are looking at outfitting an entire house, a one stop shop with great financing options and reward program can be a compelling choice for the average consumer. They certainly won't get all the whales, but they get enough big (and medium) fish to be on somebody's radar. I personally did QC on several jobs that few people on this board would have passed on.

With regards to B&W: Welcome to the global economy. I saw plenty of smaller boutique shops in malls all over Shanghai that featured B&W. These shops sold a few high end brands, but didn't offer much beyond that. And if I recall correctly, B&W was sold through Best Buy/MHT China when it launched. Producing expensive goods at low volumes that compete against mass produced 'commodities' is an extremely risky proposition these days.

As for predictions of Best Buy's demise, time will tell. I don't think it will be in the next 10 years though. The company is 45 years old. And while they have seen soem decline in recent years, their financials are fairly consistant. They have a pretty firm grip on the middle of the market - Walmart can only provide products and services up to a certain level, and there will always be people that prefer buying in person over buying on the internet.

It's all my fault - we just did not hit our numbers last year.
Here is an excerpt:

...It is hard to overstate the extent to which the U.S. retail environment in general and the challenges faced by specialty audio/video dealers in particular have changed fundamentally over the last 18 to 24 months.

Many of you have found ways to evolve your business model to adapt to the new world and are positioned to capture increased market share when consumer confidence and personal credit begin to recover. For a number of different reasons, however, many dealers have not and the result is more store closings and business failures than we have seen in the last 20 years combined. 


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I was talking with a couple recently departed Magnolia guys (yesterday) who told me that there are (2) Magnolia stores in China, and they are projecting to sell more B&W from those two stores, than the the entire U.S.!!!

I have some pals, who work for a high end shop (2 stores), and I broke the news to one of the guys yesterday --- he insisted there was no way in hell this would happen... Guess he wasn't informed as of yesterday!

That's gotta hurt especially since their two stores are next door to Magnolia stores.

Their non-Best Buy stores sell a TON of Macintosh, the big Martin Logans, Vienna Acoustics, Sonus Fabre, etc. These stores (at least they used to), have very very good salesguys who have been with the company up to 30 years or more!!! That is changing, slowly and I feel sorry for the changes they are going through.

A totally different animal than the Best Buy Magnolias.

I have been in multiple MHT stores-in-a-store. Ironically, theones that seemed to be doing a better business were those in smaller markets where there were fewer high-end shops. The two that I visit most often are Lexington, KY and Castleston (Indianapolis). The Lexington store seems more of what you would expect in a MHT and has always had a good number of shoppers.

The Indy store on the other hand seems to be stuck over in the corner and other than a couple of customers sitting at the main display, no one seems to be buying or even looking at anything.

My theory is that Indy has enough of the higher end shops that someone who wants a certain product can find it through other sources. Lexington does not have a large variety of these shops so customers gravitate to the place they can find the product they are looking for.

Just a theory. But there are those customers who have heard of B&W on AVS who will pick them up at MHT because it is easy to do so.

My 10 year prediction includes Best Buy becoming the new location for tire kickers/strokes and the guys who used to waste time listening to gear and then ordering it from somewhere else.

I love BestBuy, i always have. But this is what happened to me a couple of weeks ago... I wanted some headphones.. nothing super expensive but something decent for traveling. I found some Sony headphones i wanted for around $80 . I had google maps instructions printed out to the nearest BestBuy and i was all set when i decided to google them for reviews. Amazon link popped up $46! Today i tried it again and a google store has them for $44!

What did i do? I bought them thru amazon, paid for next day shipping and had them here the next day for $20 less. I have been around retail operations so i understand the whole having someone to talk to face to face but when your met with an almost 50% discount its really hard to justify it.

What i think will happen to Best Buy (and already does) is they will become the showroom for the online stores just as CI's used to be the showroom for mail order dealers. People will go over, waste best buys time and buy it from someone else. As we move forward more and more people are beginning to shop online. Even the tech-dummies know how to use google and the sale belongs to whoevers ad ranks highest with the lowest price.

Circuit City was in business for 60 years and poof.. gone. They lost the war with BestBuy before it ever started because they were not in touch with the market. People didnt want to shop in the late 70's early 80's "electronic discount outlet" where sales guys nagged you from the moment you walked in the store. They didnt want to wait for product to be pulled from the back after they paid for it. CC solved these issues but to late in the game. Their name is still alive... as an online store.

Best Buy's "chance" to survive is to pick up where tweeter left off and attempt to grab up all the new $5-50k projects where the ingredients are a dash of high end brands and a pinch of big @ss installation team. They have both of these plus a control system to work with. If they look in the mirror and see themselves as this company i have described here then look out trunk slammer/ hang and bang/ and middle market companies because they will put you out of business. If they think they are going to keep the doors open with iPod, digital camera and cheap computer sales then we will be saying goodbye to them in 10 years because walmart will be making those sales.

This is who Best Buy needs to model themselves after http://www.abt.com/. Abt not A-B-T :) Fewer/better stores will create a bigger difference between them and Amazon.

Just another indication of how the market is evolving for us. We as an industry need to continue to market ourselves as high end integrators. The midmarket is now being filled by the box stores and in order to survive we all need to accept this and adjust. Cash flow is important, yes, but if there is no effort to move away from the mid market, eventually that cash flow will dry up and it will be too late.

If we market ourselves as high end only, then there is very little competition to worry about. Product then becomes "just product". These types of customers don't have the time or inclination to shop you to death on the internet. They want what they want and are willing to pay for it if you can convince them that you are the guy to deliver it!

As technology gets better/cheaper the entry level/medium crestron jobs wont be there anymore. I remember our Phast days when our $250k jobs were 90% AV and 10% automation. A sonos system can beat any of those phast systems today for pennies on the dollar. Todays $250 Crestron systems will be accomplished by tomorrows $20k at the apple store so its time to get your ducks in a row and head for the top.

Exactly.

For anyone that was shocked by this move from b&w, it should probably be pointed out that last year their biggest dealer went out of bsiness. I can't rember the name of the company now, but it was the one with stores in DC and Philly that shocked everyone when they closed. There was even an article in cepro.

If you like selling b&w then you might should be glad they did this because it may be what keeps them in business.

Circuit and Best Buy sold consumer electronics in a large scale format. Beyond the basic similarities, they were vastly different companies, with vastly different strategies and financials. Best Buy is edging up on $50 BILLION in revenue, and continuosly shows positive growth. Circuit was no where close to that, even at its peak. Past performance doesn't doesn't gaurantee future success, but I think its safe to say that Best Buy will not crash and burn like Circuit or so many others.

Comapre GM and Volkswagen Auto group - both make cars. But their financials and strategies couldn't be more different.


Again, Best Buy is bigger than just audio and video. According to their 10k, 'consumer electronics' comprised 39% of their total revenue over the last 2 years. The consumer electronics category is further broken down to includes televisions, navigation products, digital cameras and accessories, digital camcorders and accessories, e-readers, DVD and Blu-ray players, MP3 players and accessories, home theater audio systems and components, musical instruments and mobile electronics. A/V is a big chunk of the business. But they don't have to win the category to stay viable as a company. They just need to place.

Look at Microsoft or Apple for comaprison. Both are titans, but often fall well behind the competition in areas where they are weak.


Just selling products cheaper hasn't been Best Buy's strategy for over a decade. Hence the international expansion, product diversification, and aquisitions. It will take something significantly larger than ripples in the A/V market to capsize a company like Best Buy.

My point is that unless you can process the scope and scale of comapnies like this, you can't begin to see the long term evolution. And it may be moot anyway. The only way a company the size of Best Buy will fail is if someone else takes over. So even if they implode, the same competitive threat will still exist for most integrators. It all comes back to running a smart business and being the best at what you do, regardless of who you compete with today.

People said the same about K-Mart, Sears & Roebuck, Circuit City, IBM typewriters, and the U.S. Whip Company. With the growth of Amazon and Target Wal-Mart is even showing some signs of falling from the number one spot. The public has a short attention span, and as soon as something else gets their attention, they move on. Middle class shoppers are becoming turned off on Wal-Mart and looking for nicer places to shop. But Wal-Mart has buying power that no one else can compete with. Its a a competition that doesnt have enough info yet to see how it will play out. But history leans towards the argument that even Wal-Mart wont be number one for ever.

This would support that BB also has limited time. Add in that Wal-Mart is working hard to stay alive by taking BB's in store shoppers, and Amazon and Newegg are quickly taking their small item (I mean size, not price) customers, then it only looks worse. Do you realize that for $80 a year you get free 2 day shipping on everything from Amazon? For $4 per item you can get it next day. For less than the sales tax on most purchases, you can get next day shipping.

Unless Best Buy can figure out some major makeover, they are done. The question is just when will the doors get locked.

Myer Emco

Thank you. I was posting from my blackberry and couldnt really google it and post at the same time.