Best Buy Strategy Best Buy Current Strategy

Best Buy Strategy

Best Buy Current Strategy

Best Buy Co. Inc. is a global retailer that produces technology and entertainment products and services across the globe. The company incorporated in 1966 in the state of Minnesota and today it is operating in U.S., Europe, Canada, China and Mexico. Best Buy controls a collection of retail stores and websites under eleven brand names.

Target Market

Best Buy mostly targets the individual consumers, which Best Buy divides in to three main areas; rich suburban families, trend setting urban individuals and closely linked families of Middle America. Majority of the Best Buy's consumers are Americans; however, the international customers also made a good contribution to the revenue few years back.

Best Buy currently operating in four continents provides following range of products and services:

Consumer electronics: It is the largest product category providing audio equipments, television sets, audio players, DVD players etc.

Entertainment software: CDs, DVD movies, video game hardware etc.

3. Home office products: Computers, calculators, cellular phones etc.

4. Appliances: Air conditioners, washing machines, refrigerators etc.

5. Installing and repairing computers and related services

Competitors

Since last several years, Circuit City is the direct competitor of Best Buy and is the second largest electronics retailer after Best Buy. However, Circuit City also suffered from huge financial losses due to which they were force to do liquidation in 2009. Best Buy was able to take around 40% of Circuit City's market share after this incident.

The indirect competitors of Best Buy are more in number; these include:

Wal-Mart and Target which are discount retailers but not specialized in electronics

Dell, Amazon.com and other online retailers

Office supply stores; OfficeMax, Office Depot, Staples etc.

Retailers that provide home improvement such as Home Depot

Software stores

Retail Format

Best Buy' business strategy has two main goals; one is to offer a wide range of products to the customer at the lowest prices and other to expand to the international markets. Management always believed that these strategies will help Best Buy to be in a favorable position forever and it will grow domestically as well as internationally.

Customer-Centricity Operating Model: Best Buy treated its customers as unique individuals and meets their customized needs and end-to-end solutions of their problems.

Cross Industry Expansion and Aggressive Growth: Best Buy continuously focused on industry expansion and spread its network to four continents along with doubling local stores in every five years time. In addition, it also enhanced its products range by including kitchen and bath appliances and extending to cellular phones and other electronics.

Analysis of Current Problem

Despite huge success and having the title of one of the global retailers of the world, it is now time to say bye to the troubled Best Buy (Brush, 2011). Best Buy is facing a critical situation these days and facing huge financial loses. There are several reasons behind decline of Best Buy; some of which are as follows:

1. Best Buy's online competitors like Amazon.com have taken away business from it by offering better prices to the consumers. Similarly, other big chains, like Wal-Mart are also competing greatly on price by offering less expensive products to customers (Brush, 2011).

2. Best Buy sells products and services that are consumer luxuries and not necessities. The worldwide recession has badly affected the consumer buying behavior of shopping. Around 6 million people became jobless due to recession, so people do not have enough money to do shopping the luxury and entrainment products and services.

3. People prefer to download movies, games and listen music free instead of buying DVDs and CDs at Best Buy.

4. People have switched more towards other types of electronics; like Apple iPad and now they do not have craze in buying flat screen TVs or such type of entertainment electronics.

5. Best Buy has become a target of complaints due to its inability to fulfill the customer orders. For instance, one day, they promote a video deal but when customer goes for purchase, the video is neither available on shop nor online on their website. They also canceled some of the Christmas order this year, which very much annoyed customers. Different newspapers also warned that shoppers should avoid BestBuy.com due to delivery delays (O' Donnell, 2012).

These changing environments and trends of consumers have negatively influenced Best Buy revenue. The company has recently reported a decline of sales at its stores since last one year and is therefore having lower profits (Brush, 2011). Its shares have also fallen to around 34% (O' Donnell, 2012) which is portraying same situation that lead Circuit City to liquidation.

Best Buy's Response

Best Buy is trying to handle this difficult situation and move towards the positive side. A recent article published in Forbes site on July 4, 2012 "As Best Buy Closes 50 Stores And Faces Threat of Junk Bond Status, Richard Schulze's Fortune Shrinks" stated that Best Buy is closing 50 stores in order to get profitable and is facing threat of Junk Bond Status. Best Buy is trying hard to meet its customer's need by providing good service and technical support. However, by the time it fixes these issues, it will be too late and the net worth will continue to drop.