The retail meltdown of 2017 has been well documented, with some reports estimating 8,600 brick-and-mortar locations will close by the end of the year. At the same time, Amazon is growing exponentially by adding categories, sellers and consumers.
In the age of Amazon, consumer electronics retailers like RadioShack and Circuit City were hit especially hard, and just five years ago, Best Buy looked as if it could be headed for the CE retailer graveyard.
Today, with an emphasis on consumer education, customer experience, and bridging online and in-store buying experiences, Best Buy is holding its own. The linchpin in Best Buy’s stand-out success as the No. 1 CE retailer may be its CEO, turnaround expert Hubert Joly, who joined the company in 2012. Criticized by some for choosing a CEO without consumer electronics or retail background to replace previous chief executive Brian Dunn, Best Buy has flourished under his leadership.
Joly’s “Renew Blue” transformation strategy is at the center of Best Buy’s revival. Consistently topping Wall Street expectations, Best Buy has grown earnings per share at an average rate of 9 percent each year. Joly recently announced the next phase of Best Buy’s transformation, called Best Buy 2020, in which it will roll out in-home services, exclusive brand partnerships, and offerings in emerging categories like smart home solutions.
So, what can other retailers take from Best Buy’s playbook to help them compete?
1. Don’t be reduced to a showroom: When Joly joined Best Buy in 2012, one of his first moves was to examine the retailer’s pricing and align it more closely with what consumers might find online so consumers wouldn’t have a reason to shop elsewhere. Many consumers still like the idea they can achieve instant gratification for what they want to buy. This is especially true in many CE categories like games and games systems. Additionally, Best Buy realized that if it created a differentiated in-store shopping experience in which product pricing rivaled what customers could get on Amazon, people would purchase in-store.
2. Embrace the omnichannel experience: Best Buy doesn’t view itself as a brick-and-mortar retailer with an online presence; it sees itself as a multichannel retailer, giving consumers lots of opportunities to research, shop and buy the products they want — on their own terms.
Best Buy is a leader in connecting in-store and online experiences by offering consumers different shopping and purchase combinations, whether it’s in-store or online.
3. Invest significantly in employee education: Best Buy has more than 1,000 stores and about 125,000 employees. That’s a lot of people charged with delivering Best Buy’s brand experience. Under Joly’s leadership, Best Buy focuses on educating and empowering employees to lead discussions with customers about complex consumer technology.
Many consumers need a guide to help them navigate bits, bytes, and megahertz; knowledgeable sales associates can help consumers connect the dots between complex consumer tech and how they’ll use it in their homes. In some test markets, Best Buy is taking the notion of the knowledgeable employee to the next level by rolling out an in-home service in which staffers go to customers’ homes and consult with them on technology deployments and upgrades.
4. Look for partnerships: Best Buy takes advantage of the halo of brand awareness and favorability with a “store within a store” model. Well-known consumer electronic brands like Samsung, Sony, Apple and Microsoft pay “rent” to Best Buy. This is a unique win-win-win scenario in which Best Buy gets additional revenues from the big brands; brands get an experiential showcase for their products within Best Buy stores, and customers get access to specialized shopping experiences supported by consultative salespeople.
5. Think of your brand as an experience, and walk the talk: Joly comes from a travel background, a category that by definition emphasizes experience. In a post-Amazon world, retailers must focus on the experiences of consumers shopping in their stores and on their websites. In a category in which the products themselves are commodity, a differentiated shopping experience from a retailer that aligns with customers’ values and beliefs will win. If you examine the value propositions of both Amazon and Best Buy, it’s at least equal — and in many cases better — for customers to buy from Best Buy. Customers get similar prices and shipping terms, but Best Buy allows customers to pick up or return their online orders in local stores and also receive great aftermarket support.
While Amazon is planning to roll out in-home advisory services to help customers make sense of complex home technology, Best Buy will likely continue to maintain its experiential edge for years to come.
Deb Gabor is the founder of Sol Marketing, a brand-strategy consultancy focused on building winning brands. Since 2003, Sol Marketing has led brand-strategy engagements for such organizations as Dell, Microsoft, NBC Universal, Allrecipes, Cheezburger, HomeAway and RetailMeNot.