Deutsche Bank: Amazon set to eclipse Best Buy as top consumer electronics retailer
Amazon accounted for a whopping 90% of the $5.6 billion growth in consumer electronics sales posted nationwide in 2015, according to a note from Deutsche Bank analysts issued Tuesday, Quartz reports.
Five years ago, Amazon had 6.2% share and ranked No. 4 on the list of top 100 U.S. electronics retailers; today, it's No. 2 with 17.0% share, jumping ahead of Wal-Mart, Barron’s reports.
Amazon is now gunning for electronics retail leader Best Buy, which is swiftly losing market share with flat same-store sales last quarter that were nevertheless better than expected, Quartz notes. Consumer electronics sales grew 28% at Amazon in 2015, compared to same-store sales increases of 4.3% at Apple and 3.8% at Best Buy.
Best Buy is apparently the main beneficiary of RadioShack’s bankruptcy, according to Deutsche Bank, and sales moving over to Best Buy account for much of its recent gains, Barron’s reports. But of the top 25 consumer electronics retailers, just nine saw actual dollar growth last year, and only Costco and Amazon picked up market share, the analysts said.
Best Buy announced in May that it is working to beef up its customer service by expanding store associate training and enhancing its Geek Squad tech support team. Best Buy CEO Hubert Joly told Fortune at that time that the company is in a unique position to help customers make sense of an increasingly complex technological environment.
“The pace of innovation (in tech) is very extraordinary, but for the customers it’s a bit confusing knowing what to buy,” Joly said. “There is a growing gap between what technology can do and what we as consumers understand what technology can do.”
The thing is, Best Buy has to differentiate its shopping experience if it can’t differentiate its merchandise. While the retailer does have its own exclusive lines of electronics, the main differentiator remains price, which Amazon—more willing and able to forgo profits in its retail operations thanks to its hugely profitable cloud computing business—is often able to meet or beat.
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