Market Overview

How Amazon And Wal-Mart Are Squelching Best Buy

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Best Buy Co Inc (NYSE: BBY) disappointed analysts and investors Thursday by announcing that it sees flat to negative same-store sales growth in the first two quarters of its fiscal year. The stock closed down more than 14 percent.

Henry Blodget, Business Insider editor-in-chief and CEO, was on CNBC to discuss how e-retailers and other discount retailers are destroying Best Buy’s business.

Related Link: 4 Reasons Investors Hate Best Buy

Best Buy's Position Is Not Exactly Idyllic

“They are at a tough place,” Blodget said. “They are getting squeezed by the Internet. Amazon? Much more volume; they can sell at lower price. And if you want low prices […] you go to Wal-Mart, which is going to sell at a lower price.”

“So, they [Best Buy] are in the middle of people who need help and want to get schmoozed about their products and so forth, but that is an increasingly smaller segment of the market, so it’s tough.”

Wal-Mart And Analyst Jeff Bezos Share Philosophy

When mentioned that in one of the upgrades of Amazon this week, the analyst argued that Jeff Bezos is no more relying on lower prices, but instead on selection and convenience to consumers. Blodget said, “That would help, but Bezos philosophy, it is the same as Wal-Mart, which is: most companies try to raise prices over time, get more margins, so forth.”

“Amazon is committed to try and lower prices as aggressively as it can.”

Related Link: A Look At 2 Hot Tech Retailers

Electronics Retailers Aren't A Shoe-In For Success

He continued, “That is why Wal-Mart has been so successful. It’s the same thing; their whole mission is lower prices. That just puts the squeeze on everybody else and this is a tough business to begin with. How many huge electronics retailers have we seen go belly up? It’s just very tough.”

Posted-In: Business Insider CNBC Henry Blodget Jeff BezosMedia

 

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