Best Buy: a Bit of Personality
A new digital era hit Best hard, as well as any other brick-and-mortar retailer of consumer electronics. While Best Buy somehow survived, some did not: companies like HHGregg and Circuit City went bankrupt. However, it looked like BB would join them soon: by the end of 2012, its stock sunk to a low of $11.3 per share. Declining sales forced the company to leave European and Canadian markets. Over years, things only got worse, as Amazon e-commerce grew immensely.
Despite all that, things started to turn around for Best Buy. Sales began growing, stock hit $90 in February, and $120 in November, despite COVID-19 pandemic. Why? The company changed the way it works.
Amazon destroyed a lot of old-fashioned brick-and-mortar competitors, as it provided much better prices. However, Best Buy have found one thing that e-commerce giant couldn’t provide — heavy personalization. E-commerce is perfect for the people who know what they want, but there are a lot more people who actually don’t have any ideas. In fact, according to 2018 Kantar survey showed that 50% of consumers can’t understand what’s going on with consumer technologies. So, Best Buy remade its website to make it more approachable for overwhelmed customers and launched a service which provides free home visits to help customers figure out exactly what they need. Also, it introduced a Total Tech subscription that offers unlimited technical support in-person, over the phone or online, for an annual fee of $199. It was a huge success: in two years since the start of the program Best Buy sold more than 2 million memberships.
The other measures are linked with health care. As senior population is growing fast, Best Buy tries to profit from demand for smart home technologies that lets seniors remain in their homes. So, Best Buy bought tech firms like Great Call that gave it tools to get in touch with senior health issues.
The pandemic hit Best Buy hard. First, they had to close all stores, then meet with customers only by appointment for in-home advisory service. This format helped customers somewhat, but then management was able to reopen stores and again be fully operational by June 22. At that time, half of the 51,000 associates who were furloughed returned. While management expected fewer customers and held back on recalling all furloughed associates, they soon saw the need for more customer service and recalled 80% of their sales forces.
Of course, customer shopping changed during this time. The e-commerce sales jumped 242% over the previous year as customers stayed home. 44% of the merchandise was picked up in stores, and many stores now have sophisticated pick-up service in front of the store that includes scheduled time slots to help customers know when to pick-up.
Despite the pandemic, Best Buy’s stock valuation grew even larger than ever before. It was only possible thanks to the earlier measures.