Best Buy is in the middle of a dramatic turn-around. A year ago it appeared that Best Buy was destined to become another Circuit City and slowly go out of business. They simply couldn’t compete with Amazon, Wal-Mart or Target.
In December 2012, Best Buy’s stock price fell to $11.20, a nine-year low. December same store sales fell 1.2% as holiday discounts failed to attract shoppers. The company suffered from poor leadership, high internal costs and was not competitive on price.
What a difference a year makes. The press couldn’t have been more negative about what was going to happen to Best Buy this time last year. Recently Best Buy’s stock closed at $42.92, an impressive 383% increase from its low in 2012. The company has pulled off a dramatic turn-around which started with a leadership change. Late last year Hubert Joly replaced Brian Dunn as the CEO.
Joly launched the “RENEW BLUE” strategy which is designed to make Best Buy the preferred authority and destination for technology products and services. This strategy focused on more competitive pricing, improving in-store experience and internal cost reductions. Over 400 job were eliminated in the corporate office. Joly has implemented a store within a store model, striking exclusive partnerships with Samsung and Microsoft to establish in-store shops within Best Buy stores.
Best Buy has also made it its mission to match Amazon and other e-commerce sites on price. They are committed to being price competitive. In the past they have struggled with being a showroom for Amazon. “Showrooming” is when consumers use physical locations to see and try the very latest technology, but then go online to find a better deal.
Retailers, as you can imagine, aren’t fans of the practice. The near-term future for Best Buy depends on convincing consumer’s that their stores can be the best showroom. Best Buy is attempting to turn that weakness into a strength, embracing the fact that having stores work as showrooms attracts curious shoppers.
Best Buy recently launched their holiday advertising campaign which promotes their stores as “Your Ultimate Holiday Showroom”. New television spots highlight the experience consumers get at Best Buy — online and in-store — while touting things like its “low price guarantee” and the ability to order online and pick up in store.
Best Buy has made great strides in turning their business around in a short period of time in a very competitive environment. It will interesting to see if their new strategy succeeds long-term.
Have you shopped in a Best Buy store recently?