Best Buy CEO Hubert Joly Outlines Three Keys to Success
Since CEO Hubert Joly took the reins three years ago Best Buy has been reborn. The once struggling electronics retailer is now the darling of the segment and continues to see sales grow quarter after quarter.
Sales for Q2 2016 increased .8% overall, while online comparable sales increased by an exciting 17%. What does Joly attribute the continued success Best Buy has enjoyed over the last three years? The CEO points to three key competitive advantages that helped the retailer gain customers, increase the bottom line, and provide a shopper experience that is difficult to replicate.
Here are Joly's three keys to success:
1. Serve customers anywhere, anytime. While servicing the shop anywhere customer is the cornerstone of any successful omnichannel retailing strategy, actually providing the experience effectively continues to be a pain point for many retailers. In addition to continued improvements to its e-commerce platform Best Buy has enhanced the digital experience with the release of a new mobile app.
An exciting e-commerce experience and a shiny new mobile app does not necessary guarantee omnichannel success, but when it is paired with a dynamic in-store experience the foundation for continued financial success is solidified.
"We continue to leverage our ship-from-store, digital marketing and enhanced website functionality to drive a 17% increase in domestic comparable online sales," Joly said. "This growth was driven, number one, by a significantly increased number of our online customers, who received and took advantage of our free two-day shipping promise, enabled by enhancements through our ship-from-store capability and supply-chain investments that are driving improved speed, convenience and reliability. Number two, increased by the increased visibility of open-box and clearance inventory. And number three by the expansion of online-only flash sales."
2. Unique market position. Due to its wide merchandise assortment and the ability to interact with products on the sales floor Best Buy attracts plenty of early technology adopters. Tech junkies are flocking to Best Buy not just for its wide assortment and competitive pricing, but for the unique in-store experience the retailer provides.
"We've always believed that as a result of these trends in consumer behavior, the store experience needed to be so much better," Joly said. "When the customer gets to the store, she has done a lot of research and she's much more educated than maybe a few years ago. And so it's maybe that in some cases we see fewer trips to the store, because so much time has been spent before the store. And so the focus in the store is on the customer experience. We've invested significantly in the physical experience in the stores, and candidly, it is so helpful. You cannot use your senses online to see the difference in picture quality of the TV or the sound quality of a headphone. You really have to go to the store."
3. Vendor partnerships. Not only does Best Buy have a wide assortment of cutting edge technology its vendor partners are making significant material investments in Best Buy's stores to enhance the shopping experience and showcase their latest technology.
"With these partnerships, we're able to bring to life interactive technology experiences that again make the Best Buy operating model more relevant for customers," Joly said. "Our vendor partnerships are continuing to grow, confirming that they're bringing value not only to our customers and Best Buy, but also to our vendor partners."
In addition, Best Buy is continuing to extend its relationships with vendors through increased service offerings. For example the electronics retailer will begin selling AppleCare in Q3, and will roll out its Apple-authorized service provider capabilities with 50 in-store pilots before the holiday shopping season.
Sales for Q2 2016 increased .8% overall, while online comparable sales increased by an exciting 17%. What does Joly attribute the continued success Best Buy has enjoyed over the last three years? The CEO points to three key competitive advantages that helped the retailer gain customers, increase the bottom line, and provide a shopper experience that is difficult to replicate.
Here are Joly's three keys to success:
1. Serve customers anywhere, anytime. While servicing the shop anywhere customer is the cornerstone of any successful omnichannel retailing strategy, actually providing the experience effectively continues to be a pain point for many retailers. In addition to continued improvements to its e-commerce platform Best Buy has enhanced the digital experience with the release of a new mobile app.
An exciting e-commerce experience and a shiny new mobile app does not necessary guarantee omnichannel success, but when it is paired with a dynamic in-store experience the foundation for continued financial success is solidified.
"We continue to leverage our ship-from-store, digital marketing and enhanced website functionality to drive a 17% increase in domestic comparable online sales," Joly said. "This growth was driven, number one, by a significantly increased number of our online customers, who received and took advantage of our free two-day shipping promise, enabled by enhancements through our ship-from-store capability and supply-chain investments that are driving improved speed, convenience and reliability. Number two, increased by the increased visibility of open-box and clearance inventory. And number three by the expansion of online-only flash sales."
2. Unique market position. Due to its wide merchandise assortment and the ability to interact with products on the sales floor Best Buy attracts plenty of early technology adopters. Tech junkies are flocking to Best Buy not just for its wide assortment and competitive pricing, but for the unique in-store experience the retailer provides.
"We've always believed that as a result of these trends in consumer behavior, the store experience needed to be so much better," Joly said. "When the customer gets to the store, she has done a lot of research and she's much more educated than maybe a few years ago. And so it's maybe that in some cases we see fewer trips to the store, because so much time has been spent before the store. And so the focus in the store is on the customer experience. We've invested significantly in the physical experience in the stores, and candidly, it is so helpful. You cannot use your senses online to see the difference in picture quality of the TV or the sound quality of a headphone. You really have to go to the store."
3. Vendor partnerships. Not only does Best Buy have a wide assortment of cutting edge technology its vendor partners are making significant material investments in Best Buy's stores to enhance the shopping experience and showcase their latest technology.
"With these partnerships, we're able to bring to life interactive technology experiences that again make the Best Buy operating model more relevant for customers," Joly said. "Our vendor partnerships are continuing to grow, confirming that they're bringing value not only to our customers and Best Buy, but also to our vendor partners."
In addition, Best Buy is continuing to extend its relationships with vendors through increased service offerings. For example the electronics retailer will begin selling AppleCare in Q3, and will roll out its Apple-authorized service provider capabilities with 50 in-store pilots before the holiday shopping season.