On January 31, Best Buy shut down seven of its retail locations across Canada, five of which are located in B.C.
Electronics chain Best Buy surprised the public and its own staff Thursday morning when it shut down five of its B.C. stores and two more locations across Canada. CBC reporters were at the front lines, speaking to employees who had shown up for work that morning only to discover the store had shut down.
Eight Canadian locations of big-box retailer Future Shop will also be closing, one of which is in B.C. Best Buy and Future Shop are both owned by American electronics giant Best Buy Co. Inc. In total, 900 workers were laid off (with severance support) from the now-closed locations.
According to retail expert David Gray of DIG360 Consulting Ltd., the closures aren’t necessarily a red flag for Best Buy and Future Shop, but an indication of the changing retail landscape. “The way shoppers are behaving in the marketplace has changed quite a bit and will probably stay changed into the future,” says Gray. “Instead of impulsively satisfying wants, I think there’s a shift to really looking at what is truly needed. This has led to a general flattening of demand—that’s true certainly in Canada, definitely in the United States. So the fact that Best Buy’s parent [company] is U.S.-based is certainly a factor in all this. There are a lot of financial pressures on Best Buy throughout the organization because of the U.S. state of affairs.”
Also contributing to the in-store demand lull is increased online shopping, especially for retailers who sell electronics. Big-box retailers are vulnerable to a new consumer trend called “showrooming,” where customers test out products in store and subsequently buy them online at the cheapest price they can find. Gray says that although this trend can be pernicious for retailers, he doesn’t consider it a huge contributing factor in Best Buy’s store closures. “I feel that Best Buy has negated that to some degree because through Future Shop, they’ve got a price match,” says Gray. “If you show staff, ‘Here’s what Amazon is selling it for,’ they’ll price match that. So it takes away a little of the showrooming, but even so, it makes it hard for Best Buy to create an experience for their customers.”
In a statement released the morning of the closures, Best Buy claimed that shutting down the stores was part of an effort to reduce real-estate costs and that it will be placing a greater focus on its online sales and its new Best Buy Mobile locations, adding that the decision factors into the “long-term transformational strategy to optimize the company’s retail footprint across the country.” Adds Gray: “The decision to close the stores, for me it doesn’t mean that Best Buy is sinking; it means they’re being very smart. They’re saying, ‘We need to retrack a little bit in order to redefine ourselves and be relevant.’ ”
Kristen Hilderman is the assistant editor at BCBusiness magazine, specializing in retail and manufacturing. | Twitter