Best Buy Co., Inc. (BBY) Seems Poised to Embrace J.C. Penney Company, Inc. (JCP)’s Failed Strategy

In short, if Best Buy Co., Inc. (NYSE:BBY) were to announce more shops in the coming months — perhaps deals with HTC, Sony Corporation (ADR) (NYSE:SNE), or LG — investors shouldn’t be surprised.

The difference between electronics and clothing

But didn’t this boutique model fail when Johnson tried it at J.C. Penney Company, Inc. (NYSE:JCP)? Why would it work for Best Buy?

Fundamentally, the shopping experience is vastly different between clothing and electronics. To some extent, the boutique model can actually be detrimental when it comes to shopping for clothes. A consumer looking for a pair of jeans, for example, must run from one mini-shop to the next, comparing different brands’ offerings.

Increasingly, that isn’t true when it comes to electronics. The rise of the ecosystem has meant that shoppers are choosing to commit to a brand, rather than buy an individual product. That is to say, someone who has an iPhone may get more utility from buying an iPad in place of a rival tablet.

There’s also a bit more brand loyalty among buyers of high-end electronics, as compared to clothing, particularly among the budget-conscious consumers J.C. Penney Company, Inc. (NYSE:JCP) generally appeals to.

Best Buy becoming a landlord?

Best Buy seems pleased with its Samsung Experience shops, and given the comments management has made, more deals with other companies could be on the way.

Soon, Best Buy Co., Inc. (NYSE:BBY) could find itself transforming into a quasi-landlord; a provider of space for individual brands, rather than a simple big-box store.

Back in February, I had written that I believed Best Buy was destined for bankruptcy. I hold that opinion no longer. By providing its assets (retail space) to brands eager to replicate Apple’s retail strategy, Best Buy should wind up with a new lease on life.

The article Best Buy Seems Poised to Embrace J.C. Penney’s Failed Strategy originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

Joe Kurtz owns shares of J.C. Penney. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Salvatore “Sam” is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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