Is ‘Building the New Blue’ the right plan to complete Best Buy’s transformation?
In recent years, Best Buy turned its business in a positive direction by executing on the tactics that comprised its “Renew Blue” strategic vision. Now, the consumer electronics chain is in the initial stages of its “Building the New Blue” growth strategy and early results are encouraging.
Hubert Joly, CEO of Best Buy, has developed a three-fold strategy playing up the chain’s in-store, online and in-home assets to set it apart from the competition. Best Buy reported a comparable sales increase of 1.6 percent in the first quarter with online sales jumping 22.5 percent. Online sales represented 13 percent of the company’s U.S. revenues, up from 10.6 percent in the same quarter in 2016.
Mr. Joly discussed the initial progress the company has made on delivering on the “New Blue” plan. Among the initiatives is a greater focus on mobile devices and building sales through an improved multichannel shopping experience.
“The smartphone industry has significantly changed over the past few years, especially with installment billing plans, unlimited data plans and the proliferation of prepaid and unlocked devices. This can make shopping for a smartphone confusing and complicated,” said Mr. Joly (via Seeking Alpha). “We are improving the experience on bestbuy.com and revamping the mobile departments in many of our stores to create a better, easier, more seamless shopping experience for customers.”
Mr. Joly said early results are positive in mobile, with the recent launch of the new Samsung Galaxy 8 Android phones as evidence.
“We simplified the buying experience and provided clarity of carrier offers and ease of phone selection and saw our highest ever Android preorders,” said Mr. Joly. “This initiative will include other enhancements such as improvements to the phone activation process, the addition of more specially trained mobile associates and new vendor displays.”
“Mobile 2020,” as Best Buy calls it, will be in several hundred stores by year’s end. One of the new features are menu boards, similar to those found in fast-food restaurants, that are set up to help customers understand their options and see the latest promotions.
- Best Buy reports better than expected First Quarter Revenue and Profit – Best Buy Co., Inc.
- Best Buy’s CEO Hubert Joly on Q1 2018 Results (Earnings Call Transcript) – Seeking Alpha
- Best Buy Aims To Simplify Smartphone Shopping – Best Buy Co., Inc.
DISCUSSION QUESTIONS: Do you think Best Buy is on the right track to transforming the company into a retail business that will succeed over the long haul? What do you think Best Buy has done right in recent years? Where do you see opportunities for further improvement?
Dan RafteryPresident, Raftery Resource Network Inc.
Dan RafteryPresident, Raftery Resource Network Inc.
Dan RafteryPresident, Raftery Resource Network Inc.
Dan RafteryPresident, Raftery Resource Network Inc.
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15 Comments on "Is ‘Building the New Blue’ the right plan to complete Best Buy’s transformation?"
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Founder, CEO & Author, HeadCount Corporation
The electronics category remains very challenged and Best Buy’s initiatives, while helpful and encouraging, are a long way off from delivering sustainable growth and reliable success. Focusing on mobile is a smart if not obvious move, but I wouldn’t call it more than a tactic. Best Buy and other retailers with significant brick-and-mortar investments need to focus their efforts on how to most effectively leverage these assets in combination with online efforts. This is very much a work in progress for most of these retailers including Best Buy.
Managing Director, StoreStream Metrics, LLC
Whether driven by Apple or lagging business, Best Buy’s decision to develop the broader store-within-a-store (or pods) concept has been spot on. Letting the brands market and merchandise their product and services as they see as appropriate is effective. Not only does it give the store a fresh and diverse look, it allows shoppers to experience each individual brand on its terms rather than through the Best Buy lens. This approach also forces the brand to carry most of the commercial responsibility and merchandising expense — both to Best Buy’s advantage.
President and CEO, Stealing Share
Simple is better. If Joly redefines the brand with greater clarity and purpose it will help. However, like in the rest of the category, as customers move to online sales at an ever increasing rate Joly will have to decide what to do with the real estate.
These big box stores will start to weigh down profits.
President, Second To None
Consumers are drawn to brands where the in-store and online shopping experiences are designed around consistency, simplicity and clarity. As Best Buy continues to innovate and improve upon the omnichannel experience, it is starting to pull ahead of the pack. Building the New Blue appears to be a solid strategy resonating with the retailer’s core customers.
Chief Executive Officer, The TSi Company
Best Buy’s New Blue strategy for smartphones is wise because customers often find the many choices confusing and find it difficult to decide before purchasing. I see this strategy as being successful. However smartphones are just one category. If Best Buy wants to focus only on smartphones then they should open many mobile device stores and forget about the rest of their business.
What I see lacking here is the opportunity to do a better job selling appliances and electronics. Best Buy stores are terrific showrooms but are often missing the well-trained associate capable of engaging the customer, asking the right questions and making intelligent recommendations. It’s no wonder why many customers go into a Best Buy store to see the product, test the product then leave the store and research it further online, often buying it someplace else. So investing in “Building The New Blue” is excellent if it’s across the board with all products and if it includes well-trained associates capable of satisfying the customer into making the purchase.
Best Buy’s biggest missed mobile-first opportunity is during the mobile activation process. Best Buy only activates for the carrier making them a “dumb pipeline” for carriers.
If Best Buy subsidized the mobile activation process within their store to provide discounts for installing the Best Buy mobile app and provided information on how to use a smartphone at Best Buy for BOPIS and how to lookup product information, they would create mobile customers at the time of activation.
Why Best Buy is missing this opportunity at the activation phase escape me.
Co-Founder and CMO, Seeonic, Inc.
In order to distinguish itself in the electronics marketplace, Best Buy has to deliver a level of customer service and support that sets it apart from other retailers including Amazon. Since Joly took over as CEO, the Renew Blue strategy has done exactly that — Apple and Samsung store-within-a-stores, better prepared associates and leveraging the Geek Squad. If the New Blue strategy continues to provide a good consumer experience based on these kinds of initiatives and focused on the latest technologies like mobile, Best Buy will continue to hold on and expand its customer base.
CEO, GenZinsider.com
I think that anyone who can explain mobile phone carrier issues in a simple way is going to be successful. I love Best Buy and the one reason why is because of their fantastic customer service. They can’t do enough for you and they know about every product in the store and where it is located and not by staring down at a device and reading off it. They are trained in all their areas. My mom had a question about a TV and the sales person knew everything about them. They help you find what you need and get you in and out of the store. I also like their mobile site. Just this year my mom bought three 4K TVs to go with my cousins’ and my new Xboxes and PlayStation. She bought me a new phone case and new cords for my brother’s cellphone and computer. This is our go-to store. I want go tonight, I need something.
EVP Thought Leadership, Marketing, WD Partners
I like it. Even though they are the sole multi-brand CE player left, which certainly helps, they are still going to have to keep moving forward and trying new things on a constant basis.
Having said that, I’d like to see them try much smaller showroom stores as part of these initiatives. Reducing footprint and expenses on the physical side is also going to be key going forward, and who better to make it work? Right. There’s no one else left.
Strategy and Operations Executive
Best Buy has managed to embrace and understand the mantra that less is more and that curated assortments and a mobile first digital strategy are the ways to retain relevance and increase profitability. The company is certainly on the right track. However, while they have transformed the brick-and-mortar experience to an enjoyable destination, the mobile and omnichannel components will need to stay ahead of the innovation curve to compete in today’s electronics marketplace.
Big box retail operations are evolving and perhaps it’s time for Best Buy to consider smaller-scale operations to reduce the significant overhead of these large-scale locations. Pop-ups, store-within-a-stores and other concepts may be worth considering as Best Buy continues their evolution.
President, Raftery Resource Network Inc.
Rather than complain about “showrooming,” Best Buy figured out how to play in the new marketplace and attract the empowered consumer. Investing outside the physical store is tough for most retailers to swallow, but Best Buy has done it wisely and it sounds like more of the same is planned for the future. Flexibility is the key to their success. If they can sustain that, they should be able to remain relevant.
Retail Industry Advisor, Softtek
CEO, Beekeeper
The process of purchasing smartphones is still such a mystery when working with different providers and retailers. Even though smartphones should be some of the simplest things we buy, since they’re so prolific. Best Buy is on the right track in taking the guesswork out of the buyer’s journey and simplifying the process. Transparency builds trust with customers so giving all the information up front in a comprehensive way is a smart move that more retailers should focus on. Ideas like the digital menu board will further promote this culture of transparency and customers will appreciate having easy access to information at their fingertips.
Retail Transformation Thought Leader
VP Marketing & Business Development, Estrella Brands
It appears Best Buy is on the right track and with technology evolving at the current rate, it needs to be a permanent mode.
When consumers can hold most of your departments in one device (TV, music, movies, video games, and so forth) it is very impressive that Best Buy has succeeded. However, Best Buy can’t become a phone company. They need to strengthen their role in the appliance category and other products not available on a smartphone.