How did Best Buy put Indie Stores Out of Business?

Back when I was a teenager in the late 80's/early 90's in Minneapolis, we had an ALL-CD Best Buy store (well, they also had a video-rental section but I doubt it generated much revenue). At the time it was well understood that BB was undercutting the independents, but at the time it was hard to refuse their rock bottom prices. (In retrospect it's hard to imagine how this business model was expected to work. This store was apparently selling most of their stock for below what they paid for it, but didn't have any washing machines or hi-fi systems to compensate for their losses.)

I recall that I bought the entire Elvis Costello catalog there, up to SPIKE. Gotta say, the place was nice while it lasted.

 

our best buy never had a deep catalog

I guess I was into eclectic artists

It has shrunk dramatically over the years

used to be 4 long aisles
now it is two short aisles
and movies are also downsized
with Tv Series being the only thing that has expanded in physical media space in a BB

 

In my area, independent and small-chain stores used CD market had already existed several years before Best Buy started aggressively piling up stock and doing the "loss leader" reduced prices for new CDs. I'm talking the early 1990s here.

I also don't believe that Best Buy put the indies out of business- they certainly did damage, but nothing like what downloading music over your phone line (and the eventual change in format) did.

All of the inventory had more monetary value then. It was nothing like the $1-3 prices you see today. There was better selection in the used racks partly because people were still buying CDs regularly and there was still interest in the CD format itself.

It all depended on the title, price, availability and convenience. Used titles were often $7.99-11.99 from an indie store and could be bought brand new @ Best Buy for $9.99. If the indie store was 20 minutes away and the Best Buy was over an hour's time away, it didn't make sense to do all that traveling, so you bought used. I'm pretty sure that all friends of mine at that time thought along those same lines. None of us insisted on buying new.

From memory it was around $9.99 for Best Buy's "loss leader" new release price vs. $17-18 from an indie store.

A lot of the indie stores that didn't make it were ironically often the best indie stores- all they specialized in was music. A lot of the indie shops that did survive made it because they became "Head Shops" overnight. Music racks shrank to make room for band and pot-related shirts. Glass counters that once showcased box sets now housed all kinds of drug paraphernalia. It was actually kind of depressing. Those prices stayed the same, though.

In my area.. in the beginning, the indie stores often carried what the majors wouldn't. Lots of punk, metal, alternative and indie stuff. The internet was extremely primitive and you could not find that music anywhere else! Then Best Buy's catalog stock started to become extremely impressive- they carried stuff I never expected a major retailer to carry. The prices weren't the cut-throat $9.99 loss leader prices, but they were still often $5 less. So once the indie stores started stocking more head shop stuff, they stopped specializing in a lot of the hard to find stuff.

Not really, it wasn't really all that different from today other that titles that have been released since those times, of course. CDs generally had more value back then...


My above comments of course do not apply to all indie record stores- it's just my experience here. I'd really like to make a trip to Ameoba Records sometime!

 

No doubt BB put margin pressure on lots of independents but "instant" cd copies and bit torrent downloads killed it dead.

 

Here's some fun facts for you...

In my area, back in the early 90's, we had Mall music stores like Record Town and Tape World (both owned by Trans World, although most didn't know that) and Musicland, plus Lechemere (a sort of proto Best Buy), Strawberries and Wal-Mart that all carried music and movies. There were also a few indie stores, like Bullmoose, but you had to make the drive from the suburb to the city to get to those. At that time, too, Bullmoose only had three locations, and two of them were pretty new. Bullmoose were also the only ones selling used product then, too.

By the mid to late 90's, Best Buy had replaced Lechmere, and Circuit City had also moved in - both offfeing CD's at at much higher discounted rate than the other stores, and, as others have mentioned, with fairly decent stock, including exclusives and imports. The music departments in both these shops were a fairly good chunk of their stores. We also got our first (and only) Newbury Comics, Borders and Target, all of which also carried sizable music departments.

Curiously, though, it wasn't so much the indie stores that were being hit as hard, as it was the Mall stores. Most of them were having hard times because of the big boxes, and by the end of the decade, chains like the Musicland Group (Musicland, Suncoast...etc), Camelot Group (Camelot, The Wall, Specs), as well as some of the smaller indie chains like Strawberries (and WaxieMaxies) were all bought up by/merged with Trans World Entertaiment (Record Town, Tape World, Coconuts, Peaches...etc). Again, even then, most consumers were unaware of this, even when it was happening. By the beginning of the next decade, most of the Trans World stores were re-branded as what they are now - FYE. Most of those places never even carried used product, until the earlier 2000's, and they finally did that as a means of staying alive, and competitive, as that was something the big boxes never got into.

What really hurt everybody, though, was the rise of the Internet, sites like Amazon, and more importantly, downloading. I think the big boxes also shot themselves in the foot using CDs as loss leaders, and by the time they realized this, it was too late.

Flash forward to the last few years, and Circuit City and Borders are long gone. Best Buy, Wal-Mart and Target have all drastically cut back their music departments (and even movies, to a degree), to the point of near non-existence. Newbury Comics have moved into Malls, and vinyl aside, are more concerned with clothing, fashion and trend than CD and DVD sales anymore. FYE is still around, but they are the last hold out in that regard. Even then, they have adopted kind of the old Newbury model of carrying trend product to offset falling music sales.

But, wouldn't you know it, the little local indie chain is not only still around, but thriving. Bullmoose now has nearly double the amount of stores in the same 20 minute radius, plus have many other locations all across the State, and into the next one. There are also at least half a dozen used record stores (mostly specializing in vinyl) that have cropped up in recent years, and are doing decent business, too. Had you asked me if that would have been possible 20, 15 or even 10 years ago, I probably would have called you crazy. Still, even with the state of things the way they are, it's nice to see that the little guy can triumph.

 

I will say that I have to give Best Buy a lot of credit for having a $15 vinyl copy of No Line on the Horizon that I snatched up quickly back in 2010.

 

Sounds like a CD pricing error to your advantage.

 

It was the perception amongst some indie stores that illegal downloading really hurt the used CD business.

 

It's weird because it was at the Best Buy that had the smaller music section (we have two and this one is a smaller store).

I remember seeing it for like 29.99 maybe a few weeks before. When I went back I saw a new yellow price tag slapped on the old 29.99.

There were maybe two copies of NLOTH and a few random others. I was thinking they were just trying to liquidate it since there was maybe a total of 6 lp's (I think the others were a Dave Matthews lp--Big Whiskey....--and Eminem's Relapse).

 

I worked at a one stop for 22 years and towards the end in the nineties a lot of our customers would get their new releases from Best Buy where they could buy them cheaper than we were getting them from the majors.

 

Three small racks at mine in the St. Louis area - one rack is CDs priced around five dollars with music DVDs and a few box sets at the end. The other two racks are CDs from A-Z. But it's even skimpier than it sounds.

 

My local best buy (outside the States) it's selling the last rack of cds(all garbage obviously) at 0.608 US Dollars each.... hillarious.

 

Back when the Coalition of Independent Music Stores was really active and Best Buy was ramping up their online site; Best Buy had free or bargain shipping, 9.99 sale prices and no limit on how many pieces you could buy. For at least one or two weeks, the CIMS stores were ordering box lots of new releases at a savings of a buck or so a disc from BB. I think it was around the time "One Hot Minute" was released, that was the title featured in the Billboard article, if memory serves.

 

That drove me away too. I used to spend all day Saturday in Dublin searching for new / used records and CDs. But as time went on and I noticed they wouldn't have what I wanted or else it was delayed coming in or they would say "I'll order it for you".

Much easier to hit Amazon / Ebay and leave the second hand stores for an occasional browse every few weeks. I spend a lot of my disposable income on music but most of that has gone to online retailers over the last 10 years.

PS - the catalyst was not being able to buy Scott Walker's The Drift on release date. I tried every single shop in the city. I made my first Amazon order that day and never looked back.

 

I recall when our BB opened back in the 90's, it really was like a huge gorilla had arrived & was handing out free candy.
The selection was immense & had plenty of imports that made it fun just to see if you could find some of your favorite non-US artists in there (they were more often than not at first)
Who could resist the low new release prices either? Granted, they were competing with Sun TV & Circuit City who also played the loss leader game. The small shops really couldn't compete with that & didn't seem to try. They focused on the even deeper imports & swag + the used market was growing. It kept them alive & I happily supported them all.

Now, those local shops are all gone as is Sun TV & CC. Best Buy is a shadow of it's former self in many ways. I used to look forward to see what they had on sale each week. Now I could really care less & rarely even stop in. I recall about 5 years ago they were getting into vinyl before it became "cool" again & yet they dropped it shortly after. I think the last good deal I got there was their exclusive Tom Petty live box for under $30. I doubt I've spent more than that in the last couple years & I'm waiting for them to cancel my credit card for non-use. I won't care in the least.

 

It was downloads that killed the beast.

 

Bumping this thread because I saw a new Best Buy landmark today: music section is now three quarters of one side of a rack, and one end of the end cap of the rack. I know it isn't a surprise to anyone, but that's the smallest I've ever seen.

 

And the DVD/Bluray section is almost as small. This is why I gave up on them.

 

I remember the first time I went to Best Buy. I bought CDs The Birthday Party, Bessie Smith, Bartok, and Gallon Drunk. That seems so bizarre now.

 

By the time we got a Best Buy, we already had plenty of other stores. Most of them had a vastly larger selection then Best Buy. They didn't kill anything in my town. It wasn't until Amazon became this online shopping monster that the stores begin to cave one by one. Even Walmart is a mere shell of what it used to be.

This is just my observation, but I knew very few people who downloaded illegally. The ones who did still bought music as well. It wasn't until digital downloads became DRM free that I noticed that more people were no longer buying music in stores. They were not getting it from a torrent site, but rather amazon and iTunes.

 

Here, Best Buy (and Circuit City) didn't start out with better inventories than the independent stores in town. What they did have was better prices though, so people started going there and buying cds there, to save money. As a result the indies started hurting and eventually went out of business.

Best Buy's inventory was decent enough for a while, then as more and more people either bought online or downloadeded, their sales fell off and their inventory began shrinking, to what it is now.

 

Well, I think the time frame Best Buy and indie stores were in competition was in the pre-downloads era.

 

What Best Buy did quickly kill were the overpriced mall chains. Those became ghost towns once a Best Buy opened up.

 

One thing that needs to be considered as well is location. In suburbs and small towns, there weren't many indie record stores if at all. Most got their records from department stores. I can't begin to tell you how many used records I find near me with old department store price tags on them. Where Best Buys competed with indie stores were in more urban areas.

 

I remember when I was in college and had nearly no money to spend.. As bad as I hated supporting such a large chain, Best Buy had new cd's for around 9.99 when the local stores were around 14-17.99


Had to go with my budget at the time