More Evidence That The Era Of Big Box Retailers Is Over

Best Buy employees

Photo: Flickr/staticjana

Major economic bellwether UPS reported mixed results this morning, but saw strength in online retail sales.In fact, the company attributed much of its growth in the U.S. to a surge in online sales. 

“Daily volume for deferred products jumped 9.9% and UPS Next Day Air volume climbed 5%, driven primarily by on-line retail growth,” the company said in its earnings announcement. “Increases in revenue per piece produced by higher base rates and fuel surcharges were mostly offset by changing product and customer mix as e-commerce continued to drive volume growth.”

The data out of UPS adds to retailer earnings reports already that show greater consumer adoption of the web as a point of sale, and is a sober reminder to Best Buy that its retail strategy is strained.

Best Buy, which hopes to reach $4 billion in online sales by fiscal 2016, faces stiff competition from online behemoth Amazon in that arena — a competitor that most broad- and soft-lines are safe from online. 

The Richfield, Minn., based retailer has faced mounting pressure over the past year. Same-store sales declined 2.3 per cent during its fourth quarter, with weakness across the board including gaming, notebooks, digital imaging and televisions.

Best Buy has rapidly been trying to turn its operations around as it has seen peers CompUSA and Circuit City fail. Consumers have been using its locations as a testing ground for products before making final purchases at competitors like Amazon and Walmart.

And then the company’s long-time chief Mike Dunn resigned amid a board investigation of misconduct. Best Buy expects to find a new chief executive in the next six to nine months.

Shares in Best Buy are flat this afternoon.

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