Best Buy Co Inc plans to boost its Web presence and open a greater number of small stores in the United States targeting mobile customers in an effort to win back market share from the likes of Amazon.com Inc and Wal-Mart Stores Inc.
The news came after many investors had raised concerns about the retailer's huge overhead costs and oversized stores at a time when many shoppers go online to buy gadgets.
The largest U.S. consumer electronics chain has reported three straight quarters of same-store sales declines and forecast a fall in same-store sales in the current quarter, mainly due to its ailing television business.
The online channel is our greatest growth opportunity, Chief Executive Brian Dunn told investors and analysts in a meeting on Thursday at the company's corporate headquarters in Richfield, Minnesota.
Best Buy said it wants to double its current $2 billion online business within 3 to 5 years.
Dunn also expressed optimism about potential online taxation reforms that aim at expanding the collection of sales taxes on items bought over the Internet. That would prevent online-only retailers such as Amazon from having an advantage over traditional chains.
We believe it's just a matter of time before this field is leveled, Dunn told analysts and investors.
Industry experts have long urged Best Buy to shrink larger, older stores as many shoppers increasingly buy gadgets online.
These (large format) stores were built for another era in consumer electronics retailing. Craig Johnson, president of Customer Growth Partners told Reuters last week. These stores, unless they are radically reconfigured or shrunk, are white elephants.
Best Buy's Dunn defended its brick-and-mortar presence.
Stores ... augment the online presence, Dunn said, highlighting the importance of knowledgeable associates while trying to sell new gadgets.
Best Buy is now aiming for 600 to 800 Best Buy Mobile stand-alone stores in the United States within five years, even as its cuts U.S. big box store square footage by 10 percent over the next three to five years.
The retailer also plans to invest more in its profitable Chinese brand, Five Star, hoping to more than double its revenue in China to $4 billion within five years. It sees a total of 400 to 500 Five Star stores in the next five years.
Best Buy shares were down 80 cents or 2.6 percent to $29.45 in afternoon New York Stock Exchange trading.
(Reporting by Dhanya Skariachan, editing by Gerald E. McCormick and Derek Caney)