Best Buy Continues to Outperform the Struggling Electronics Market

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Best Buy Continues to Outperform the Struggling Electronics Market

By Tim Denman - 07/07/2015
The consumer electronics market has gone soft.

The sale of TV's, computers, tablets, digital imagining and more has dropped 5.3% across the board. Although, Best Buy is not immune to this trend the retailer continues to perform well in the struggling segment thanks to investment in additional revenue streams.

The electronics retailer is supplementing decreased sales in some electronics categories with an increased emphasis on appliances and service contracts. Thanks to the increased push in these growth areas, the company was able to post a revenue figure of $8.6 billion for Q1 2016. Although, that total signifies a .9% drop year-over-year it beat company expectations and outpaced the electronics market as a whole.

CEO Hubert Joly credits Best Buy's multi-channel approach and its ability to interact with customers in their homes thanks to the company's lucrative installation and service business as a key driver of their market leading success.  

"Today, we interact with customers in three distinct and complementary channels: online, in-store and in-home," Joly said in a recent earning call. "We believe our ability to do this particularly in-home is a strategic competitive advantage that with these investments will further differentiate Best Buy from the competition and allow us to deliver uniquely personalized experience to our customers where, when and how they want to be served. As we invest, we will keep the obsessive focus on the customer experience that forms the core of our strategy."

Best Buy is focused on a number of investment areas focused on key product categories, life events services, and customer experience:
  • As the tablet and personal computer market continues to shrink the electronics retailer is increasing its commitment to the growing appliance segment. In Q1 2016 Best Buy rolled out 11 of the 60 additional specific kitchen and home stores within the store planned for fiscal 2016.
  • Mobile phones continues to be a strong revenue driver for the retailer and it is extending its mobile phone installment billing selling capability online with AT&T, and plans to add additional carriers this summer.
  • Best Buy continues to invest in what it calls its life events categories. Its newly launched wedding and gift registry is beginning to grow, while its new mover program is driving significant revenue growth — especially in the highly profitable television segment.
  • The connected home is also an area the retailer is watching closely. Joly reports that there is "a gap between what customers understand they can do with technology and what technology can do. So we are there to close these gaps."
  • In Q1 2016 Best Buy launched a new mobile app that includes Apple Pay acceptance.
  • The retailer launched new search capabilities, including the ability to search opened box items across the enterprise. Best Buy is currently in the recruitment phase for a technology development center in Seattle. Which Joly believes "will be instrumental in continuing the transformation of our e-commerce technology platform and mobile customer experience."