Micro Center opening 3 new stores in 2023

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Re: Micro Center opening 3 new stores in 2023

Post by BillyGr »

ClownLoach wrote: March 16th, 2023, 5:16 pm Here's another way to look at the situation: Circuit City brought in $12B a year at bankruptcy and Best Buy was at $55B a year. In the 12 months after Circuit City finished liquidation Best Buy staffed up, rushed new stores, and even took over many Circuit City Store locations to capture share. The sales for that 12 month period were... $53B. So a $12B a year retailer disappeared and their #1 competitor not only didn't gain a dollar of sales but actually lost revenue. Now they only bring in $46B a year.

The margin percentages have remained tight and the prices have declined 75%, but the longevity of the products has also greatly improved. There was a short term rush to adopt new technologies like LCD TVs and iPhones but ultimately that has slowed down as technology hasn't really advanced much in recent years. The point is that the electronics business was always very difficult to be in. You had to increase the transaction count to offset the declining average retail. And more transactions means more labor cost on lower revenue. It's just a miserable business and that's why you continue to see electronics retailers of all sizes and shapes disappear, and will continue to do so unless they've got a really good niche. Micro Center has a fantastic niche - they're the last standing "build your own computer" national chain, they don't have any debt, they pay for new stores and remodels with cash, and they're incredibly good at selling profitable warranties and such because they maintain a commissioned sales force (on a policy of you don't sell you don't get paid, you lie when you sell you lose extra commission on all returns).
So, you just showed that they did, in fact, gain sales.
$55 Billion + $12 Billion = $67 Billion
Prices drop 75%, so 25% of $67 Billion is $16.75 Billion.
However, you state they are now bringing in $46 Billion, which is about 2.75 times what it should have been had they only sold the exact same amount of items at that 75% lower price.

So, somewhere, they sold enough additional items to make $29.25 Billion dollars of sales (meaning more than doubling the actual sales from the two chains previously).

Then again, how much they SELL still isn't the key part, it's how much money is LEFT (Profit) at the end of the day - you can sell any amount you want, but if you pay more for it than you sell it for, you don't make money or stay in business very long :)
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Re: Micro Center opening 3 new stores in 2023

Post by Bagels »

ClownLoach wrote: March 14th, 2023, 3:56 pmIt's somewhat more complicated with electronics. I spent a decade in the business. Stores basically don't make very much profit on the item itself and never have. Many items like computers and printers were even sold at a -2% to -5% margin, below cost. All the profit is in the accessories, warranties, and installation services. Generally the prices of cables etc. also plummeted, accessories like TV stands and furniture became cheap wall mounts etc. and warranties are usually a percentage of the product price. Instead of needing big component cables you only need one HDMI cable. Wired connections are mostly now wireless. I could go on. So yes if prices fall 75% you need to make all that up, possibly more. This is why 75% of the electronics storefronts are also gone (Circuit City, CompUSA, Fry's, and many more). They weren't just taken out by Amazon either.
Microcenter's pricing is competitive with online retailers. Whenever I'm in the Tustin store, the place is PACKED -- even right before closing on a Saturday night. Their "tech bar" (or whatever it's called) is always busy. Meanwhile, Best Buy has little foot traffic. And a lot more exposure to computers, TVs, etc. than Microcenter - which mainly focuses on parts.
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Re: Micro Center opening 3 new stores in 2023

Post by ClownLoach »

BillyGr wrote: March 17th, 2023, 8:45 am
ClownLoach wrote: March 16th, 2023, 5:16 pm Here's another way to look at the situation: Circuit City brought in $12B a year at bankruptcy and Best Buy was at $55B a year. In the 12 months after Circuit City finished liquidation Best Buy staffed up, rushed new stores, and even took over many Circuit City Store locations to capture share. The sales for that 12 month period were... $53B. So a $12B a year retailer disappeared and their #1 competitor not only didn't gain a dollar of sales but actually lost revenue. Now they only bring in $46B a year.

The margin percentages have remained tight and the prices have declined 75%, but the longevity of the products has also greatly improved. There was a short term rush to adopt new technologies like LCD TVs and iPhones but ultimately that has slowed down as technology hasn't really advanced much in recent years. The point is that the electronics business was always very difficult to be in. You had to increase the transaction count to offset the declining average retail. And more transactions means more labor cost on lower revenue. It's just a miserable business and that's why you continue to see electronics retailers of all sizes and shapes disappear, and will continue to do so unless they've got a really good niche. Micro Center has a fantastic niche - they're the last standing "build your own computer" national chain, they don't have any debt, they pay for new stores and remodels with cash, and they're incredibly good at selling profitable warranties and such because they maintain a commissioned sales force (on a policy of you don't sell you don't get paid, you lie when you sell you lose extra commission on all returns).
So, you just showed that they did, in fact, gain sales.
$55 Billion + $12 Billion = $67 Billion
Prices drop 75%, so 25% of $67 Billion is $16.75 Billion.
However, you state they are now bringing in $46 Billion, which is about 2.75 times what it should have been had they only sold the exact same amount of items at that 75% lower price.

So, somewhere, they sold enough additional items to make $29.25 Billion dollars of sales (meaning more than doubling the actual sales from the two chains previously).

Then again, how much they SELL still isn't the key part, it's how much money is LEFT (Profit) at the end of the day - you can sell any amount you want, but if you pay more for it than you sell it for, you don't make money or stay in business very long :)
The prices dropped 75% in the last 5 years of Circuit City's existence, not so much after.
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Re: Micro Center opening 3 new stores in 2023

Post by ClownLoach »

Bagels wrote: March 17th, 2023, 1:47 pm
ClownLoach wrote: March 14th, 2023, 3:56 pmIt's somewhat more complicated with electronics. I spent a decade in the business. Stores basically don't make very much profit on the item itself and never have. Many items like computers and printers were even sold at a -2% to -5% margin, below cost. All the profit is in the accessories, warranties, and installation services. Generally the prices of cables etc. also plummeted, accessories like TV stands and furniture became cheap wall mounts etc. and warranties are usually a percentage of the product price. Instead of needing big component cables you only need one HDMI cable. Wired connections are mostly now wireless. I could go on. So yes if prices fall 75% you need to make all that up, possibly more. This is why 75% of the electronics storefronts are also gone (Circuit City, CompUSA, Fry's, and many more). They weren't just taken out by Amazon either.
Microcenter's pricing is competitive with online retailers. Whenever I'm in the Tustin store, the place is PACKED -- even right before closing on a Saturday night. Their "tech bar" (or whatever it's called) is always busy. Meanwhile, Best Buy has little foot traffic. And a lot more exposure to computers, TVs, etc. than Microcenter - which mainly focuses on parts.
And the computer parts are one of the few categories that has actually increased in price over the last decade or so, especially video cards. It costs more to build a fancy gaming PC today than a decade ago as the capabilities have dramatically improved. Suddenly Micro Center is in the thick of the only real high dollar growth category, and it's an area where ironically the poor behavior of Fry's Electronics and others (reselling used merchandise as new, counterfeit or gray market goods, etc.) has led to distrust of customers. These customers are spending thousands of dollars on these computers and they're willing to drive hundreds of miles or even get on a plane to ensure that they are getting authentic, high quality components. Nobody who is going to go through the trouble of building a quality custom PC would buy from Amazon, Best Buy or others selling off brand questionable merchandise or product which may be counterfeit or stolen. I remember when you bought a processor at Fry's they would try to bring you the ones in a plastic bag and foam, but if you asked for one in a factory Intel or AMD package they would be "out of stock." Micro Center only sells in the factory packaging, and both tests and labels all open box items which is why you can trust their products.

The irony of Best Buy is that they are benefiting from the movement of sales online because they can more or less cut payroll accordingly. They also have done a good job of staying in stock with supply chain problems especially on appliances. The cook top I needed for the house last year was a 6 month backorder at Home Depot, Lowe's, and Howard's. Best Buy was able to transfer from a out of state DC and deliver in 5 days.

The customer who won't buy a warranty, premium cables or installation services is usually also the customer who doesn't want to spend two or three hours talking to a sales person. So they have been able to shift these less profitable customers to a lower cost fulfillment method of BOPIS and curbside. The few people you find in the store talking to an employee usually are the ones that actually need help and it's still available - I was surprised to talk to a sales person about my complicated kitchen stove exhaust situation and they knew everything about them. They would even set up a complimentary appointment to finalize the sale in home so they could measure everything to ensure it would fit our unusual cabinetry. So I would guess that they are still driving a decent amount of sales volume through those stores but it is in the categories which are more "omnichannel friendly."
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Re: Micro Center opening 3 new stores in 2023

Post by Bagels »

ClownLoach wrote: March 18th, 2023, 2:09 pmAnd the computer parts are one of the few categories that has actually increased in price over the last decade or so, especially video cards. It costs more to build a fancy gaming PC today than a decade ago as the capabilities have dramatically improved. Suddenly Micro Center is in the thick of the only real high dollar growth category, and it's an area where ironically the poor behavior of Fry's Electronics and others (reselling used merchandise as new, counterfeit or gray market goods, etc.) has led to distrust of customers. These customers are spending thousands of dollars on these computers and they're willing to drive hundreds of miles or even get on a plane to ensure that they are getting authentic, high quality components. Nobody who is going to go through the trouble of building a quality custom PC would buy from Amazon, Best Buy or others selling off brand questionable merchandise or product which may be counterfeit or stolen. I remember when you bought a processor at Fry's they would try to bring you the ones in a plastic bag and foam, but if you asked for one in a factory Intel or AMD package they would be "out of stock." Micro Center only sells in the factory packaging, and both tests and labels all open box items which is why you can trust their products.

The irony of Best Buy is that they are benefiting from the movement of sales online because they can more or less cut payroll accordingly. They also have done a good job of staying in stock with supply chain problems especially on appliances. The cook top I needed for the house last year was a 6 month backorder at Home Depot, Lowe's, and Howard's. Best Buy was able to transfer from a out of state DC and deliver in 5 days.

The customer who won't buy a warranty, premium cables or installation services is usually also the customer who doesn't want to spend two or three hours talking to a sales person. So they have been able to shift these less profitable customers to a lower cost fulfillment method of BOPIS and curbside. The few people you find in the store talking to an employee usually are the ones that actually need help and it's still available - I was surprised to talk to a sales person about my complicated kitchen stove exhaust situation and they knew everything about them. They would even set up a complimentary appointment to finalize the sale in home so they could measure everything to ensure it would fit our unusual cabinetry. So I would guess that they are still driving a decent amount of sales volume through those stores but it is in the categories which are more "omnichannel friendly."
I completely agree. Micro Center's also helped out by the fact that it has a small footprint. Tustin was chosen because it was close to OC's tech center (which has largely vanished over the past couple decades) but today serves as its only store in Los Angeles area and people drive 50+miles to get there. They use to have LAN parties back in the day, but I don't think they do that stuff anymore (I was never into that tbh, so I really don't know).

Best Buy has made a surprising comeback. They're actively closing all of the small format stores opened in the late 2000s/ early 2010s that were suppose to be the future of the company. It definitely looks as if they're thinning out their store fleet to be regional distribution/ delivery centers. For awhile, they handled everything Lenovo -- if you ordered something online, you'd pick it up at Best Buy but it appears Lenovo is offering free shipping on every order at the moment.

I've also noticed that in stores that have been recently renovated, there's a larger emphasis on the pick-up counter, with the regular checkouts being slimmed down (and losing their TJ Maxx-type junk lanes in the process... ironically, Walgreens is adding those). Also getting rid of most of the wireless sales area,.

I'm one of those people BB lost with their terrible policies. Much of my youth, and most of the money I had as a youth, was at Best Buy. In 2000, I purchased MS Office 2000 for school and when I got home realized somebody had swiped the CD and activation code, replaced it with a junk CD and resealed the package. Of course, BB refused the return saying I was lying as they never return open software. That was something like 90 hours take home pay for me. In the nearly 23 years since, I've been in their stores maybe 10 times and have not made a single purchase.
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Re: Micro Center opening 3 new stores in 2023

Post by ClownLoach »

Bagels wrote: March 19th, 2023, 5:24 pm
ClownLoach wrote: March 18th, 2023, 2:09 pmAnd the computer parts are one of the few categories that has actually increased in price over the last decade or so, especially video cards. It costs more to build a fancy gaming PC today than a decade ago as the capabilities have dramatically improved. Suddenly Micro Center is in the thick of the only real high dollar growth category, and it's an area where ironically the poor behavior of Fry's Electronics and others (reselling used merchandise as new, counterfeit or gray market goods, etc.) has led to distrust of customers. These customers are spending thousands of dollars on these computers and they're willing to drive hundreds of miles or even get on a plane to ensure that they are getting authentic, high quality components. Nobody who is going to go through the trouble of building a quality custom PC would buy from Amazon, Best Buy or others selling off brand questionable merchandise or product which may be counterfeit or stolen. I remember when you bought a processor at Fry's they would try to bring you the ones in a plastic bag and foam, but if you asked for one in a factory Intel or AMD package they would be "out of stock." Micro Center only sells in the factory packaging, and both tests and labels all open box items which is why you can trust their products.

The irony of Best Buy is that they are benefiting from the movement of sales online because they can more or less cut payroll accordingly. They also have done a good job of staying in stock with supply chain problems especially on appliances. The cook top I needed for the house last year was a 6 month backorder at Home Depot, Lowe's, and Howard's. Best Buy was able to transfer from a out of state DC and deliver in 5 days.

The customer who won't buy a warranty, premium cables or installation services is usually also the customer who doesn't want to spend two or three hours talking to a sales person. So they have been able to shift these less profitable customers to a lower cost fulfillment method of BOPIS and curbside. The few people you find in the store talking to an employee usually are the ones that actually need help and it's still available - I was surprised to talk to a sales person about my complicated kitchen stove exhaust situation and they knew everything about them. They would even set up a complimentary appointment to finalize the sale in home so they could measure everything to ensure it would fit our unusual cabinetry. So I would guess that they are still driving a decent amount of sales volume through those stores but it is in the categories which are more "omnichannel friendly."
I completely agree. Micro Center's also helped out by the fact that it has a small footprint. Tustin was chosen because it was close to OC's tech center (which has largely vanished over the past couple decades) but today serves as its only store in Los Angeles area and people drive 50+miles to get there. They use to have LAN parties back in the day, but I don't think they do that stuff anymore (I was never into that tbh, so I really don't know).

Best Buy has made a surprising comeback. They're actively closing all of the small format stores opened in the late 2000s/ early 2010s that were suppose to be the future of the company. It definitely looks as if they're thinning out their store fleet to be regional distribution/ delivery centers. For awhile, they handled everything Lenovo -- if you ordered something online, you'd pick it up at Best Buy but it appears Lenovo is offering free shipping on every order at the moment.

I've also noticed that in stores that have been recently renovated, there's a larger emphasis on the pick-up counter, with the regular checkouts being slimmed down (and losing their TJ Maxx-type junk lanes in the process... ironically, Walgreens is adding those). Also getting rid of most of the wireless sales area,.

I'm one of those people BB lost with their terrible policies. Much of my youth, and most of the money I had as a youth, was at Best Buy. In 2000, I purchased MS Office 2000 for school and when I got home realized somebody had swiped the CD and activation code, replaced it with a junk CD and resealed the package. Of course, BB refused the return saying I was lying as they never return open software. That was something like 90 hours take home pay for me. In the nearly 23 years since, I've been in their stores maybe 10 times and have not made a single purchase.
I think the BBY strategy going forward is to maintain a fleet of "B" stores. They won't keep "C" quality locations, which mainly are the late 2000s-early 2010s opened stores that were primarily used as satellites to pull volume away from then-overloaded "A" stores. Most of those are in locations that are more like neighborhood centers and are away from highways such as the now closed Temecula, Long Beach Marina, and El Segundo locations. Some of them also may have opened up to siphon traffic from a competitor like Circuit City 20 years ago and now aren't needed (El Segundo again is a example of that practice; the Manhattan Beach customer used to drive to Hawthorne where BB and CC were across the street from each other - so they opened a second BB and cut off the traffic to the CC). They seem to be willing to close "A" locations as well if they aren't top volume and there's a good enough "B" quality location nearby (they did this in San Diego and left Grossmont because of another cheaper location nearby). So they won't keep the worst locations and don't want to pay for the best locations. The irony shouldn't be lost on anyone who worked in the industry before it crashed around 2008 - Circuit City and others were criticized by stock analysts for not moving more stores to "A" locations like Best Buy and keeping too many "B" locations.

Best Buy's real estate strategy and new remodel format basically are Circuit City 2023. All that's left is redoing the exterior with a big purple "plug" shaped tower. I no longer see signage reflecting that Best Buy is an entirely non commissioned sales force either; I have heard that they pay certain incentives like SPIFFS on the sale of some items, warranties and services now. Commission actually kept Circuit City going; they started to decline when they eliminated the program due to the high cost. There is a myth that commissions mean you get sold things you don't need; the reality was that the salesperson was directly penalized in their pocketbook as returns were backed out of their checks. If the return rate was too high they would be written up and eventually fired because the company didn't want to be stuck with open box items sold at a discount. They had more of an incentive to listen and sell the right item for the customer needs than a low pay hourly employee who doesn't really care about anything other than when they are off for the night.

One area of concern is that Best Buy was at least maintaining a large team of their own employees to run their Geek Squad home installation and repair businesses until recently. They are increasingly eliminating that Geek Squad branding and also moving to 3rd party logistics for delivery and installation in metro markets. Although I don't have a favorable opinion of Best Buy as a company I do understand that they provided significant training and good pay for these in home installers who hang flat panel TVs and other such work. Each employee would receive what amounted to several weeks of classroom and hands on training each year to ensure consistency and safety. Now that it is a third party you are pretty much at the mercy of whatever contractor they send over who may have no more training than watching a YouTube video on "How to hang a TV for dummies." I would never want one of these third party people drilling through my walls, fishing cables or anything else technical. They could break your TV, damage your home, or even cause a fire and it could be a larger legal fight to recover damages if a third party was responsible for the negligent installation.
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Re: Micro Center opening 3 new stores in 2023

Post by Brian Lutz »

With the Micro Center in Charlotte now set to open in early 2024, I have seen that they have started running some rather aggressive "new customer specials" via Facebook/Instagram ads in this area, with the catch that a lot of these specials are for in-store purchase only, which seem to be trying to get people into their existing stores. For most people this isn't practical (until the Charlotte store opens the nearest store to here is Fairfax Virginia in the DC metro area, about 300 miles away) but a couple of days ago I was on a roadtrip where I was not only near a Micro Center store (Overland Park Kansas) but had space in the car to actually purchase one of these heavily discounted new customer special items, in this case a 3d printer (Ender 3 S1) for only $200 that normally sells closer to $280.

Oddly enough, in spite of the big discounts I think this could work out in their favor, as they cater to a clientele with not only the tendencies, but also the disposable income to make large impulse purchases, and there's a good chance that just getting these customers into the door and signed up for email and text promotions will get some of them to make those big purchases. In a way I think it's what Fry's was trying to build their business model on, but their biggest problem (aside from the general sketchiness of all their operations) was that the stores were just too large and they had to come up with something to fill all those shelves, which ended up mostly being a lot of cheap Chinese junk. Micro Center isn't completely immune to this, but they have much smaller stores and can focus their shelf space on more desirable products. I don't think the Overland Park store I went to was much bigger than 30k square feet, Not small by any means, but not overly large either.

Also at some point it was revealed that the third new location will be opening in Miami some time in 2024.
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Re: Micro Center opening 3 new stores in 2023

Post by buckguy »

MicroCenter stores vary a lot. The one I go to near Cleveland is a former Zayre that started out as a local department store—-probably 60k sf, bright and well laid out. The one I near where I work in Rockville, MD is smaller, dark, cramped and poorly laid out. It’s in an odd multi-level part of a strip mall that probably started out as a Memco. The flagship in Columbus looks like a conversion of something else and seems like a less well executed version of the Cleveland store. They may get some people with a lot of disposable income, but those folks don’t predominate in any of these locations, all of which are near but not in high income areas. The Cleveland store has great customer service, while it’s non-existent outside of service desks in Rockville and somewhere in between in Columbus. I’d be curious what the new stores are like, esp. since their existing stores recycle existing space and have different footprints.
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Re: Micro Center opening 3 new stores in 2023

Post by Romr123 »

Detroit store is in Madison Heights right off I-75, and is a reasonable spot for easy access to all parts of the metro, and is particularly handy for DINK 30-somethings. Right across 14 mile from Oakland Mall, and just down John R from the Asian restaurant row---a good nerd combination.
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Re: Micro Center opening 3 new stores in 2023

Post by Brian Lutz »

buckguy wrote: July 13th, 2023, 6:42 am MicroCenter stores vary a lot. The one I go to near Cleveland is a former Zayre that started out as a local department store—-probably 60k sf, bright and well laid out. The one I near where I work in Rockville, MD is smaller, dark, cramped and poorly laid out. It’s in an odd multi-level part of a strip mall that probably started out as a Memco. The flagship in Columbus looks like a conversion of something else and seems like a less well executed version of the Cleveland store. They may get some people with a lot of disposable income, but those folks don’t predominate in any of these locations, all of which are near but not in high income areas. The Cleveland store has great customer service, while it’s non-existent outside of service desks in Rockville and somewhere in between in Columbus. I’d be curious what the new stores are like, esp. since their existing stores recycle existing space and have different footprints.
At the Overland Park store I went to it seemed like there was no shortage of customer service. I had a good conversation with an employee in the Maker Tech section of the store (which in itself is a very underserved category in retail, especially as things like 3d printers become more mainstream) about the 3d printer I was buying and some of the ones I had already used previously. I think there's an expectation that stores where many of the customers are likely to be experts will need employees that are at least equally knowledgeable about those areas (this applies mostly to the more technical areas like PC components, Maker Tech and electronics, maybe not quite as much for the consumer electronics and prebuilt computer sections.)

If you look at one of the "coming soon" entries on the store list on the Micro Center website you can see a rendering video of what the newer stores are expected to look like. Mostly it seems similar to the Overland Park store I visited with updated signage and a few minor layout tweaks.
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