Best Buy is Back, Baby

Amazon will rule the world. Bricks-and-mortar is ancient history. Shop on your phone, click the button, and the drone will drop off your new TV within the hour. Right? Well, maybe. But apparently Best Buy didn't get that memo. The company has come roaring back.

Yes, it's true that shopping malls have seen better days. And yes, companies like Sears and JC Penney are probably not going to see explosive growth anytime soon. Heck, these days even Victoria's Secret is having problems selling ladies' underwear. (I know - what is the world coming to?) But against all odds, including the distinct possibility of bankruptcy, big-box electronics retailer Best Buy is making a strong comeback.

Of course, you don't go to a store to buy CDs and DVDs anymore. But it turns out that people still need a well-stocked store to buy their electronics. It helps that Best Buy is fielding a knowledgeable sales staff who can answer questions (who knew - buying this stuff is confusing), and it has implemented free shipping and price matching. Their website is nicely integrated between stores and mail order and if you are particularly shopping for electronics, it is far easier to use than Amazon's vast and often weird offerings churned up by its search engine.

That all sounds pretty typical, but the company implemented those changes more aggressively than usual. For example, a lot of stores would "price match." That means you would bring back your receipt, and a print-out from Amazon, and after some hassle, the store would issue you a credit for the difference. Best Buy went much further - checking Amazon's prices and upfront adjusting their prices to be more competitive. Throw in buying online and picking up at the store, a place to bring back defective products, and servicing, and you have a business model that can actually compete.

A lot of the credit for those moves goes to chairman and CEO Hubert Joly. He took over the reigns in September 2012 and promptly ignored calls to hollow out the company and sell its assets and instead doubled down on the existing business, working hard to improve its weaknesses and grow its strengths.

To some degree, all stores suffer from drive-by-shopping. People take advantage of the opportunity to peruse the products in a store, then buy it online elsewhere. But as changes were implemented, people that came into Best Buy stores to look at a product, suddenly found it was easier to just buy it there, at about the same price.

The numbers don't lie. Since Joly assumed control, online sales have doubled to more than $6 billion; sales in established stores rose 6 percent in 2017. Thanks to solid performance and a stock buyback program, share prices are up nicely; Best Buy stock was selling for $12 in 2012, and it now up around $76.

Using the "If you can't beat 'em, join 'em" strategy, Joly has even inked a deal with Amazon; Best Buy will sell Amazon Alexa and Fire TV products. If nothing else, that shows Amazon's confidence in Best Buy's ability to move products. This move matches Best Buy's smart decision to bring Apple and Samsung into the stores (reportedly, Best Buy rents the floor space to them and Apple and Samsung provide employee training), thus gaining heavyweight allies.

Best Buy can also offer troubleshooting and servicing that, at least for now, Amazon cannot. Service served up $2 billion in revenue for the company last year and the company offers a 24/7 tech support program on an annual subscription basis.

Of course, in such a tough business environment, nothing in the future is assured. Clearly, online sales, even if they are through Best Buy, will continue to challenge physical store sales. As retail malls wither, consumers may increasingly lose the habit of physical shopping, and may ignore all stores including Best Buy. that. And if the turnaround is mainly due to brilliant management, what would happen if management decides to leave?

For now, Best Buy's turnaround is good news for anyone who values audio-video gear. I think it is essential, for long-term health of the industry to have a dedicated and trusted bricks-and-mortar store where people feel comfortable buying their TVs, phones and stereos. It's a shame that many bricks-and-mortar competitors have dropped out (remember Circuit City?) but if Best Buy is the best of them, it deserves to own the market. For consumers, such a monopoly isn't particularly worrisome; online sales will ensure that prices stay competitive.

I will forever miss the mom and pop TV and stereo stores of yesteryear. Big box stores just aren't the same. But I would much rather buy a TV from a place where I can actually stare at it and a stereo at a store where I can listen to it, instead of looking at a picture of it. Hang in there, Best Buy. We need you.

drny's picture

Best Buy success is mostly due to their financing offers and tech repair easy accessibility (read also ease of product return).
You can view their products, but you are not allow to access the menus to make adjustments. Magnolia center within Best Buy is an upgrade, but their staff's knowledge base is adequate at Best.
I do purchase T.V. displays, laptops, even 4k Blurays at Best Buy.
I do so because I have sadly had to return or exchange such items.
Most Electronics are manufactured to high standard, but there are lemons in the bunch. That being the case, thank God for Best Buy brick and mortar stores.

WildGuy's picture

yeah i agree that i rather see a product that i can either touch, try out, look, or listen to before i buy it. best buy is one of those stores that i would like to check out the product in person before buying it. beside, the inside design of best buy store is very modern looking and cool atmosphere. its clean, roomy, and new looking.

there are some stuffs i would buy at but for many other stuffs, i rather buy at best buy since like you said, i can see it in person.

jcarys's picture

"Of course, you don't go to a store to buy CDs and DVDs anymore."

Yeah, right, I picked up 5 UHD discs at my Best Buy yesterday. Looked at CDs and impulse bought one that was on sale.

dnoonie's picture

For big purchases I rea!!y prefer brick and mortar stores.

I prefer buying Blu-rays local because of shipping damage even through they will fit in my package drop box.

I have constant problems with shipping damage and purchases that can't be made local I have held for pickup to help eliminate shipping damage and porch pirating, this not only negates the convenience of mail order but pushes it into the realm of less convenient.

I like ordering online for local pickup and do this quit a bit at Best Buy, Home Depot and Walmart.

Best Buy is very easy to shop at, there are 2 on my regular travel route that I purchase from regularly.


daboyle82's picture

Best buy is successful because of multiple reasons. First, they offer Mobile Phone contracts within the store, and a host of accessories, cases and chargers. I have always bought a phone from best buy rather than the ATT or Verizon physical stores. As others have also mentioned - returns. If there is a chance I will need to return something of value, I usually buy it locally for ease. I always worry about buying a TV online, and worry about the shipping company damaging it - when I buy from the store- that worry is gone since BB bears that burden. Comparison is also huge, and although walmart and even costco and places offer TVS and such now, no one has the magnitude of offerings like best buy. After Amazon took off, Best buy needed to be more competitive in pricing and they have. I still go to Newegg or microcenter for computer parts, but other than that best buy is my go to. I realize the cables and cords are a complete rip off there, but if you know what to avoid and purchase online, then best buy isn't so bad.

daboyle82's picture

Best buy is also great about streamlining and only carrying products and sku's that the masses want. Sure you will find a magnolia in some stores with specialty products, but for the most part they don't carry oddball junk like radio shack did- that was their Achilles heel. For those type products, I go to amazon. Best buy has the best seller items, and also carries good deals on large demand items like TV's, computers and audio. Now that there will be tax on online ordered products, best buy's success is only increasing.