Best Buy: A Beacon of Hope in a Dark Retail World
As Amazon and other online-based retailers grow to dominate the retail industry, it seems like every time you turned on the news, another company is going bankrupt or closing stores. There is, however, one light in the otherwise pitch-black retail tunnel: Best Buy.
In 1966, Richard Schulze and James Wheeler opened Sound of Music - an audio equipment store - in Saint Paul, Minnesota. The duo was successful from the get-go, and began expanding throughout the region. In 1983 they renamed themselves “Best Buy,” and began selling - among other things - VCRs and home appliances. This turned out to be a great pivot for Schulze and Wheeler; by 1993, they’d recorded $1.6 billion in sales, an increase of over $650 million!
As the Great Recession hit, one of Best Buy’s biggest competitors, Circuit City, closed. While at first glance, this seemed like an amazing opportunity for Best Buy to capture market share, it was actually just the first competitor of theirs to be affected by the lack of liquidity in the market. As a result, consumers began shopping at other places such as Costco and Amazon, where prices were cheaper, and in the case of Amazon, more convenient. This change in shopping venue was also due to what is known in the retail industry as “showrooming.” Showrooming is when customers would go to a store, check out the merchandise, browse the aisles, and talk to associates, and then proceed to order the items they want online at a cheaper price.
By 2009, Best Buy’s fortunes began to turn sour, and in 2012, they brought in a new CEO, Hubert Joly. Joly had no experience in retail before joining Best Buy - his last position was as CEO of a hospitality company - but this was exactly what Best Buy was looking for. They knew they needed someone different - someone with leadership skills who knew how to focus on the customer experience, which was a critical aspect of their turnaround plan.
In 2012, “Renew Blue” was announced. This plan implemented the concept of price-matching - if you found a lower price anywhere, Best Buy would match it. They also revamped their employee training tools (which gave employees a better understanding of the products they were selling) and improved the Geek Squad experience, placing small stations for major vendors such as Apple, Samsung, and Windows in their stores. Lastly, Best Buy cut costs wherever they could, closing unsuccessful stores and improving warehouse efficiency.
As of 2017, the “Renew Blue” plan was deemed complete. Best Buy’s stock has increased 330% since its lowest point during the Recession, same store sales growth have started to go up from the previous years’ again, and their revenue from e-commerce is improving annually.
Now they have started a new plan; “Building the New Blue.” This aims to help Best Buy stay on a path of growth and assist them in surviving and thriving in the new age of retail. They are in the process of expanding their smarthome offerings, the Geek Squad program is now offering customers assistance on devices they might not have even purchased at Best Buy, and they are even offering in-home service to assist customers.
Best Buy’s “Renew Blue” changed the retail industry, and it seems like “Building the New Blue” will do the same. With the future of retail starting to look a little less bleak, it looks like Best Buy is well-positioned to be there for us when our chargers break.