The bankruptcy and liquidation of hhgregg is terrible for the retailer’s employees and retail landlords, but someone may benefit from the retailer’s downfall. Best Buy has a national presence and a large overlap with what hhgregg sells, and is in a position to pick up some of the retailer’s former customers the next time that they need a fridge or a computer.
Back in 2009 when Circuit City went out of business, Best Buy was able to grab about 20% of the sales that used to go there. What’s different now is that more of our shopping has shifted online than in 2009. While Best Buy’s online sales are growing, they might not have grown enough to nab 20% of the business that used to go to hhgregg if those customers decide to shop online instead.
For its part, Best Buy hopes to impress any former hhgregg shoppers who wander in.
“We’re going to do everything we can to give them a good shopping experience,” a spokesman for the chain told the Minneapolis Star-Tribune. “Our stores have changed a lot over the last few years.”
According to the Star-Tribune, an analyst for Deutsche Bank analyzed the situation over the weekend, and noted that Best Buy could pick up about 20% of hhgregg’s sales after the liquidation is over, for a total of $335 million. That would be good for Best Buy’s business, but Best Buy has a relatively small selection of appliances, which comprise only 9% of its total sales. At hhgregg, appliances were 60% of its total sales.
Other retailers like Lowe’s, Home Depot, JCPenney, and even the shrinking Sears could gobble up the rest of the appliance sales that used to belong to hhgregg. While online appliance sales are growing (especially refrigerators, and ovens) buying appliances that way hasn’t entirely taken over yet.