Let’s Get Physical

12 11 2009

Retail inventory decisions are seldom fun. As I always told my students, inventory is the bane of a retailer’s existence. You can’t sell anything if you don’t have inventory. But if the inventory doesn’t sell, you’re going to be looking at a sea of red ink. And stuff you don’t want to see anymore.

It’s a lot like how men and women think of the opposite gender: “Inventory. Can’t live with it. Can’t live without it.”

So I was taken aback when I read that Best Buy is now test-marketing fitness equipment in 40 stores. Notice how this category is now called “fitness equipment” and not “exercise equipment” (I suppose the former just sounds less sweaty). Notice also how fitness equipment has absolutely nothing to do with Best Buy’s mission.

It would be like The Weather Channel showing movies on Friday night (they do). Or HBO giving the weekend forecast (thankfully, they don’t).

So what makes Best Buy think it can get away with this?

Now I will be the first to say there is no hard and fast rule that says retailers can never venture into different product categories. Many do, but most who do focus on incremental extensions into closely related categories. Fitness equipment, in my estimation, is a disruptive leap into an area in which Best Buy knows absolutely nothing. What could the Geek Squad know about rowing machines, treadmills ad stationary bikes?

Maybe Academy, Sports Authority and the like should start selling PCs and LCD televisions. After all, it’s the same logic Best Buy is using. Once you get situated in the world of big box retailing, your niche is pretty well carved. You are a specialist with more and more of less and less. Unless you have designs on being the next Walmart or Target (a little bit of everything), Best Buy’s new strategy just seems like a pulled muscle waiting to happen.

And that’s a strain no bottom line can afford.

Dr “Stick To Your Knitting” Gerlich



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