Best Buy expected strong smartphone sales during the 2015 holiday season, based on 2014’s smartphone sales trends. Unfortunately for the retailer, that strategy backfired in a big way, as the Minneapolis-based chain reported a 7.2 percent drop in same-store sales of computers and mobile phones for the nine-week holiday period ending January 2. This compares to a 1.8 percent decline during the same period in 2014.
Overall, and because Best Buy stocked up on more smartphones than it pushed to customers over the holidays, domestic revenue dropped by 0.8 percent year-over-year.
These numbers may not seem like much, especially for a sprawling retail chain like Best Buy, but keep in mind that computer and mobile phone sales accounted for 42 percent of the company’s revenues, so any drop is one that will be noticed.
As for what caused the decline in computer and phone sales, Best Buy chairman and CEO Hubert Joly pointed the finger at manufacturers, accusing them of a lack of innovation. Because of this, according to the executive, fewer customers decided to upgrade their devices. Data collected by research firm Gartner, which revealed the worldwide slowing growth of smartphone sales, supports part of Joly’s statement, though whether it’s due to a lack of innovation in the smartphone space is up for debate.
To counter the negative news, Joly revealed that customers turned to smartwatches and fitness trackers during the holidays, though he did not divulge concrete numbers. Even so, with the Fitbit app soaring to the number 1 spot in the Apple App Store on Christmas and smartwatches expected to land on the wrists of 9 percent of the American population by year’s end, there does seem to be some truth in Joly’s words.
