Best Buy, the end of big box and the future of retail

Best Buy (S bby) said Thursday that it would close 50 stores, while also detailing plans to expand the number of stores with a different concept where customers can go to try out devices and talk to expert staff members; it will boost worker training by 40 percent. The shift in strategy is one that will echo across much of retail in the future, as the web and mobility change how consumers want to buy goods — especially tech goods in these early days.
But as Apple (s aapl) or Best Buy’s smaller store concepts show, even as big box stores may suffer, brick and mortar retail can succeed. Even Amazon is purportedly thinking about a retail strategy as it expands into making tablets with its Kindle(s amzn) device. As is the case elsewhere, retailers are finally seeing that the disruption of the web doesn’t have to put them out of business, it just means they need to change their business. Here is how our shopping experience may change:
Hands on devices and smart people to tell consumers about them: For consumers, buying everything from smartphones to a mattress can be complicated and expensive, so making sure the item is there so the consumers can touch it and also ask someone questions about it is part of the new model. The Apple store does this well, but so do the mattress stores dotting our strip malls or even high-end food markets.
Square footage devoted to education, not bulky inventory and displays: Real estate is just one of the required costs of doing business in the real world, so stores need to make their square footage count. Maybe it means that all clerks have the ability to check a customer out on a portable device as opposed to making room for checkout stands. Perhaps it’s stocking fewer items and relying on a just-in time inventory management or even sending a customer to the web and delivering the item the next day. The shift will be in thinking of a store not as a repository of goods for sale, but more as a place to win buyers over to your products.
Lower margins make retail’s future murky: Mobile shoppers that do comparison pricing mean that most retailers will have to lower their prices to compete with WalMart (s wmt) and the web. But that could mean margins of less than 4 percent, making ideas about a better trained workforce or an Apple-like experience hard to fathom. As retailers find themselves in this spot, there are several ways things could play out. There’s the Apple example of having stores become an extension of your brand as fashion houses and mobile phone retailers do. There are ways to play with exclusivity of certain items or to control your supply chain to boost margins, but that’s where a lot of the innovation will lie in the future.
As for those empty Big Box shells dotting the landscape. Maybe we can turn them into data centers.