In an effort to explore the impact of Amazon.com on brick-and-mortar retailer Best Buy, Suzanne Mulvee, senior real estate strategist with Boston-based Property & Portfolio Research, a CoStar company, created a graph that translates Amazon’s share of the electronics market into square footage. It turns out the online retailer has grown its footprint from one seventh of Best Buy’s store fleet to the equivalent of approximately 50 percent of its store fleet, or 20.1 million sq. ft., in just four years.
“Under the old paradigm, the strength of your real estate mattered: if you had better-located stores, especially in supply-constrained markets, then you’d be insulated from new competition,” Mulvee writes. “Under the new paradigm, high-priced infill locations in Manhattan or San Francisco can be just as easily challenged as greenfield locations in Texas or Phoenix. In the Best Buy-Amazon battle, it’s as if Amazon has a store directly across the street from every Best Buy.”