The End of the Road for Electronics Stores?

February 24, 2021


Radio Shack, Circuit City, CompUSA, Good Guys have succumbed to changes in consumer buying habits, and now comes word that Fry's Electronics abruptly closed its stores. For Fry's, it was a long time coming, even before the pandemic. Foot traffic to its large stores dwindled as the retailer experimented with different inventories, including consignments. Still, it was not enough for the best online electronic sellers such as Newegg and Amazon. Much like Sears, Fry's lost its way amid the great retail evolution.

Best Buy is one of the few electronics stores left that has successfully reinvented itself for the new retail environment. It invested in an omnichannel strategy, closed underperforming stores, reduced store size, created 'experiences' in stores, and more. When the COVID-19 pandemic hit last year, it offered curbside pick-ups of online orders at temporarily closed stores. Curbside pick-ups continue now that stores have reopened, but the retailer is looking to turn its stores into fulfillment facilities.

According to a recent Bloomberg article, Best Buy is testing a smaller store format that reduces the space for customers to browse by nearly half to focus on getting digital orders. The company plans to shift stores in one or two more markets to the new setup, reducing square footage used for shoppers to about 15,000 square feet from an average of 27,000 square feet.

Other electronics retailers such as Micro Center have also enhanced their omnichannel strategies and offer such conveniences as buying online pick-up in stores (BOPIS). For Micro Center, in particular, its approach differs from Best Buy by focusing more on the "tech geek" by offering hard-to-find electronic parts.

Total US e-commerce sales for 2020 were estimated at $791.7 billion, up 32.4% from 2019. In terms of percentage of total retail sales, e-commerce ended the year at 14%, peaking at 16.1% share in Q2. In 2019, e-commerce represented 11% of total retail sales.

As a supplement to its quarterly e-commerce sales estimates, the US Census Bureau has provided e-commerce sales estimates for some retail segments, including Electronics & Appliances for 2020:

Quarter US e-commerce sales in $ millions
Q1 (Jan – Mar) $13,262
Q2 (Apr -June) $19,735
Q3 (July -Sept) $17,549
Q4 (Oct-Dec) $21,492

According to the Census Bureau, data for previous quarters is not available due to the quality of data. For more info: https://www.census.gov/retail/index.html

 


ABOUT SPEND MANAGEMENT EXPERTS

Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting and forecasting accuracy and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered.

Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

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The End of the Road for Electronics Stores?

February 24, 2021


Radio Shack, Circuit City, CompUSA, Good Guys have succumbed to changes in consumer buying habits, and now comes word that Fry's Electronics abruptly closed its stores. For Fry's, it was a long time coming, even before the pandemic. Foot traffic to its large stores dwindled as the retailer experimented with different inventories, including consignments. Still, it was not enough for the best online electronic sellers such as Newegg and Amazon. Much like Sears, Fry's lost its way amid the great retail evolution. Best Buy is one of the few electronics stores left that has successfully reinvented itself for the new retail environment. It invested in an omnichannel strategy, closed underperforming stores, reduced store size, created 'experiences' in stores, and more. When the COVID-19 pandemic hit last year, it offered curbside pick-ups of online orders at temporarily closed stores. Curbside pick-ups continue now that stores have reopened, but the retailer is looking to turn its stores into fulfillment facilities. According to a recent Bloomberg article, Best Buy is testing a smaller store format that reduces the space for customers to browse by nearly half to focus on getting digital orders. The company plans to shift stores in one or two more markets to the new setup, reducing square footage used for shoppers to about 15,000 square feet from an average of 27,000 square feet. Other electronics retailers such as Micro Center have also enhanced their omnichannel strategies and offer such conveniences as buying online pick-up in stores (BOPIS). For Micro Center, in particular, its approach differs from Best Buy by focusing more on the "tech geek" by offering hard-to-find electronic parts. Total US e-commerce sales for 2020 were estimated at $791.7 billion, up 32.4% from 2019. In terms of percentage of total retail sales, e-commerce ended the year at 14%, peaking at 16.1% share in Q2. In 2019, e-commerce represented 11% of total retail sales. As a supplement to its quarterly e-commerce sales estimates, the US Census Bureau has provided e-commerce sales estimates for some retail segments, including Electronics & Appliances for 2020:

Quarter US e-commerce sales in $ millions
Q1 (Jan – Mar) $13,262
Q2 (Apr -June) $19,735
Q3 (July -Sept) $17,549
Q4 (Oct-Dec) $21,492
According to the Census Bureau, data for previous quarters is not available due to the quality of data. For more info: https://www.census.gov/retail/index.html  

ABOUT SPEND MANAGEMENT EXPERTS

Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting and forecasting accuracy and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered. Connect with Spend Management Experts on TwitterLinkedIn, and the Spend Management Experts blog.

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