We’ve written about the tremendous success of Best Buy before, but really, the company’s ability to prosper in an otherwise down retail economy is nothing less than remarkable.
Seriously. Best Buy should not have had success in 2016 or 2017. They should have gone the way of the dodo like Circuit City. They should have closed their doors years ago. And yet, here we are. Best Buy lives.
But why? How does the company keep chugging along in the face of every preconceived notion about what should happen to old guard retailers?
What Best Buy Did
About a year or so ago, we covered in depth our theories behind why Best Buy avoided a fate similar to its competitors. We suggest you read the entire post, but in short, it boiled down to three main points:
1. Met the Market
Best Buy recognized that consumers tend to prefer testing out expensive electronics in person. So, rather than allow potential customers to come in the store, decide on a product, and then leave to purchase it at a lower price elsewhere (presumably Amazon), the company instituted a price match guarantee policy, thereby eliminating one of their e-commerce competitors biggest advantages.
2. Embraced Stores of the Future
If you’ve followed the Celect blog, you know we’ve been pushing the idea of concept stores or “stores of the future,” which happen either through a greater integration of technology and/or embracing of “retail experience.” Best Buy has embraced the former and continues to work towards the latter, making it much more than just an Amazon showroom.
3. Optimized Fulfillment to Drive Sales
Faced with less-than-stellar e-commerce sales, Best Buy implemented a ship-from-store initiative. Now, its 1,000-plus retail stores act as mini-distribution centers, with store employees packing and shipping online orders. This opened up store inventory to the online channel, vastly increasing product availability on the website, including clearance items and returns that would have previously been stuck at an individual store, as well as reduced shipping times substantially—so much so that the company's average shipping time bests Amazon.
That was a year or so ago. But the company hasn’t rested on its laurels.
What Best Buy is Doing
Now Best Buy is taking consumer’s love of testing out expensive products before they buy it even further. Best Buy will partner with San Francisco-based startup Lumoid to provide try-before-you-buy rentals on its website for cameras, audio equipment and fitness trackers. Been staring at one of those fancy $1,000 drones? This seems like a great way to test them out first with little to no risk.
According to Total Retail,
“Best Buy continues to test new services and programs as it seeks to keep the momentum of its turnaround going — and at least hold off Amazon.com for capturing more of consumer electronics market. Amazon doesn’t offer a similar rental service. The partnership with Lumoid is a potential solution to Best Buy’s “open box” problem — i.e., goods that have been bought but then returned so they can’t be resold at full price.”
It Seems to be Working
According to the Motley Fool,
“Amazon stock may have quadrupled over the past four and a half years, but Best Buy stock has performed even better. Shares of the consumer electronics retailer have quintupled in that time, beating out Amazon by 100 percentage points. That's right: Lowly old Best Buy, a company that many thought would be killed by Amazon, has been a better investment than the retail-slayer itself.”
Why? It’s simple. Best Buy knows its customers really, really well. And that has made all the difference.