Will Best Buy See Big Returns From Overhauling its Stores and Website?

Discussion
Jun 14, 2013

Best Buy needs fixing and, to its management’s credit, that’s what the company is attempting to do. Two recently reported cases in point:

  1. Best Buy is remaking its personal computer department into Windows stores-within-the-store at 500 of the chain’s locations.
  2. The consumer electronics chain is overhauling bestbuy.com to integrate with its Rewards Zone loyalty program. Until now, the two have literally been on separate websites.

Under the leadership of CEO Hubert Joly, Best Buy has made a number of changes to become more competitive, attending to both its bottom and top line. On the company’s recent earnings call, Mr. Joly said Best Buy remains focused on its six "Renew Blue" priorities, which consist of: online growth; improving the multi-channel consumer experience; increasing revenues and profits per square foot; reducing cost of goods through supply chain efficiencies; optimizing the chain’s real estate; and reducing its selling, general and administrative expenses.

The latest news from the chain shows a commitment to some of these key initiatives.

The decision to open Windows stores inside of Best Buy locations follows a similar move by the chain with Samsung. It also operates separate Apple areas inside its stores. The initiative includes the addition of more than 1,200 Microsoft-trained Best Buy associates. The concept, Tami Reller, head of marketing for Windows, told Reuters, "offers a large-scale, hands-on customer experience" of her company’s products.

The overhaul of bestbuy.com is critical to the company goal of improving consumers’ experiences across its selling channels. By integrating the Reward Zone loyalty program site with its e-commerce site, Best Buy is hoping that it can get customers to rate products they’ve bought, write reviews and share positive buzz on their experiences by offering them points used to discount future purchases.

"Best Buy has a huge customer database they haven’t harnessed," David Strasser, a retail analyst with Janney Capital Management, told the Star Tribune.

Rewards Zone has 40 million members and integrating it with Best Buy’s mobile and websites "could be potentially enormous," Mr. Strasser said.

What do you think of the most recent moves made by Best Buy? Does Hubert Joly have the chain on the right track overall?

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14 Comments on "Will Best Buy See Big Returns From Overhauling its Stores and Website?"


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Joel Rubinson
Guest
8 years 11 months ago

Both moves are the right way to go. Store within a store delivers experiences that online can’t match. Integrating Reward Zone with bestbuy.com is a small but positive step at making online and offline interactions with a retailer seamless and synergistic along the path to purchase.

David Livingston
Guest
8 years 11 months ago

Even after an overhaul, Best Buy’s model will be about being hassled and up-sold. I won’t go back because the sales people and cashiers continue to insult me trying to up-sell extended warranties and asking personal questions. It’s just so much easier to order online or go to Walmart. You buy something, pull it out of the box and plug it in. End of story.

I really don’t want to hear any canned sales talk from a teenager. Then to confuse the consumer more with loyalty programs. The best loyalty program is no loyalty program except offering the lowest price. Or great customer service, however, with low margins in that industry they will most likely attract low margin talent.

Dick Seesel
Guest
8 years 11 months ago

Best Buy is in the early stages of a turnaround. It’s arguable that their stock price has overshot their actual improvement in sales (which still declined in the most recent quarter) but it’s clear that Mr. Joly is starting to address many of the company’s most urgent needs.

First, a more brand-centric approach to merchandising (with focus on key players like Samsung and Microsoft) is a smart alternative to the aimless merchandising inside those “big boxes” for the past several years. (There is plenty of space to play with, in the area now devoted to music, DVDs and computer software.) Second, Best Buy needs a more robust omni-channel strategy—not only to make its big box stores more productive, but also as a brand positioning tool.

Paula Rosenblum
Guest
8 years 11 months ago

I just visited the new BB web site to see what the hub-bub was about. I was able to determine that, with the information provided, I’d be unable to make an educated decision on what PC to buy, if I was in the market. But I suspect I’m not the target buyer anyway.

Obviously, integrating the Rewards Zone is most important. The Windows store-within-a-store is sort of “meh” to me…but I guess they have to be somewhere.

Overall, I think Best Buy’s got a tough row to hoe, but I will say I’ve been impressed by Joly’s moves.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
8 years 11 months ago

I like the direction. I have stated in past postings that a store-within-a-store concept at Best Buy would be a great move. Their store size is a real disadvantage unless they can find ways to better use the space to drive overall traffic.

Combining the loyalty program with the web was a must. No question this has hurt Best Buy over the last few years. I have been a Rewards Zone card holder for years and still don’t understand how it benefits me. Because of that, I rarely shop the chain. Combining and promoting the Rewards Zone program with the web site should greatly improve Best Buy’s ability to speak with their 40,000,000 customers on file.

My. Joly has a lot of work ahead of him, but these two recent moves are moving Best Buy in the right direction.

Ryan Mathews
Guest
8 years 11 months ago

I think they are steps—perhaps—in the right direction.

The website integration initiatives are sort of a no-brainer and long overdue.

The store-within-a-store idea isn’t quite so obvious since it conjures up images of a high-tech version of the perfume section of a department store.

Do customers want to be sold one “fragrance” of technology or do they really want to see their choices integrated and side-by-side? I guess we’ll know soon.

But the big issue is how to beat the showrooming problem and, while each of these initiatives has potential, I’m not sure they quite get to that.

Steve Montgomery
Guest
8 years 11 months ago

Adding the separate department for Windows is a good move—especially if the store associates actually receive meaningful, good training and are able to use their improved skills to help customers make better decisions. I wonder what they will be trained to say when someone asks if should they buy a PC with Windows 7 or 8?

My concern is that if you raise consumers’ expectations, you have to able to perform. Given the turnover in their stores, will Best Buy be able to deliver on the more knowledgeable staff promise?

Camille P. Schuster, Ph.D.
Guest
8 years 11 months ago

These are definitely good moves, especially the website integration. Finding knowledgeable employees is always an issue. Now consumers will have to find the employee who knows about a particular product line. Maybe it would be worthwhile finding out what questions consumers actually have.

The last time I went to Best Buy to gather information, I was approached by an employee who had a list of questions that she insisted be asked before we could talk. The questions were not related to what I wanted to know, so I left. Will consumers respond to employees with even more segmented knowledge? We will see.

Anne Howe
Guest
8 years 11 months ago

Customer experience that simplifies the consumer decision process and also invokes trust is what will make it or break it at Best Buy. I’d like to see the staff be able to pull up peer reviews or info to answer questions in a heartbeat so the shopper can get to confident and secure while at the shelf. If they can excel at that, they might have a chance to get the at least the confidence seeking showrooming behavior under control.

Price transparency driven showrooming just might be here to stay for many, many consumers.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
8 years 11 months ago

So, how does the discontinuation of BB’s Geek Squad figure into this looming transformation? I always considered the Squad an important service and image builder for the chain. It has (had) the “cool factor” that appeals to younger shoppers. Cute little cars, too.

Mark Price
Guest
Mark Price
8 years 11 months ago

There is no question that Best Buy dug themselves into a bit of a hole over the past 2-3 years. Joly is a smart, experienced turnaround executive, and has already moved the company forward. His focus on a small group of priorities increases the likelihood that the company will marshal its resources toward the same goals, which may be the most important factor in the company’s turnaround, more important than any specific initiative.

Tom Redd
Guest
8 years 11 months ago

The Blue is on the right track and things will improve. The next trick is to leverage their overall brand. They have the most powerful brand in retail when it comes to CE. Ask someone: Buying a TV – where might you visit to look at lots of TVs? Go ahead, test the brand. They will – as my guess – say Best Buy and maybe some other names. Key is that BB has a major chunk of shopper mindshare and now they need to tune the shop operations (bricks and clicks) and leverage that mindshare.
I just bought a TV there. Why? The associate knew more about the LED TV then any web site and beat other prices. No hassles, just service and a good deal.
Tom

Maggie Vanderburg
Guest
Maggie Vanderburg
8 years 11 months ago

I’m disappointed that the customer service aspect of their staff starting with the store manager has not improved. They are on a skeleton staff and the associates don’t realize that not following through with the customer in front of them is causing the loss of the present and future sales. If you want to specialize with particular brands, then be sure the associates are trained not only in the product but also how to sell.

Joan Treistman
Guest
8 years 11 months ago

It makes sense to consider modifications to the website and the store. It’s to his credit that Mr. Joly is attending to both channels simultaneously. If the emphasis of success measurement is restricted to behavior associated with Reward Zone, the changes may be misguided. The article refers to goals of top line and bottom line performance, but the strategy to get there seems more scattered than focused…perhaps that’s intentional.

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