M+E Daily

Best Buy Downsizing CD and DVD Retail to Make Room For Games, Electronics

Ahead of the holiday sales season, Best Buy is taking away shelf space for CDs, and reorganizing its DVD aisles, to make more room for videogames and top-selling electronics such as mobile phones.

The shift in the store’s product mix is significant for entertainment distributors, as it seems to accelerate a trend that has been emerging on the sales floors of other major entertainment retailers, such as Walmart, in recent years. But while reductions in retail floor space for CDs follow years of industry-wide sales declines for the format, studio executives report signs of stabilization in the DVD business.

Nevertheless, Best Buy is promoting videogames — specifically titles developed for new motion-control and 3D hardware — to the front of its entertainment media mix.

Best Buy CEO Brian Dunn announced the plans for “another store reset” during a quarterly earnings call with analysts earlier this week. The initiative, Dunn said, “will include an increase in the space for higher-growth and in the aggregate higher-margin categories — like (mobile phones), e-readers, and gaming – with a heavy emphasis on new gaming platforms and pre-owned game titles.

“This will be enabled,” Dunn said, “by a reorganization of the DVD and CD sections. The CD section in particular will shrink in space allotment.”

Dunn added that Best Buy plans “to be the biggest retailer of motion-based gaming platforms,” which this holiday season will include Microsoft’s Kinect system as well as Sony’s Move controller for the PlayStation 3. Dunn also said the retailer expects “3D gaming to be a big driver of gaming sales,” which “in turn will stimulate 3D TV sales.”

Changes to stores’ videogame departments appear to be already underway. A Best Buy location in Manhattan had cleared shelves for a new mix of Xbox 360, PlayStation 3, and Wii titles, with signage announcing “new and pre-owned games at great prices.”

A store associate confirmed the location would be selling pre-owned games, but said he did not know when. As part of its renewed effort  to grab share of the pre-owned videogame business, Best Buy rolled out a trade-in program last month at 600 stores nationwide.

On the other side of the Manhattan outlet, Best Buy maintained 11 rows of shelving for DVDs and three rows for Blu-ray discs, with additional shelving for movies running along walls as well as end-cap and free-standing displays. CDs took up four store aisles, with vinyl records claiming a portion of one row.

Overall entertainment software sales at Best Buy have been sluggish this year. For its most recent quarter, Best Buy that continued declines in entertainment, as well as in sales of TVs, have outweighed comparable-store increases in areas such as mobile phones, tablet computers, and appliances.