Thursday, February 25, 2016

Replacement Cycle Bites Best Buy

The durability of phones and computers is good for almost everyone but a bummer for Best Buy, which sees falling sales as consumers replace devices less often. Best Buy had bet big on being a go-to place for mobile devices, and the same as at Radio Shack, that’s turned into a negative now that people are keeping their devices for years. The Reuters story:

People are using phones and computers as much as ever, but now only a small fraction of users expect to replace computing devices every year or two. My own desktop computer and phone are 8 years old, and by 2021 that pattern may be the norm. Another change affecting retailers is consumers buying replacement devices directly from the manufacturer. A consumer who can wait two days for a replacement phone can save a trip to the store. Best Buy is not the most convenient place to buy a phone anyway, and Best Buy is reporting a 6.8 percent decline in that category. This is more of a change than than it sounds. Phones and computers might take up 10 percent of the floor space in Best Buy, but they account for nearly half of revenue. Combined with other growing categories (such as home appliances and fitness trackers) and stagnant ones (video games, car stereo) Best Buy expects flat sales this year.

Best Buy’s report is a measure of what is going on across retail, with consumers looking for ways to spend less time shopping. It’s a long-term trend with no single obvious cause, and retailers simply have to adapt.