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Analysts: Bose Closing Half of its Brick-and-Mortar Stores Worldwide Would Drive UP Profit

By Yna CarlosPublished on
A Bose store in the central business district of Sydney, Australia, one of the countries where many Bose stores will be closed. (From www.dailymail.co.uk)
A Bose store in the central business district of Sydney, Australia, one of the countries where many Bose stores will be closed. (From www.dailymail.co.uk)

While the strategy won’t be a dampener for Bose, the company should expand its network of resellers.

A Bose store in the central business district of Sydney, Australia, one of the countries where many Bose stores will be closed. (From www.dailymail.co.uk)
A Bose store in the central business district of Sydney, Australia, one of the countries where many Bose stores will be closed. (From www.dailymail.co.uk)

News of Bose’s decision to shutter nearly half of its physical stores worldwide had saddened many, including the company itself, but business analysts said the move would mean improved profit for the Massachussets-based audio products manufacturer.

Profiting from its online presence in giant retail platforms like Best Buy, Target, and Amazon, Bose announced last January 15 that it has found no need to keep its 119 retail shops in North America, Europe, Japan, and Australia over the next several months. The affected stores make up 48% of the firm’s 239 stores.

The company will maintain the operations of 130 stores throughout China, the United Arab Emirates, India, and other Asian countries such as South Korea.

While the move may have left many speculating it would mean less awareness of the Bose brand, business experts said the company has already established itself in the market that a shift to online retail can do Bose more good than harm.

Better Financial Performance

Mark Cohen, director of Columbia University's Retail Studies, in a 2013 interview, with Retail TouchPoints TV. (From Retail TouchPoints)
Mark Cohen, director of Columbia University’s Retail Studies, in a 2013 interview, with Retail TouchPoints TV. (From Retail TouchPoints)

Mark A. Cohen, director of retail studies at Columbia University’s Graduate School of Business, told Forbes that the company’s retreat from brick-and-mortar “will not likely affect its sales very much and will likely improve its profitability.”

He cited as factors the potential for its online business and remaining retail stores to continue with their growth.

For its 2019 fiscal year, Bose generated $4 billion in revenues, unchanged from the 2018-level.

Put More Reseller-Partners On-Board

Anindya Ghose, Heinz Riehl Chair professor of business at New York University’s (NYU) Stern School of Business and the Director of the Masters of Business Analytics program at NYU Stern, commented:

“My sense is that this decision by Bose to close too many offline stores is dictated by cost economics. I do not see much of an impact on them because there are many third-party resellers carrying their products. In particular, as long as their products are available on Amazon, people will have easy access and a convenient method to buy.”

However, Ghose said Bose should continue adding third-party sellers and an effective pricing strategy to compete with its rivals.

Using Store Closing Savings on Advertising

Anindya Ghose, Heinz Riehl Chair professor of business at New York University’s (NYU) Stern School of Business and the Director of the Masters of Business Analytics program at NYU Stern, at a lecture series for his book
Anindya Ghose, Heinz Riehl Chair professor of business at New York University’s (NYU) Stern School of Business and the Director of the Masters of Business Analytics program at NYU Stern, at a lecture series for his book “Tap.” (From Flickr)

“It could also benefit more from customer acquisition through targeted digital advertising (by diverting some of its cost savings from store closings),” Ghose said.

“Finally, it could try to leverage organic word-of-mouth from its existing loyal base of customers through nurturing online communities,” he added.

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