Best Buy cancels plans for discount outlet amid lease struggles
- Best Buy has closed its East Northport store to remodel it into an outlet but did not finalize a new lease.
- The retailer is now looking for alternative locations to establish a discount store in New York City.
- The decision reflects broader retail challenges and Best Buy's strategy to adapt to changing consumer behavior.
In September 2024, Best Buy announced its decision to abandon plans to transform its East Northport store into the state’s first discount outlet. This development occurred after the electronics retailer was unable to secure a long-term lease agreement with the landlord of the store located in Huntington Square Plaza, owned by the Sterling Organization. Initially, the store was reported to be closing temporarily for remodeling, aimed at reopening as an outlet during the summer. As part of its strategy to boost profitability amid declining sales, Best Buy is exploring new store formats, including the opening of outlets that can enhance profits from returned merchandise. However, the failure to negotiate a lease at the East Northport location prompted the company to seek alternative locations for an outlet store in the New York City area. This decision is reflective of Best Buy’s broader response to changes in consumer behavior, particularly the shift towards online shopping. Over the past few years, Best Buy has been grappling with significant sales declines. Since the onset of the COVID-19 pandemic, the retailer has experienced a 12-quarter streak of falling sales at stores open for at least one year, and a 3% drop in sales revenue, amounting to $9.45 billion in the last fiscal third quarter ending November 2, 2023. The chain has attributed these declines to macroeconomic uncertainties, customer tendencies to wait for promotional deals, and competition from online retailers like Amazon as well as big box competitors such as Walmart and Target. In a bid to adapt to changing market trends, Best Buy has closed about 120 regular stores over the past five years, reducing its total number to 889, which includes nine locations on Long Island. The company is currently focused on converting some of its existing regular locations into smaller, more efficient store formats that are better suited to the current retail environment. This restructuring effort is a direct reaction to the company’s need for less physical space due to the rise in online purchases and consumer preferences that emphasize convenience and accessibility.