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Best Buy’s Business Evolving

Best Buy apprised analysts of its progress on a number of developing strategic fronts during a conference call last week. Among the highlights:

  • Customer Centricity. The company has launched a pilot project in a handful of stores that is designed to better address the specific needs and wants of disparate customer segments. Best Buy was short on details, but said the effort entails reconfiguring stores, altering their operating model and bringing in support teams. Early results showed sizable increases in sales and gross margins, and the company is expanding the test.
  • PC Repair and Installation Services. In-store, the goal is to reduce the current turnaround time for repairs from one week to one day. Currently, 60 percent of PCs are now fixed within four hours. In the home, the company’s recently acquired Geek Squad service, which installs and repairs computers 24/7, will be extended from six markets to 10 by year’s end. The company described in-home service as a multi-billion market that will position Best Buy for the era of the networked home.
  • Networked Homes. Vice chairman Brad Anderson described the wired home as the next likely growth engine for Best Buy following the current digital TV cycle. To prepare for its arrival over the next decade, the company will grow its Networked Home Solutions builder channel business, which this year will help developers wire some 4,500 new homes. (See story p. 18.)
  • The company will re-launch its e-tail site by July 1. Improvements will include faster checkout, better navigation, increased assortment, more financing options, greater traffic capacity and personalization features that tailor specific offerings to returning shoppers based on previous on-site activity. President Al Lenzmeier said the site’s free shipping offer has been a key driver of its “spectacular growth and higher close rate.”
  • Ad Campaign. A new program will launch later this month with the tagline “Thousands of possibilities. Get yours.” The campaign is aimed at “heavy technology and entertainment spenders who appreciate the benefits of a connected lifestlyle.”
  • More City Stores. Best Buy stores in major urban markets including New York, Los Angeles, Seattle and San Diego are among the company’s top performers, prompting plans for increased penetration in metropolitan markets. A second Manhattan store, on the Upper East Side, is planned for the fall.