Minneapolis - Best
Buy is rebalancing its channel strategy to address market share gains by online
retailers, including Amazon.com.
In the process,
the company is dramatically expanding its online-only assortment, where it is promising
more competitive pricing, and is shrinking the footprint of some of its big-box
stores as they come off lease.
It also has not
ruled out the possibility of closing some of its larger locations.
In an earnings
call this morning to discuss the chain's fourth-quarter results, CEO Brian Dunn
stressed the importance of maintaining a brick-and-mortar presence to
differentiate Best Buy from online-only competitors. Stores allow in-person
consultations with sales personnel, provide a convenient pickup option for e-commerce
orders, and will give the company a competitive advantage should tax policy favoring
e-tail-only merchants change.
acknowledged, "We are very carefully looking at our square-footage
requirements" and are "redefining the optimal big-box store size," while co-Americas
president Shari Ballard pointed to "opportunity in smaller-format stores."
Buy is reallocating space and labor in its big-box stores to three low market-share
categories where it sees the greatest opportunities for growth: mobile, gaming
and appliances. According to co-Americas president Mike Vitelli, mobile
departments will receive more accessory SKUs, gaming areas will benefit from
the rollout of trade-in and pre-order services, and majap departments will begin
incorporating processes gleaned from its eight in-store Pacific Sales concept
shops on the West Coast.
Room for the
department expansions will come from declining categories like CDs, whose floor
space is being cut by half.
In addition to
improved space utilization, the changes to Best Buy's business model will also
help attract new customers, the executives said.
financial officer Jim Muehlbauer said the company is as yet unaware of any
impact on its business from the events in Japan, although it is still too early
for vendors to fully assess the situation.
Dunn added that
Best Buy will continue to support its Japanese vendors "to the best of our
ability," and expressed heartfelt sympathy for both them and the people of
Minneapolis - Best Buy is rebalancing its channel strategy to address market share gains by online retailers, including Amazon.com.