Why Does Best Buy Sell a $3,900 Refrigerator?

By Douglas A. McIntyre Updated Jan 13, 3:29AM EST · Published Sep 17, 9:20AM EDT

Why Does Best Buy Sell a $3,900 Refrigerator? — © Michael Rivera / Wikimedia Commons

Best Buy Co. Inc. (NYSE: BBY) is a consumer electrics giant that just happens to sell appliances. The reason for strategy of diversification is hard to say. A move against Home Depot Inc. (NYSE: HD) or Amazon.com Inc. (NASDAQ: AMZN) or both?

Best Buy, for example sells a “KitchenAid – 23.8 Cu. Ft. French Door Counter-Depth Refrigerator – Black” for $3,869.99. But does Best Buy really sell it? The merchandise is fruit of a deal started with the Best Buy buyout of Pacific Home in 2006. Since the deal has hit its 10th anniversary, and Best Buy continues to use the brand, it appears the retailer made a wise decision.

Best Buy apparently has elected to keep an appliance brand separate with its consumer electronics brand. Best Buy does not conjure up visions of coffee makers. Better to leave that association to what management has decided is a brand that at least has a direct association: “Pacific Kitchen and Home, within Best Buy.”

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The gambit extends itself to the way the Best Buy website works. The visitor who wants an appliance goes to Pacificsales.com and leaves the Best Buy website completely.

The PacificSales site looks nearly identical to the appliance site at HomeDepot.com.

Under the Pacific Sales plan, Best Buy loses one point to Home Depot and gains one against Amazon. A typical Home Depot has enough floor space for a huge appliance showroom. Amazon has none. Best Buy has to compromise. A list of its stores shows only a fraction have a Pacific Sales location. For Best Buy, a store within a store — unless the store is not there.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.