Best Buy for years has had large portions of its retail stores dominated by racks of CDs and DVDs, but during a conference call this past Tuesday, Best Buy Chief Executive Brian Dunn announced that both sections would see major reductions this coming holiday season. “We’ll have another store reset before the holidays, which will include an increase in the space for higher-growth and, in the aggregate, higher-margin categories, like Best Buy Mobile, e-readers and gaming, with a heavy emphasis on new gaming platforms and pre-owned game titles,” said Mr. Dunn. “This will be enabled by our reorganization of the DVD and CD sections. The CD section in particular will shrink in space allotment.”
Part of the problem isn’t just those departments are seeing decreased sales, but a lot of other products have gotten smaller, meaning that the stores, which average 50,000 sq feet, are beginning to look a bit empty. By rearranging things they will be able to set up kiosks for customers to try out things like Microsft’s Kinect and Sony’s Move controllers. Greg Melich, an analyst with ISI Group, spoke with Investors.com, and explained this in more detail. “The stores are too big now. They’ve tested fitness equipment; they’ve tried selling musical instruments. It makes a lot of sense for Best Buy to expand its video games section.”
With the exception of video games, and mind you that Best Buy is increasing its used games selection, it definitely appears that physical media is on the decline, at least in the purchase situations. With the ease of rental now for DVDs through the mail or kiosks, and most people just purchasing digital music, there just doesn’t seem to be as much need to purchase anything in a physical form entertainment wise.
And, by the way, remember how I complained that not all Best Buy locations had the iPad? That’s changing for the holidays. Apparently the company will be adding them in with other e-readers such as the Kindle in an area where people can try them out in person.
I have to admit, I had never pondered the impact of technology getting smaller messing with the layout of stores. It sounds like it may be a better thing for consumers, however, as all that empty space appears to be taken up with a lot of demo areas for you to try things out. There is something always to be said for the hands-on experience.
What say you? Is Best Buy cutting back on CDs and DVDs yet another sign that media is changing?