Best Buy Retail Strategy: SCA, Store Image & IMC

Introduction

The target market for Best Buy is appliance and electronics consumers—people in the 18–35 year age range, though the retailer also targets older adults as well as millennials. Its main target is described as "highly engaged consumers who love technology" (WARC). In recent years, Best Buy has had to redefine itself and its corporate strategy. In fact, it has had to redefine everything—from its core products to its target market to its store concept. With the foreseeable rise of e-commerce, brick-and-mortar retailers have had to adapt or die—and many have died. Blockbuster, Toys 'R' Us, and RadioShack are just a few of many that have fallen by the wayside.

Best Buy appeared headed for a similar fate in 2012, when its share price hit a 21st-century low of $11.29. The company managed to bounce back in a big way, and much of that recovery has to do with its ability to stay afloat in the digital era. Best Buy has rejuvenated its store concept, adopted the store-within-a-store strategy (Lee), and increased its appeal to tech-loving consumers who have helped propel retailers like Apple into the stratosphere.

Store Image

Best Buy's store image has changed considerably since the early 1990s. Throughout that decade, Best Buy offered some of the best deals on CDs, radios, movies, electronic equipment, and computers. Then the Internet arrived and e-commerce changed everything. Foot traffic into Best Buy dwindled, and the store often seemed like a ghost town compared to the buzzing, busy days of the '90s.

Best Buy's store image was revamped to be less product-centric and more consumer-centric. The store branded itself and its workers as experts in all things electronic and developed its own Geek Squad to compete with Apple's Genius Bar. Yet as far-reaching as Best Buy's ambitions were, the merchandise it was selling—and its brick-and-mortar retail business model—could not quite keep pace with online competition. The store had to push harder and convert the window-shopping foot traffic that still trickled in into actual sales.

It adopted an approach similar to Amazon's click-and-collect model, allowing customers to order online and pick up in store. Best Buy cut inventory and supply chain costs by minimizing the product it stored on-site. Accepting that purchasing traffic was being redirected to the Web, Best Buy developed a new store image that was finally web-based. Its website became slick, streamlined, and easy to use. One-stop click-and-shop access, similar to what Amazon offers, helped boost the retailer's image and demonstrate that it could compete for consumer attention in the 21st century. If a local Best Buy did not have a product in stock, Best Buy's website would carry it and could deliver it quickly enough that the company would not lose the sale.

Sustainable Competitive Advantage (SCA)

In terms of sustainable competitive advantage (SCA), Best Buy has relied on pricing and education to compete with e-commerce giant Amazon, which has pushed all other retailers to the ropes. Best Buy's SCA was always price. Giving consumers the lowest prices helped it win market share against other electronics retailers, giving it the edge over Circuit City and Media Play. But it has since had to reshape its SCA and adapt it for a new era.

In adapting, Best Buy asked itself what products people were least likely to buy online—and the answer was large ones: appliances like televisions, dishwashers, ovens, and refrigerators. TVs and appliances were the products that Best Buy could focus on to ensure its brick-and-mortar stores still had a reason for existing (Plastow). That worked for a while, but as time passed—2012 was a particularly hard year, with the economy still recovering from the 2008 global financial crisis and prices depressed by the rise of discount retailers—Best Buy had to do more. It needed to develop another SCA, and this time it turned to education (Shapiro). That SCA is rooted in the following factors:

• Training store staff to become product experts
• Strengthening the capabilities of the Geek Squad army of specialists
• Ramping up smart home offerings, along with installation services to help customers set up their purchases (Shapiro)

There is also the SCA that has developed around web presence. Best Buy has expanded its online presence to keep shoppers from turning to Amazon. Its website is clean and organized, advertises sales in meaningful ways, and is intuitive to use—unlike the brick-and-mortar store, which can be quite confusing due to its store-within-a-store concept. The site gives Amazon meaningful online competition.

In terms of the local brick-and-mortar store, however, the SCA that Best Buy has implemented is one based on intelligence and providing consumers with everything they need to make a confident purchase. When a consumer enters Best Buy today, a sales agent meets them and places the customer into a queue. The agent assumes the visitor is there to buy—and even if the customer intends only to see a model in person before purchasing it online elsewhere, the agent does not want that person to leave easily. They want the customer to stay, learn about the devices and appliances on display, and quite possibly complete a purchase in store. Associates use the new store concept coupled with an aggressive sales-and-education approach to drive sales and keep costs down.

Customer service is the new underlying SCA that Best Buy is relying upon to remain in the retail business. If competitive products and low prices secured it a spot among the nation's top retailers before the dotcom bust, today's e-commerce-heavy environment lacks not in low prices but in human contact. Best Buy has identified this gap and is providing consumers with a real-world place to get hands-on experience alongside a real-world expert in electronics.

Conclusion

Best Buy is a retailer that has transformed itself over time to be more customer-focused, which is a meaningful achievement for a company of its size and nature. The rise of e-commerce has decimated the brick-and-mortar retail landscape, but Best Buy has managed to stay afloat by reinventing itself—its store concept, its approach to product offerings, its relationship with consumers, and its online presence. Best Buy's strongest strategy going forward remains its SCA centered on service, education, and—as always—competitive pricing. These three pillars will help ensure that Best Buy remains competitive for years to come.

Works Cited

Lee, Thomas. "Best Buy Bets Big on Store-within-store Concepts." StarTribune, 14 July 2013.

Plastow, Jason. "Best Buy Competitive Advantage." Storify, 2012.

Shapiro, Richard. "Best Buy's Competitive Strategy to Beat Amazon: Educate Consumers." B2C, 2016.

WARC. "Segmentation Drives Best Buy's Strategy." WARC, 2016.