Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Google Inc (GOOG), Best Buy Co., Inc. (BBY): Would One Make The Other Relevant Again?

The rumor that electronics superstore Best Buy Co., Inc. (NYSE:BBY) might host Google Inc (NASDAQ:GOOG) in a store-in-store concept to sell its coming Google Inc (NASDAQ:GOOG) Glass sent shares soaring 4% last week.

While there was a lot of conjecture as to whether it was true (it’s not, as Best Buy Co., Inc. (NYSE:BBY) debunked it) or even feasible — tech guru Robert Scoble, who posted the rumor, said Google Inc (NASDAQ:GOOG) wanted to rent some 6,000 square feet of space, almost a quarter of Best Buy Co., Inc. (NYSE:BBY)’s average store size — it still gave a hint as to where the electronics retailer sees its future.

Google Inc (NASDAQ:GOOG)

Best Buy already houses mini-Apple stores; is launching some 1,400 Samsung Experience Shops for Samsung to peddle its Galaxy S4 (at around 500 s.f. each); and earlier this month Microsoft said it would be opening 500 stores-within-stores ranging in size from 1,500 to 2,200 s.f.

So even though it’s not coming to pass, it’s instructive to see whether housing Google Inc (NASDAQ:GOOG) would have made sense financially to Best Buy Co., Inc. (NYSE:BBY)’s future.

Sure, there’s the opportunity to draw in more traffic that could end up generating sales for the retailer, but it wouldn’t be so cut-and-dried that it would have actually paid off. Plenty of store-in-store concepts fail — Target just parted ways with RadioShack earlier this year because of dismal sales (and ended a tech service partnership with Best Buy, to boot) — and there’s no guarantee that someone coming in to buy an iPhone, Galaxy, or PC will stay around to buy a big-screen TV, too.

Shares of the electronics retailer have tripled so far this year, in no small part because they’ve been carried aloft on each successive partnership announcement. But I remain unconvinced this “big tent” concept will work out well for CEO Hubert Joly, who seems to have gone all-in on this idea.

Best Buy Co., Inc. (NYSE:BBY)’s staff are supposedly the resident experts when it comes to all things tech, and improving the customer experience to minimize the impact of showrooming and loss of sales to Amazon was what was going to drive the retailer forward. However, with each of these store-within-store concepts maintaining strict control over product and pricing, it’s not exactly an unbiased atmosphere the consumer is walking into. By becoming a tech shopping mall of sorts, Best Buy runs the very real risk of diluting its own brand.

There was also the codependent nature of the relationship Best Buy would have had with Google Inc (NASDAQ:GOOG) that spoke against its success. Where Google Glass would obviously have enjoyed the low-cost means of using Best Buy Co., Inc. (NYSE:BBY)’s retail footprint to put its technology into the hands of as many customers as possible, Best Buy would need the search king even more in hopes of keeping foot traffic high.

There was no guarantee Best Buy would be relevant once again after selling itself out for a few pieces of silver, but the fragile and precarious nature of its position remains intact, regardless of how its turnaround plans seem to be gaining traction. Best Buy has allowed for wiggle room that an agreement may yet happen one day (Google Inc (NASDAQ:GOOG) says don’t bank on it), but I foresee the dilutive impact of these types of agreements ultimately hurting more than helping.

The article Would Google Have Made Best Buy Relevant Again? originally appeared on Fool.com and is written by Rich Duprey.

Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and Google. It also owns shares of Microsoft and RadioShack.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Loading Comments...