Can Best Buy build momentum with new services and IoT?
A positive earnings call that beat expectations has analysts wondering what Best Buy is doing right and if it can keep it up.
In its Q2 earnings report, Best Buy reported a 0.8 percent comp sales increase on top of sales growth of 3.8 percent for the same metric last year. It also announced online sales growth of nearly 24 percent for the second straight quarter. Sales in health and wearables as well as other areas increased, offsetting declines in mobile phone and gaming sales.
Best Buy has been putting an effort into changing both what it sells and how it sells. On the Q2 earnings call, CEO Hubert Joly noted the company’s fiscal year 2017 as a year of “exploration and experimentation” which involves leveraging the Geek Squad for same-day, on-demand services, in-home consultations by technology experts and teaching in-store classes on topics including home automation.
Last year, Mr. Joly stated that the connected home was “making Best Buy’s operating model increasingly relevant as customers want and need more help selecting, installing, connecting, integrating, using, maintaining and taking full advantage of their products,” Diginomica reported. This week, as a part of the retailer’s 50th anniversary celebration, Best Buy put together an IoT showroom in the Mall of America highlighting their connected home offerings, according to the Star Tribune.
Other retailers, such as Target and Sears, have also been putting significant efforts into promoting IoT products and both companies have opened showroom concepts to give customers a full picture of connected living.
But while Target and Sears both pursue multi-category appeal, Best Buy maintains a long-time reputation as an electronics retailer. So the other two retailers may have serious competition on their hands if Best Buy continues to push its focus towards connected home devices and related home services.
- Best Buy Earnings Release, Q2 Fiscal 2017 – Best Buy
- Best Buy’s (BBY) CEO Hubert Joly on Q2 2017 Results – Earnings Call Transcript – Seeking Alpha
- Best Buy Promotes Connected Home, Internet of Things – Wall Street 24/7
- Best Buy opens connected home display in Mall of America – Star Tribune
- Best Buy thrives on Internet of Things complexity – Diginomica
DISCUSSION QUESTIONS: Should Best Buy continue to push IoT and related home services to separate itself from the competition? How do you expect rivals to position offerings in the IoT space to compete with Best Buy?