Report: Best Buy Falling Behind Amazon, Wal-Mart

By : Erik Gruenwedel | Posted: 23 Nov 2009
egruenwedel@questex.com

Forget Black Friday. The race to be the low-price leader in consumer electronics finds No. 1 consumer electronics retailer Best Buy losing ground to competitors Wal-Mart and Amazon, according to a new report.

In a price comparison of 50 overlapping non-TV products, which included Blu-ray Disc players, Pali Capital analyst Stacey Widlitz found that Wal-Mart and Amazon lowered retail prices 3% and 1.3%, respectively, while Best Buy increased prices 2.1% since a similar price comparison Nov. 2.

Widlitz said Amazon remained the cheapest in crossover products, which were 13.6% less expensive on Amazon than at Best Buy, while Wal-Mart was 6.3% cheaper than Best Buy.

Excluding Black Friday specials, Amazon Nov. 23 offered select Internet-enabled Blu-ray players from $129.99, while Best Buy presented a wireless connected Insignia player online for $129.99. Walmart.com, which offered a Sony BD player for $128.99, offered a Samsung wireless BD player for $148.

Widlitz said Best Buy appeared to be focusing on smaller-ticket CE products during the holiday season, reflecting ongoing concerns about the economy.

Indeed, among new-release Blu-ray movies over the past 30 days, Wal-Mart priced titles from $14.32 (Night of the Creeps) and up, while Amazon priced the title at $14.49 and Best Buy offered it for $19.99.

“With the consumer stretched, we believe [Best Buy] is targeting smaller, more affordable gift items for the holiday,” Widlitz wrote in a note.

In the ultra competitive high-definition TV market, Amazon priced TVs 6.2% below Best Buy on comparable models, while Wal-Mart was 4.5% cheaper than Best Buy. The latter marked a reversal from Nov. 2, when Best Buy bested Wal-Mart on comp TV units.

“While Wal-Mart and Amazon remain price leaders versus Best Buy in TV and non-TV [comparisons], the differential with Wal-Mart is probably not a reason to hit the panic button,” Widlitz wrote. “Amazon’s pricing spread remains more concerning for Best Buy.”