Goodbye, Best Buy. Hello, specialty retail?

December 14, 2010: 5:35 PM ET

With the big box consumer gadget chain's revenues down, it seems shoppers are heading to specialty stores or online to get their goods.

Though holiday shopping has been surprisingly healthy so far, particularly online, Best Buy is feeling the pain associated with fickle consumer trends. For its third quarter ending November 27, Best Buy (BBY) reported revenues of $11.89 billion, less than the $12 billion the company pulled in the same time last year, and even less than the $12.45 billion analysts predicted.

In a year dominated by new gadgets like the iPhone 4, iPad, and Samsung Galaxy Tab, the news comes as a surprise to some, given the company's recent efforts to change up store layouts to showcase popular portable devices like smartphones, e-readers, and tablets. Games and game devices also play more prominent roles in-store as well -- many Best Buy locations now feature areas dedicated to Sony and Microsoft's (MSFT) gaming products like the Playstation Move and Xbox Kinect motion-based controllers.

In theory, these changes, which play up the year's most popular tech, should have bolstered the company's bottom line, but they didn't. So what happened? Sanford C. Bernstein analyst Colin McGranahan attributes the loss to a shift towards online sales in consumer electronics. But we're not sure if that's the whole story. More

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