Best Buy produces record results doing things differently in the pandemic
Best Buy’s flexible approach during the second quarter led to record online sales during the period and produced a gain in same-store sales, even though during the first six weeks of the period its locations accepted visitors on an appointment-only basis.
The consumer electronics chain saw its U.S. digital business grow 242 percent over the three months ending Aug. 1, a record for Best Buy, and stores open at least a year posted a 5.8 percent gain.
Best Buy benefitted from a number of factors, including people looking for a variety of products to fill their cooking, educational, entertainment and job needs while staying at home. Consumers had money to spend thanks to an influx of stimulus cash from the CARES Act passed in March.
Speaking on the retailer’s earnings call yesterday, CEO Corie Barry was cautious about its outlook while maintaining that lessons learned this year are likely to stay with the company.
“We are leveraging localized data and analytics that allow us to pilot various services like opening stores an hour earlier for consultations only,” she said. “Using data and analytics also allows us to quickly and productively customize operations to the local situation, if necessary.”
Ms. Barry said that her team expects that digital sales will remain historically high going forward and stores will handle more of the load. Currently, Best Buy handles 60 percent of all orders via stores.
“We are starting to evolve the way we use our stores for fulfillment. For example, next month, we will be piloting a ship-from-store hub model to help handle significant volume pre-holiday and year-round. All our stores will still ship out online orders, but approximately 250 locations will be positioned to ship out significantly more volume,” she said.
“These locations were chosen for their space, proximity to carrier partners and ability to support same and next-day delivery. Over time, this should allow us to deliver a more productive fulfillment model.”
Best Buy continues adding to its network of third-party pickup locations for online orders, with more than 16,000 currently in place within five miles of 85 percent of Americans.
The retailer is also testing having associates make same-day deliveries to the homes of customers from 200 stores. “Going forward, we are on a path to develop a flexible workforce model that leverages technology and provides associates the ability to work whenever and wherever they want,” she said.
- Best Buy Reports Second Quarter Results – Best Buy Co., Inc.
- Best Buy Co., Inc. CEO Corie Barry on Q2 2021 Results (Earnings Call Transcript) – Seeking Alpha
- Best Buy connects strong sales to frontline worker performance – RetailWire
- Best Buy is getting back to business with scheduled appointments – RetailWire
DISCUSSION QUESTIONS: What is your take on the adaptations Best Buy has made and its second-quarter performance? What makes you most hopeful or concerned about its prospects through the rest of 2020 and beyond?