How Best Buy Uses Customer Input to Develop Private Label Line

June 2007 By Devendra Mishra

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IBM’s recent Summit for Consumer Electronics Emerging Technologies proved product innovation is the main driver of sales growth and profitability. To hammer home the point, George Bailey, IBM’s general manager of Global Electronics Industry, reminded the audience of CE executives that perhaps more than any other industry consumer electronics relies on continuous innovation, and to be successful CE companies must focus on delivering integrated solutions to consumers, not just innovative products.

Best Buy says it’s doing just that.

Fernando Silva, Best Buy’s director of Private Label Product Lines, delivered a keynote address at the summit that left no doubt that we live in a consumer-centric world, in which collaboration from all areas of the supply chain should drive innovation. At Best Buy, customer-centricity means “treating each customer as a unique individual, meeting their needs with end-to-end solutions, and engaging and energizing our employees to serve them,” he said. “It is our primary strategy for providing a differentiated experience for customers.”

By listening to customers and employees more closely, Best Buy is benefiting from new ideas that in the past would never have reached corporate headquarters. Through employees that regularly engage with customers, the retailer has discovered several growth opportunities. Those with the highest potential include small-business customers, new services offerings and international growth, which account for a total of at least $230 billion in revenue, according to the 2007 Best Buy Annual Report.

For decades, CE manufacturers focused on creating products while retailers have focused on selling them. Silva demonstrated that retailers are sharing some of the roles that manufacturers used to dominate, such as developing a deeper understanding of the consumer. By doing so, Best Buy is emerging as a new ally of manufacturers and technology product developers alike.

For example, Best Buy has assembled a team of engineers, technologists and product experts from Apple, Xerox, Kodak and other leading R&D companies. Silva said, “they receive, reiterate, vote and synthesize end-to-end solutions to improve the lives of our customers by listening to them. It is the intersection of the three constituents - Best Buy, partner suppliers and product developers that determines what customer needs have to be met. Silva’s team - which invites input from approximately 120,000 sales associates in over 1,150 stores in the US, Canada and China - taps into the “one million hours spent daily by the sales associates wearing blue shirts who are now agents of our customers and not of product manufacturers, as they used be in the past.”

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