Has Best Buy found an outlet for future growth?
Best Buy is moving forward with its plan to double the number of outlet stores it operates over the next year.
The consumer electronics retailer said it is opening four new outlets this summer and fall in Chicago, Houston, Manassas, VA, and Phoenix. The stores, which feature clearance and open-box items at discounted prices, will be added to 16 existing outlets that the chain operates.
The stores in Chicago, Manassas and Phoenix are remodels of existing Best Buy locations. The Houston outlet store is being relocated to a new space that is three times bigger than its current home.
Best Buy is expanding the product selection at its outlets, adding gaming products, laptops, mobile phones and tablets to the mix. The retailer is not skimping on service even though it is selling marked down products. Every new outlet will have a Geek Squad area where customers can get technical support.
The chain is integrating outlets into its digital operations, as well. Shoppers can go to bestbuy.com/outlet to check out what’s available at their local store. They can also place an order for any product and choose to pick it up at a nearby outlet.
Best Buy’s outlets also offer same-day delivery of online orders. The retailer uses third-party service providers including Bungii and Dolly to make deliveries.
The outlet stores serve a number of functions for Best Buy.
Damien Harmon, executive vice president, omnichannel at Best Buy, in March on the retailer’s fourth quarter earnings call said, “These outlets unlock value by alleviating space and capacity from our core stores, and they are an important element of our circular economy strategy by providing a second opportunity for products to be resold instead of ending up in the landfill. In FY ’22, gross liquidation recovery rate is almost two times higher than alternative channels.”
The outlets also help Best Buy attract new customers and engage with others who have not recently shopped from the chain. Mr. Harmon said that 16 percent of customers shopping at Best Buy’s outlets are new to the chain and 37 percent are “re-engaged.”
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DISCUSSION QUESTIONS: Where do you think Best Buy will see the biggest benefit from its new outlet store strategy? Is the chain doing enough to differentiate its outlet experience from other options in the marketplace?