Charlotte Graham-Cumming, Managing Director of B2B content marketing agency, Ice Blue Sky, reflects on her time working in the USA, experiencing some of the most stand-out business initiatives implemented by one of the country’s biggest retail chains.
During the 1990’s I lived in the USA and I worked in retail. I worked at both a large multiple (Macy’s) and a regional chain (This End Up). At the time, Best Buy was a huge dominant force in the market, selling consumer electronics via big box stores in most towns across the state and the country.
In the 2000’s, however, Best Buy’s fortunes dramatically changed as the CE landscape was heavily impacted by online, Amazon in particular. This will come as no surprise to you I’m sure.
Although, what’s interesting is its “comeback”, and if you look at how they did it, there are lessons there for smaller retailers too, which are worth mentioning.
Not to ignore the less relevant problems, such as irregular behaviour by the then CEO, Brian Dunn (I’ll let you look that up), and the fact that they had private jets and sponsored the Superbowl and Nascar. If any independent retailers have these problems, then good luck!
In 2012 the company hired a new CEO from ‘the outside’ who could look at the brand with fresh eyes, Hubert Joly, and he brought in a new CFO, Sharon McCollum (previously of Williams Sonoma). Together they instituted a dramatic programme of change, which has proved very successful.
In February 2013 the share price dropped to $11.85, and as of May 2019, it’s standing at $65.01. In the fourth quarter of 2018 they reported $42.1 billion in revenue and an 11 per cent increase in dividends.
You can directly attribute this success to the “Renew Blue” strategy implemented by Hubert Joly, of which there is a summary here. Some of the recovery was helped by the company’s size and scale advantage which it used to fend off Amazon (although its huge real estate was also a liability), and external factors such as some US states forcing online retailers to pay increased taxes. But many of its initiatives were ones that could be replicated by smaller retailers. As Jeffrey Eglow, Chief Investment Officer for Guardian Wealth Advisory, notes “the retail industry is not dead so long as you are one step ahead of Amazon and make sure you are relevant”.
Here are some of the initiatives that could be helpful for independent retailers looking to change and grow:
- Use stores as both warehouses and pick-up places to speed up delivery for online shoppers;
- Expand product offerings with emerging trends where consumers need help, i.e. home computing, health technology solutions and smart technology to provide assisted living for the elderly;
- Showcasing larger brands – instead of competing on crowded shelves, invite manufacturers in to provide a ‘store with a store’;
- Get help from ‘the outside’ – Hubert Joly’s fresh eyes helped to create a new perspective;
- Talk to employees – Mr Joly was open with employees and spent time talking with them about their frustrations and issues. For example, one major frustration was their internal search facility that often provided poor or inaccurate data around stock availability;
- Form a safe place for ideas, an emphasis on showrooming and persuading people to buy while in store. Best Buy did price-match on some Amazon items where it felt it needed to, and this formed part of its investment programme;
- Cross the threshold – Best Buy’s Geek Squad quickly became popular when it implemented pre-purchase support, in smart white cars, with a uniform.
No one is denying it’s a tough landscape out there, but there’s also no denying that these initiatives worked for such a huge brand like Best Buy. And these could just as easily work for independent retailers, and indeed they are working for some leading ones right here in the UK.