Consumer electronics retailer Best Buy reported higher than expected sales in its first quarter earnings report out Thursday. The company, which experienced a slump in online sales, ultimately took about a 7 percent hit on the stock market following the release of the report.
Online sales, as a percentage of revenue, fell from 22.5 percent this time last year to 12 percent. This is due in part to big name competitor Amazon who has flexed its muscle within the online marketplace across all industries.
Yet, here at Dealerscope we’ve covered Best Buy’s recent rebranding and what Amazon can’t fully offer to its consumers (at least for now). That is an unmatched in-store experience allowing customers to try products, mostly receive them same day and the opportunity to interface with a technology expert.
“Technology products are becoming more and more intertwined with people’s daily lives — you have your smartphone, your TV, your Alexa, your Fitbit — and that means that people have a lot more questions,” Anthony Chukumba, a senior research analyst at Loop Capital Markets in Chicago told The Washington Post. “Best Buy has been uniquely positioned to benefit from that since it’s the last man standing in terms of national consumer electronics retailers.”
Competitors in the space, like hhgregg, which recently fell to the wayside filing for Chapter 11 bankruptcy last year, have given Best Buy its sense of supremacy in terms of in-store transactions.
This unique in-person experience seems to be the greatest advantage Best Buy runs with, reflected in its reported domestic comparable sales change growth of 7.1 percent.
Best Buy Chairman and CEO Hubert Joly appears to acknowledge in Thursday’s earnings report the leverage the company has to flourish through in-store consumer assistance.
“We are excited by our momentum and continue to believe we are operating in an opportunity-rich environment driven by technology innovation and customers’ need for help,” Joly said. “We are focused on providing services and solutions that solve real customer needs, and on building deeper customer relationships.”
Best Buy’s long-term growth will likely be determined by its ability to hold it’s claims on in-store consumer electronics where it thrives, and doing it all while keeping a watchful eye on others, like Amazon, who are fighting a similar fight from the other end.