Future Shop closure 'inevitable' but doesn't spell end of tech retailers: expert

The Future Shop on St. James Street is permanently closed on Saturday, March 28, 2015.

The elimination of the Future Shop brand may be the end of an era for the once-successful Canadian retailer, but it does not foretell the end for stand-alone electronics stores, says one business expert.

Mark Satov says closing Future Shop was an "inevitable" move for Best Buy, the American company that bought the Canadian retailer in 2001.

"Best Buy is a big U.S. brand so if they had to shutter one brand in Canada it would certainly be Future Shop," said Satov, a business adviser on customer strategy with Satov Consultants in Toronto.

Best Buy Canada announced on Saturday the closure of 66 Future Shop locations, with the remaining 65 stores to be re-branded as Best Buy.

Satov says while electronics are often purchased online, he predicts customers will continue to value stores on the ground.

"If you are retaining bricks-and-mortar it's going after a different segment, it's providing a different experience, making sure to have the expertise and other things in the store that you just can't get online," said Satov.

"Not everybody is going to go get that experience and feel right about then going online and buying it from somebody else, especially when a place like Best Buy is ready to match the online price in the store."

Retail analyst Maureen Atkinson says more than a third of electronics purchases are made online, making it the second largest Internet retail category after entertainment purchases like books and music. She says the Future Shop closures are part of a bigger retail trend.

"Best Buy was very adamant that running the two banners actually gave them additional revenue. But that was before I think the impact of online shopping had really taken hold," said Atkinson, an analyst with J.C. Williams Group.

"Best Buy started off by shrinking their stores, reducing the size of their stores in a lot of cases. Now obviously they've decided that wasn't enough and that merging the brands would make more sense."

Atkinson says the company tried to differentiate the brands by offering Best Buy as a commission-free alternative to Future Shop's commission-based sales team. But she says it's unclear what impact that actually had on customers.

Best Buy Canada says along with the Future Shop consolidation, the company is investing up to $200 million on improvements that include increasing staffing levels. The company's website currently lists more than 300 postings for retail jobs at Best Buy locations around Canada.

Best Buy also says it will invest in improvements to online shopping, such as allowing Internet customers to order products from in-store inventory.

Both Satov and Atkinson say the Future Shop consolidation will have little impact on Canadian consumers overall.