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Best Buy's Big Box Purge

Best Buy's Big Box Purge
Reuters

Best Buy is learning the hard way that bigger isn't always better.

Following their reported fourth-quarter net-loss of $1.7 billion, the electronics retailer recently announced that it plans to close 50 of its big box locations throughout North America and open 100 of its smaller Best Buy Mobile stores. Of the stores that are closing, most are located on the edge of a city or suburban center and are surround by other familiar retailers who have, for decades, embraced the development model of building big box stores surrounded by vast parking lots on cheap land. By my count, 18 of the planned closures are in "very walkable" areas, according to Walk Score. But of those 18, only three — in Baltimore, Boston, and Los Angeles — are in truly urban settings, surrounded by more than just parking lots and similarly large buildings.

Is this strategic downsizing signaling a dramatic shift away from the big box development model so prevalent throughout North America?

Don't bet on it just yet. The closure of some big box stores in conjunction with the opening of smaller retail configurations certainly marks a shift in thinking when it comes to retail development. For now though, it's still a very, very small shift. In 2011, there were 1,099 Best Buy stores in the United States. Subtracting 50 stores from that total moves the number of stores to 2009 levels, but still a far cry from the 357 stores the company operated in 2000. Of the more than 1,000 remaining Best Buy stores throughout the U.S., 518, nearly half, are of the 45,000 square-foot variety, with the next largest chunk, 425, coming in at 30,000 square-feet.

Conversely, there were only 177 of the newer, 1,200-square-feet Best Buy Mobile stores in 2011. But by the end of 2016, the company expects to have 600-800 of the smaller stores. After taking a quick look at the current locations of some of the Mobile stores, it appears most are located in the shopping malls that line the exurbs and the highways that lead to them. A few are located in urban centers like Manhattan and Boston.

As Best Buy adds more of these small stores, it'll be worth watching to see if they make a move into more urban centers. Methodical downsizing will give the retailer more versatility to make the move into more dense, walkable locations if and when the day comes when big boxes turn to big ghost malls.

At least on a small scale, Best Buy seems to be buying into the adage often embraced by cities, "less is more." 

Keywords: Stores

Tyler Falk is a fellow at The Atlantic Cities. All posts »

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