Wall Street Misses the Customer Centricity Point
By George Anderson
Wall Street’s reaction to Best Buy’s latest quarterly results (it missed analysts’ forecast for the chain) was predictable (the company’s stock price fell 11 percent).
What many on the street and elsewhere either missed or chose to discount in the consumer electronics chain’s numbers is the success it is having with the stores converted to its new customer-centric model.
The stores, which are developed to meet the needs of targeted shopper groups – moms, gamers, home theater enthusiasts and small business owners – began testing on the West Coast last year and are being rolled out nationally. Best Buy is looking to have 350 such stores operating by Feb. 2006. The customer-centric stores generated comp sales increases of 9.4 percent in the last quarter versus 3.5 percent for all other units operated by the chain.
“We believe that this new approach, which helps us engage with our customers differently, is essential to Best Buy’s success,” said Brad Anderson, the company’s chief executive and vice chairman in a released statement. “In the coming years, more products will become digital and more homes will become networked. The increased complexity in the business will require more complex labor in our stores and additional services capabilities, which we are now building.”
Mr. Anderson said Best Buy is succeeding because of fundamental changes it has made to the way it approaches its total business activities.
“We can satisfy customers only if we satisfy our employees as well, and I’m pleased with our progress with changing our store culture and management style. Every day more employees are empowered to find new ways to create a differentiated, end-to-end shopping experience for customers,” he said.
Moderator’s Comment: What is your analysis of the business changes taking place at Best Buy? –
George Anderson – Moderator
- Q2’06 Revenue and Earnings Conference Call – Best
- Best Buy’s Second-Quarter Net Earnings
Rise 47% to $188 Million – Best Buy/Business Wire
- Best Buy leads the trend for ‘bespoke’ stores – Financial Times
- Best Buy shares plunge despite 48% profit jump – Reuters/USA Today