Retail Excellence Winner:: Best Buy: CE Retailing’s Barometer
Best Buy is perceived by many in our industry as the touchstone against which most brick-and-mortar and online consumer electronics stores are measured—and also, as a barometer by which the health of the industry is measured. That’s a tall order, but over the last year the company has lived up to that billing, proving its staying power and its ability to rejuvenate and fine-tune its market approach.
Mike Mohan, chief merchandising officer, says Best Buy’s success is founded in a focus on “giving customers advice, service and convenience—at competitive prices—no matter how they choose to interact with Best Buy.” That means being quick to respond—both in-store and online—to marketplace shifts that affect consumer buying patterns as they relate to the categories where Best Buy plays.
“Online,” Mohan says, “we have improved the number of product reviews and enhanced how we showcase gifting options to give customers the information they are looking for. We leveraged that enhanced site functionality—along with our ship-from-store capabilities and digital marketing—to help drive a 29-percent increase in domestic comparable online sales in Q1 Fiscal Year 2015. In stores, we have partnered more closely with our vendors, including Apple, Samsung, Microsoft and Sony, to showcase the latest and greatest technology. Consumers want to see, try, and test technology before they purchase, and Best Buy stores offer the best place to accomplish this.”
Mohan also points to several consumer- and vendor-directed activities by Best Buy that have helped to account for the company’s improved profitability in the most recently reported quarter—to the tune of $461 million. “We have a number of initiatives in stores and online—including partnerships with Microsoft, Samsung and Sony—that have resulted in an improved customer experience. We’ve also made a number of improvements online, with specific improvements in how we leverage our ship-from-store capability, digital marketing, and enhanced site functionality. For example, our ability to ship items from our stores has helped us move through clearance items that have been historically trapped in our stores. This allows us to make this inventory available to our online customers.”
The ship-from-store initiative is a policy instituted at all 1,400 U.S. locations—in effect, making each a distribution center. “Customers can order online and pick up their purchase from their local Best Buy store. That’s important, considering that 70 percent of Americans live within 15 minutes of a Best Buy,” Mohan says.
Best Buy is also improving the ways it connects with customers across all demographics, he says. “This work has increased Best Buy’s reach with marketable e-mail addresses, boosts our ability to target customer demographics with specific offers, and gives us the ability to send increasingly relevant e-mails. … We want to be more personalized and relevant in how we market to each customer group or individual.”
Another recent initiative resulted in the addition of 500 Samsung Entertainment Experiences and 350 Sony Experiences—highly interactive TV-technology-centered spaces—to Best Buy stores across the nation that help customers immersively research TV choices before they commit to a purchase. “These new home theater spaces show customers exactly how incredible 4K Ultra High-Definition TVs are, in addition to providing the best selection of HDTVs in the industry. With UHD 4K technology, seeing is truly believing,” Mohan says. “In addition, the Samsung and Sony Experiences help customers see and understand exactly how to sync and link smartphones, tablets and TVs to easily share content across multiple screens.”
But the innovation doesn’t stop there, he adds, noting Best Buy’s continual pursuit of new ways to enrich customer engagement. Besides the Samsung and Sony spaces, Mohan says customers can also expect to see more Pacific Kitchen and Home spaces as well as some additional Magnolia Design Center stores-within-a-store down the road.
Mohan foresees more positives in the future for Best Buy: “While we have achieved market gains despite industry declines, the reality is that consumer electronics is more competitive than ever.