Best Buy and the reluctant shopper. Sales fall as Americans pull back on spending

Category: Business


Unlocking Word Meanings

Read the following words/expressions found in today’s article.

  1. wrestle with (something) / ˈrɛs əl wɪθ / (phrasal v.) – to try to find a solution to a difficult problem

    The business is still wrestling with the issues brought about by the pandemic.

  2. splurge / splɜrdʒ / (v.) – to spend more money than usual for expensive goods or items

    For sure a lot of people will splurge on the Christmas holidays.

  3. resilient / rɪˈzɪl yənt / (adj.) – able to recover quickly after experiencing a challenge or difficulty

    The healthcare system remained resilient despite the public health crisis.

  4. moratorium / ˌmɔr əˈtɔr i əm / (n.) – a time when a certain activity is not allowed

    The mayor’s office ordered a moratorium on the building of the bridge because of safety concerns.

  5. revert to (something) / rɪˈvɜrt tu / (phrasal v.) – to go back to an earlier condition or state

    Since the new process didn’t work, they will revert to the original process.


Read the text below.

Sales and profits at Best Buy slid in the second quarter as the nation’s largest consumer electronics chain continues to wrestle with a pullback in spending after Americans splurged during the pandemic.

The decline in sales was smaller than what Wall Street had anticipated, however, and profits were better than expected, sending shares higher in early trading.

The U.S. job market has remained resilient, but Americans are facing higher prices and more expensive credit with the Federal Reserve hiking benchmark interest rates to combat inflation. It’s more expensive to take out loans for appliances, cars and houses, or to use a credit card. As a result, consumers have become reluctant to spend unless there is a sale. They’re being more selective with what they will buy and, in many cases, trading down to buy cheaper stuff.

Retailers including Best Buy are also now bracing for the impact from the ending of the student loan moratorium, which had provided one-time college students a little more financial breathing room.

“We believe that the consumer is in a good place,” CEO Corie Barry told analysts. “But as we have said, they are making careful choices and trade-offs right for their households.”

But she expects this year will be the low point in demand for new technology after two years of declines, and next year the consumer electronics industry should stabilize and enjoy possible growth as shoppers look to upgrade and replace their gadgets.

Barry said shoppers are deal-focused, and she expects the holiday season will revert to the same promotional cadence prior to the pandemic, with peak spending right around the end of October, Thanksgiving week and the last few days before Christmas.

Comparable sales — sales from physical stores open at least a year, and digital channels — fell 6.3%, dragged down by declines in computing and appliances. Appliance sales fell 16.1%, while sales of computer and phone devices slid 6.4%. Computer electronics sales fell 5.7%. The entertainment category, including gaming, jumped 9.1% increase.

This article was provided by The Associated Press.

Viewpoint Discussion

Enjoy a discussion with your tutor.

Discussion A

  • Why do you think it’s important for consumers to make careful choices when buying household products? What factors do you usually consider when buying something for your household (ex. need vs. want, quality)? Discuss.
  • Do you agree with Barry’s statement that shoppers are deal-focused? Why or why not? As a shopper, do you also go after promotions, sales, and discounts? Discuss.

Discussion B

  • Why do you think the pandemic has affected people’s spending habits? Discuss.
  • Did the pandemic affect your spending habits? Why or why not? Discuss.