Since its humble beginnings in 1966 as a single Sound of Music Store in St. Paul, Minn. that netted $173,000 in its first year, to its status today as a $25 billion CE and majaps behemoth, founder/chairman Dick Schulze's retail brainchild has epitomized the American success story of innovation and motivation triumphing over adversity.
Indeed, despite its success in bringing a superstore format for CE nationwide, the company has faced numerous obstacles along the way. These include a watershed tornado strike on its largest store in 1981 which almost brought the fledgling chain into bankruptcy, but whose resulting “Tornado Sale” led the way for Best Buy's low-price, no-frills retail strategy.
The company flirted with disaster again in 1997, when it missed the boat on a new generation of PC chip during the holiday selling season and became bogged down with inventory. Once again turning lemons into lemonade, the company re-invented itself with a merchandising and supply chain overhaul, which positioned it for its recent growth.
More recently, Best Buy took it on the chin with its ill-fated $700 million purchase of Musicland, but even this setback only compelled the company to regroup and aim higher. Now under the day-to-day management of CEO Brad Anderson, it is consolidating its No. 1 position in CE retail and extending the franchise to Canada with a range of cutting edge concepts and innovations. These include a novel Customer Centricity concept that tailors individual stores to unique demographic segments. Following encouraging sales results from its 32 test stores, the company is rolling the program out this month to an additional 70 locations throughout California.
Simultaneously, Best Buy has taken its Geek Squad PC repair service national, setting the stage for a possible custom home-installation offering, plus a forthcoming line of private label Geek Squad goods.
The company also has big plans for its private label Insignia line of competitively priced, direct imported PCs, monitors, LCD TVs and portable DVD players, which it is likely using as a hedge against Wal-Mart's high-tech CE inroads. At the same time, Best Buy is taking on the high-end specialty channel by incorporating Magnolia Audio Video home-theater shops within its stores.
What's next for Best Buy? Dick Shulze once told TWICE that the sky's the limit when it comes to product assortment. That vision may be coming to pass with news of a new test store concept, Eq Life. The proposed 13,000-square-foot to 15,000-square-foot stores are aimed at women 45 and up, and carry health and wellness products such as nutritional supplements and exercise equipment and offers such services as nail salons and pharmacies.
It is bold, trailblazing moves like these that have earned Best Buy its Retail Excellence stripes.