Best Buy Makes Holiday Plans

Discussion
Sep 30, 2010
George Anderson

By George Anderson

Best Buy is not looking to increase the number of seasonal
hires for the Christmas selling season like others such as Macy’s and Toys "R" Us,
but that doesn’t mean the consumer electronics chain intends to stand pat.

The
company announced it would increase its ad budget in an effort to grow sales
against increased competition from Amazon, Target, Wal-Mart and others.

It
also said it would open between 44 and 50 Best Buy mobile-product locations
across the country before Thanksgiving. The company sees mobile as a hot spot
and is launching a "Free Phone Fridays" promotion starting tomorrow.
The deal features a free smart phone with a two-year
activation program.

"Best Buy Mobile is a great example of our Connected World strategy
in action and customers are really responding to it, both in our big box locations
and in the Best Buy Mobile stand-alone stores," said Mike Vitelli, president,
Best Buy, Americas, in a statement. "We are seeing huge customer demand
for mobile technology right now, especially with smart phones and tablets,
and we expect that to continue through the holidays and beyond."

The chain
is also looking at 3D and internet-connected televisions as hot sellers this
holiday season, along with tablet computers, e-readers and gaming devices such
as Xbox Kinect and PlayStation Move.

Service will continue to be a key differentiator
for the chain with free installation tips available through geeksquad.com or
by phone.

"People are driving technology innovation for the first time in decades," said
company CEO Brian Dunn in a statement. "That’s why Best Buy will
emphasize our distinctive assets that help make technology more accessible,
and deliver the experiences that connect people to the services they need,
the information they crave, the entertainment they desire and the people they
love."

Discussion Questions: What is your assessment of Best Buy’s holiday season
game plan?
Where do you think it will face its greatest competitive challenges?

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16 Comments on "Best Buy Makes Holiday Plans"


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Mark Johnson
Guest
Mark Johnson
10 years 7 months ago

Let me see if I understand this. You are going to sell more complex technologies, advertise more, offer unique Friday offers, and add traveling “mobile” locations without adding or training staff. Yes, I think this will WORK (not). The LAST thing I want to do is to go to Best Buy, fight the people who are shopping who have no idea what an LCD or LED is and try to make a purchase.

Like always, I will go to Best Buy, find the product I like, go across the street to HH Gregg and purchase it there at a better price, with a better warranty from someone who knows something about the product.

Joan Treistman
Guest
10 years 7 months ago

It seems to me that Best Buy is focused on availability for the holiday season. And that’s not a bad idea.

On the other hand, one reason that consumers buy products from Best Buy is that they receive recommendations and advice from knowledgeable staff. If Best Buy diminishes that differentiating factor from their service strategy, consumers may see the chain as no better than the competition. At that point, Best Buy sales will depend more on price or convenience; not exactly a sustainable strategy for the chain.

Steve Montgomery
Guest
10 years 7 months ago

Best Buy’s formula for Holiday sales success–spend more on advertising to drive sales plus lots of new hot products = same size workforce. I am not sure the math works.

Did they discover that they were over staffed last year? If not, have they found a way to make their people more efficient/productive? If not either of these, do they believe in what is stated to be a more competitive environment that customers are going to be willing to accept less service and/or wait longer? In the immortal words of Tom Hank’s in Big – “I don’t get it.”

Susan Rider
Guest
Susan Rider
10 years 7 months ago

Duh! This reminds me of Circuit City’s decision to let go of all their employees who had domain knowledge and hire cheap, fresh labor right out of school. We all know what happened to them. Past experience on Black Friday and Best Buy has seen lines totally out the door. What are they thinking?

George Anderson
Guest
10 years 7 months ago

Best Buy is planning to add 29,000 seasonal workers, roughly the same number as last year. It is a legitimate question, as others have raised, whether that will be enough to handle the hoped-for traffic increase that comes with more advertising.

Gene Detroyer
Guest
10 years 7 months ago

George, thanks for the clarification. Now it all makes sense. And, not only does it make sense, it is probably very smart.

Labor is associated with traffic. Not surprisingly, Best is not expecting any increase in store traffic. Does any retailer actual expect traffic increases?

The advertising effort is the key. My prediction is that Best Buy will have nice increases over year ago, but the entire volume increase will come online. Note Amazon is one of the competitors they mentioned. Every smart retailer must see Amazon as real competition. They are blind or foolish if they do not.

Personally, I am a Best Buy fan, especially during the Holiday Season, but I only purchase online and then if I can’t get it on Amazon or Wal-Mart.com.

Bob Clements
Guest
Bob Clements
10 years 7 months ago

Whoa, whoa. Best Buy isn’t saying that they are not going to hire seasonal employees. It says that they are not going to hire more seasonal associates than last year. To me, this means a few things:

1. Best Buy is expecting this holiday season will be comparable to last holiday but competition will be stronger. This is probably not a bad strategy considering retail sales in Q2 and Q3.

2. Best Buy has driven more efficiency out of their labor than last year. Since the recession, retailers are doing more with less. A big part of this is improving in-store processes to reduce the amount labor required to serve the same sales volume without affecting customer service.

3. Best Buy is recognizing that customers are going to have more knowledge and need less help. Mobility is empowering customers, and this strategy may reflect this.

Of course, time will tell if this is the right strategy for this holiday season but we know where Best Buy is placing their bets.

Ed Rosenbaum
Guest
10 years 7 months ago

I questioned this decision after only reading the lead paragraph. I agree with many of my associates who are questioning the decision. How can Best Buy expect to manage Black Friday, then the Holiday Season by opening more venues and hiring no more employees? I realize the training to work at Best Buy is more involved than at a Macy’s or J. C. Penney’s.

They were on the right path to gain market share with their plans until this decision. It will change quickly after the lines of disgruntled customers on Black Friday. I hope that will leave them ample time to hire and train for the remainder of the selling season. I doubt it. Score one red flag for the decision makers on this.

Ted Hurlbut
Guest
Ted Hurlbut
10 years 7 months ago

I’m not sure I get that they’re not going to add salespeople at the holidays, but they see service as the great differentiator. Aren’t there going to be more customers in their stores needing help during the holiday shopping season???

This sounds to me like more mass-merchant doublespeak: “We’re customer-centric, but customer-facing payroll is our biggest expense item, so we’ve got to hold the line.”

Doug Fleener
Guest
10 years 7 months ago

I think their plan makes a lot of sense. First try to drive the more labor-intense-sale mobile phones away from the weekend. Like it. Next, the majority of the value they add is post sale. I would guess they’ve ramped up Geek Squad capabilities to handle the expected increase in installations and support. Like it.

The smartest thing Best Buy ever did was buy Geek Squad. They know that extending the customer experience beyond the store and into the home gives them a competitive advantage, or at least a distinction that Amazon and other online retailers don’t have.

Roger Saunders
Guest
10 years 7 months ago
Best Buy is going to knock it out of the park this Holiday Season. The stars are aligned for them–most especially because they have been doing the arranging. This will lead to an increase in their overall sales and an increase in their market share. That’s what the consumer is saying based on the September, 2010 Consumer Intentions & Actions (CIA) survey. What’s on the consumers’ plate: 1. They are planning to spend more MORE on Consumer Electronics in the next 90 than they were saying they were going to spend this time last year 2. They are going to spend more on BIG Ticket items — computers, cell phones, TVs, devices like the Nook, iPad, Kindle, etc. 3. 33.9% of Consumers choose Best Buy as the store that they shop MOST often for electronics; equally important is the fact that 45.6% of adults in households earning $50,000+ choose Best Buy MOST often. Walmart would be a distant second, and Amazon and Target are well down the chart as three and four. 4. The BIGresearch… Read more »
Odonna Mathews
Guest
Odonna Mathews
10 years 7 months ago

Free smart phones on Fridays sounds like a good deal to advertise as long as their activation prices are competitive.

It seems to me that coming up with the right number of employees for holiday help is essential, especially with increased advertising which should generate more traffic. Nothing is more annoying to customers than if you can’t find a sales person or can’t find a knowledgeable sales person to answer a question about a product you intend to purchase. Not everyone will go online to get this information ahead of time.

Looking for service as a differentiator is the biggest challenge.

George Ator
Guest
George Ator
10 years 7 months ago

Best Buy already has service issues and not hiring additional knowledgeable staff during the nation’s best selling is a bit insane. The stores that I have checked in Utah and Pennsylvania have an inadequate number of staff now. (Just try to find someone to direct you to the correct area of the store for example.) The trade once had another store with the same attitudes, inadequate staff numbers, and not so technically knowledgeable staff, its name was Circuit City. Best Buy, look around and learn!

Tim Henderson
Guest
Tim Henderson
10 years 7 months ago

I like adding the Best Buy Mobile locations during the holiday shopping season. It provides easy access for those who may not have a Best Buy store nearby, and it’s in tune with the convenience that holiday shoppers seek.

My only caution here (as noted by others) is that Best Buy ensure any seasonal staff in the stores or mobile locations (it’s not clear whether the latter are permanent additions) are trained to help customers who may be buying a smart phone for the first time. Such associate expertise is key in differentiating Best Buy from competitors. With a quality experience now, Best Buy may actually self-gift the chain with a loyal customer for years to come.

Robert Heiblim
Guest
Robert Heiblim
10 years 7 months ago
Gee, while some of the comments here I can agree with, what is clear is that most really do not know Best Buy or the industry. First, in the case of seasonal employees, what is it you think temps can do for them other than help move boxes? Do you think there is a pool of knowledgeable staff in all their markets? If you know Best Buy, then you know they have worked and invested a lot and tried hard to train and retain associates. It is a hard business and they would certainly agree you can have poor experiences in some of their stores at times when staff is not available. On the other hand, try this at Walmart or Costco if you want no information. As well, as noted by others they have built up the web presence and expanded the Twelpforce service, they are going to offer Geek Squad support free for 60 days. Who else can match this? While this may place them as giant among the pygmies, I clearly remember… Read more »
Christopher P. Ramey
Guest
10 years 7 months ago

Best Buy, like many other retailers, seems to confuse offering a service with having good service. The former challenges the latter, and the jury isn’t in.

Electronics will continue to be a hyper-competitive category because the internet will ultimately win the war.

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