WCCO-AM’s Cory Hepola and I discussed this on air today, and here’s more information in text format, starting with a quick take, and ending with links for more depth and perspective.
After its former CEO did a mediocre job and then had to quit after improper relations with a female employee, Best Buy’s board did a great job of finding—and then empowering—a good replacement, Hubert Joly. While some wondered, given he most recently headed up a hospitality and travel firm, Joly had wide and deep experience with challenging situations from working from the management consulting firm McKinsey.
Rather than worrying about Amazon and other outside influences, Joly focused inside the box.
Best Buy’s success always has been about what it does within its own four walls of a store better than anyone else can. This included providing consumers a way to look at, touch and when relevant, listen to, the most trendy home electronics products (TVs, desktop computers, surround sound systems, laptop computers, phones and tablets…) and offering sales staff that could provide more insight on these products to inquisitive customers.
Also throughout its history, nearly of Best Buy’s sales growth occurred because it knew how to best capitalize on major advancements in home electronics such as box TVs to flatscreens, desktop to laptop computers, land line and flip phones to smart phones, computer CD games to the PlayStation and Xbox…
By 2012, there were no more significantly new category leaders for Best Buy to leverage. And there was no reason to go into a Best Buy store, given one could find out more information online about a product than he or she could by asking one of Best Buy’s floor associates. If you did, the associate would look at the price tag or product label and read it to you. Plus, Amazon could ship it to one’s house within a day or two of ordering it: no need to spend all that time going to a store.
Joly brought Best Buy back to what it was good at: having its people focused on the purpose of serving customers better than anyone else can when it comes to addressing home electronic-related interests and needs. Amazon can’t touch this.
He also leveraged Best Buy’s well-situated retail locations by bringing in other brands to pitch stores within a store—each with staff highly knowledgeable about a specific brand. Best Buy has partnerships with several vendors today including Apple, Microsoft, Samsung, Google, LG, Nikon, Cannon and the major cellphone service providers.
Perhaps most important, is that Joly thought about the future in addition to better addressing what’s trendy today. While many see Best Buy’s increase in home appliance sales as smart (especially given the timing—Sears closing so many stores in recent years has left unmet demand in the marketplace). But Best Buy is doing this because soon, all appliances will be part of the “Smart Home” concept of having everything electronic tied together through one app.
This will lead to the need for in-home services helping us figure out how to connect everything. Hence Best Buy is expanding its services offerings.
And eventually, it will be common for homes to house in-home health care devices and service monitors, which is why Best Buy recently purchased GreatCall Inc. for $800 million. GreatCall provides devices and services offering health care and emergency services for older people.
Next up: strategic partnerships between Best Buy and in-home health care staffing organizations? We’ll see.
For more on how Best Buy has repositioned itself, see these stories: