Best Buy Sales Rebound After Stores Reopen, Another Sign Coronavirus Won’t Kill Brick-And-Mortar Retail

Best Buy BBY has already proved its relevance in the age of Amazon AMZN . The top U.S. electronics chain is also showing the coronavirus pandemic won’t be the death knell of brick-and-mortar retail: Best Buy’s sales rebounded sharply in the past month after most stores reopened.

Sales for the fiscal second quarter to date rose 2.5% from a year earlier, led by a 15% jump since the company began reopening its stores in mid-June and allowed customers to visit most stores without making appointments first, Best Buy said late Tuesday afternoon. That reversed the 6.3% decline it posted in the first quarter that ended May 2. Second-quarter-to-date online sales through July 18 had surged 255%.

Best Buy shares rose more than 4% in after-hours trading to an all-time high of $94, almost doubling since reaching a low of $48.11 in March. The company also said that beginning August 2, it would increase hourly worker wages by 4%, replacing short-term incentive compensation. It will also raise its starting hourly wage to $15.

Many brick-and-mortar retailers, from clothing chain Brooks Brothers to kitchen gadgets retailer Sur La Table, have recently joined the list of chains filing for bankruptcy protection. Best Buy’s sales update, however, shows physical retail isn’t going away—despite increased online sales and a sharper divide between the industry winners and losers. 

Benefiting from the spread of remote work, Best Buy said computers, appliance and tablets were among the biggest sales drivers in the quarter to date. One sign that more consumers are opting to buy in stores when given the choice: As Best Buy’s sales picked up after stores reopened in mid-June, online sales, while still posting enviable gains, slowed to a rate of 185%.

Best Buy CEO Corie Barry, who described stores as “absolutely an asset,” said in May that the retailer, with about 1,000 stores in the U.S., had seen a “pent-up demand” from customers who wanted to come in to stores and seek live help on such items as home office or phone products. Like many other retailers using stores as online fulfillment centers of some sort, the company has said about two-thirds of what it sold online last quarter was for curbside store pickup or was shipped to customers from stores. Best Buy also has stores in Canada and Mexico.

“Physical stores remain an important part of the (Best Buy) business model,” Oppenheimer analyst Brian Nagle said in a report. 

While one may argue Best Buy is benefiting from selling tech gadgets, which naturally leads some customers to seek in-person help, it’s not the only retailer having success selling non-essential things, signaling a consumer desire for in-store visits.

T.J. Maxx and Marshalls parent TJX, known for its no-frills shops that have stolen department stores’ market share by offering bargains and a treasure-hunt experience, noted in May that its reopened stores were seeing “sharply higher” sales from a year earlier.

Indeed, I recently observed lines of shoppers 50 deep waiting to check out at a few T.J. Maxx stores in New York City.

In another telling sign, in New York’s SoHo neighborhood on Sunday, while some stores like Zara had people outside waiting to enter because of store-capacity limits, other reopened stores remained almost empty or had shoppers there mostly to return their online purchases.

Covid-19 may have hastened the end of many brick-and-mortar retailers, but the pandemic is far from being the real culprit.

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