Best Buy Taking ‘Departments’ To Another Level

CE chain looking more department-store-like itself
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News earlier this month that Best Buy will be partnering with Macy’s and operating shops in the department store’s locations is appropriate since the CE retailer took a page or two from Macy’s playbook in recent years.

Sure, this is a small operation — 10 licensed shops out of hundreds of Macy’s locations nationwide. The shops will be 300 square feet and staffed by Best Buy employees starting in November. The move reminds me of 30 years ago, before Best Buy became a national retailer.

Back then vendors always said that getting placement in Macy’s CE department — and space in its Sunday newspaper inserts — could make a supplier in the lucrative New York metro market.

This time around Best Buy will help Macy’s, long out of the CE category except for some online sales and in-store demos, generate some needed sales for the holiday season and beyond. And the products available will be high- profile mobile-related products: tablets, smartphones, smart watches, accessories and the like, from Samsung and other brands.

The irony is that Best Buy’s CEO Hubert Joly, who joined the retailer three years ago, soon after began the strategy of providing floor space to key suppliers such as Apple, Google, Microsoft and Samsung, making Best Buy a “department store” of sorts for CE and related products.

When Joly came on board that year it is not melodramatic to say that the fate of Best Buy was in the balance. Since then his strategy, of which vendor departments are a large part, has made the chain the ultimate CE showcase where leading brands can display their wares on a national basis.

According to Joly in Best Buy’s most recent earnings call, the chain is not standing pat as the holiday selling season approaches. Specifically:

*More Samsung and Sony home theater stores-within-a-store will open and emphasize not only home theater but 4K TVs.

*AppleCare warranty plans will be expanded and Apple Watch will be sold at all of its big-box stores, as well as its Best Buy Mobile Stores.

*Joly sees an opportunity in the introduction of Windows 10 via the Microsoft stores-within-a-store in 800 locations.

*In major appliances, Samsung Appliance Experience zones will expand to 225 Samsung Open Houses by the end of the year.

What’s more, Joly noted in his presentation that the “increasing complexity and interoperability of technology products and the advent of the Internet of Things” make Best Buy’s operating model “increasingly relevant.”

That means service and selection: two of the biggest reasons the best department stores have been retail leaders for years. Let’s see if this strategy can continue to thrive for Best Buy during the coming holiday season.

Steve Smith is editor at large of TWICE and its longtime editor in chief.

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