Best Buy May Shrink Stores

In a rough economic climate where many of its competitors are closing stores, Best Buy may downsize some of its stores, redirecting attention to online retailing.

That doesn't mean Best Buy is giving up on its brick-and-mortar stores, which allow consumers such niceties as salespeople and the ability to pick up items purchased online. But the store is reconsidering its square-footage requirements and "redefining the optimal big-box store size," CEO Brian Dunn said in a phone conference with analysts.

Another Best Buy executive suggested the future may lie in "smaller-format stores."

Space and personnel are already being redeployed in existing stores to target mobile products, gaming, and major appliances while the shrinking CD category is being cut.

So how is Best Buy really doing financially? Last week the company announced that its fourth-quarter 2010 income was down by 16 percent. While this beat expectations, the stock fell 5.4 percent on the news. Revenue from TVs was down—presumably the hoped-for 3DTV boom did not materialize during the holiday shopping season.

See This Week In Consumer Electronics and The New York Times.