Looks Like Santa Wasn’t Good to Best Buy

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Jan. 16 (Bloomberg) –- Bloomberg’s Jeffrey Hayzlett, Adam Johnson, Trish Regan and Julie Hyman discuss Best Buy reporting a decline in holiday sales on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

Best buy.

I know you spoke to the ceo.

What is he saying?

We live in an amazon world.

Matching prices with amazon is what crushed them.

If they had not had to do that at best buy, the ceo told me the sales would have been up mid- single digits.

Call it about five percent.

He said you have to bring the cost down.

They are going to try to take another $400 million in cost out of the business in the next year.

All the merchandise you return, they are now going to sell that in what they call an open box sale.

The discount is when he five -- is 25%-80% off.

Otherwise, they are writing it off.

The difference between best buy and some of these other companies is that best buy's issues are a little different.

It is the commodities business.

It is not like you are looking for specific fashion, for example.

In theory.

I think it is worse than that.

I don't think the grinch stole christmas.

Amazon and ebay did.

Their numbers are up.

The big thing is, behavior has changed.

It used to be five people would go to five different stores.

Now they are only going to three because they are looking online, and they are hunting.

They are not shopping.

Behavior is changing.

The biggest news was the push of not going online, but to mobile.

You do not need to go to best buy anymore.

Used to be able to go to best buy and look around, but now you don't even need to do that.

And think about the shipping.

I just got a christmas gift today as it was so delayed from ups and fedex.

That was probably my gift.

It was.

But what is going on here, really.

Is there no hope?

They have real estate.

I think julie said it best.

It is a commodity business.

I think best buy was the show room for amazon for many years.

Now they have tried to match price -- and you cannot have all that real estate and inventory.

It is a spiral down.

The discounts did not work.

They did not bring people in.

There are some stores that do really well at this.

Inc.

About your experience the last time you're in a store.

There is nobody to wait on you.

There is nothing special.

Matt miller was invest i a couple of hours ago.

He said there -- was in best buy a couple of hours ago.

He said it was a decent experience.

That's because there was nobody else in there.

Also, give people a specific reason to come in.

Exactly.

And then give them a great experience.

That is the key thing.

Your experience today in shopping is better online than going into the store.

What has been interesting about the trend over the past several years is that the bricks and mortar retailers have competed against amazon relatively well.

Some of them, at least, have developed good websites.

In the integration between the online and off-line experiences very strong.

Like toys r us.

81 ways you can buy it toys 'r' us.

25% of all online sales are amazon.

The next closest is walmart.

So what happens to the brick- and-mortar's? i don't know about you guys, but unlike going to the store.

We're going to have a tremendous -- i don't like going to the store.

We're going to have a tremendous rationalization.

I think we're going the entire chains go away.

Jcpenney is a great example.

I think macy's is doing it right.

They are becoming a top-of-the- line presence.

When you get up and have your coffee and say i want to do some shopping today, macy's is top of your mind.

Who is not doing it well?

Jcpenney, coles -- kohls, some of the mid tier department stores, but they are at a disadvantage because their customer is not really an internet buyer.

It has nothing to do with online competition for jcpenney.

They shot themselves in the foot in many ways, but they were really struggling to begin with.

Asked by is a good example.

Yes, a lot of -- best buy is a good example.

Yes, a lot of people are shopping online for clothing, but there is still a big segment that wants to see the merchandise in person.

That you're going to have to give the experience a much better look.

Even if it is easier to return the item -- have you ever been to a nordstrom?

Absolutely.

And they have that big grand piano and they play, and you are like, this is kind of cool.

And the customer service is fantastic.

It is a different situation from all these other companies like the gap.

When 50% off is the baseline, we are in an incredible world.

Pretty soon it is going to be free and here is five dollars.

The behavior has changed and i think that is the most important thing to take a look at.

The way we all shop -- and i said this before christmas.

We all did it online and had it done weeks before.

That is what we are seeing.

The grinch did not steal christmas.

Amazon and ebay did.

There is a silver line.

Overall retail sales are up.

But it's the margins.

Margins are terrible.

When is it going to come back?

Doesn't come back?

I am not sure it does.

I think we are in a downward spiral.

Amazon has won competitive weapon, price.

This text has been automatically generated. It may not be 100% accurate.

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