But even following this Apple-like business model may not be enough to save Best Buy. It’s possible that the forces of e-commerce and advancing technology are too great to effectively combat and that specialized superstores are no longer efficient. John Backus, a venture capitalist and managing partner of New Atlantic Ventures, seems to think this is the case. He wrote in a blog post earlier this year that we are entering “the death of retail 2.0.” The first permutation of the death of retail, Backus writes, included the failure of large media retailers like Borders, Blockbuster and Tower Records. The Internet proved to be a much more efficient medium for purveying media. The second wave of retail death will include sellers of electronics and other small specialty goods. According to Backus, stores from Radio Shack to Staples will find themselves in a severely diminished position, if not completely gone, in the next decade. As for Best Buy, forces beyond Amazon are making its core product lines unprofitable. Backus writes:
“Appliances are here to stay, but are not a frequent purchase. Video games are moving into the cloud. Home theatre is stagnant … we may continue to upgrade our main television screen at home every 3-5 years, but more and more we will consume movies and television on our desktops, tablets, and phones. So sales of second and third TVs are dying quickly. In-car electronics, standalone GPS, satellite radio, seatback DVD players and HD radio will quickly disappear, replaced only by the smartphone powering a dumb screen on the dashboard.”
This integration of devices is another force that will hit electronics retailers the hardest. If one device is completing many of our tasks, electronics retailers can’t move the volume of goods needed to justify huge overhead costs like sales forces and brick-and-mortar stores.
But not all big-box retail will go the way of the dodo. Retailers that offer a broad spectrum of goods will be able to fend off e-commerce by providing staple products like groceries and other items that aren’t easily shipped. For that reason, Backus sees Walmart and Target surviving the latest wave of retail death.
So perhaps it’s early to predict the total elimination of the superstore that has come to define America’s suburban landscape. But forces in the marketplace are clearly aligning to do away with many of them. And oddly enough, the sort of stores that pundits are predicting will replace them — smaller outfits that focus on customer service and product expertise — look strangely like the mom-and-pop companies of yore, the extinction of which many bemoaned not a decade ago.
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