retail news in context, analysis with attitude

The New York Times has a story about how its reporter went into a Best Buy recently and found the following:

“Happy-looking people were huddled around tables filled with the latest gadgets from Microsoft and Apple. The video game aisle was bustling. Blue-shirted employees were helping a customer pick from a glowing wall of flat-screen TVs. There was a line — a line! — at the checkout counter.

“Many people, myself included, assumed that the entire big-box retail sector would eventually fall under Amazon’s steamroller. I knew Best Buy had spent the past several years playing defense against Amazon, finding some initial success by cutting costs and reducing prices to match its online rivals.

“But Best Buy’s rebound has been surprisingly durable. Revenue figures have beaten Wall Street’s expectations in six of the last seven quarters. The company’s stock price has risen more than 50 percent in the past year. Workers are happy. And judging from several other visits I paid to Best Buy stores, the chain appears to have avoided the bleak fate of other big-box retailers.”

Best Buy CEO Hubert Joly says that the keys to its success have been 1) its decision to price-match competitors, including Amazon, “to combat showrooming” and keep people inside its four walls, 2) a focus on customer service through an emphasis on people, with the development of in-home and in-office advisory and repair services, 3) quiet cost cutting that was effective without showboating about it, and 4) turning stores into mini-warehouses, allowing them to ship to its online customers and therefore being more efficient and effective.

The Times writes that “Joly knows that despite Best Buy’s recent momentum, it’s not out of the woods yet. To succeed over the long term, it will need to do more than cut costs and match prices. Walmart, another big-box behemoth, is investing billions of dollars in a digital expansion with the acquisition of e-commerce companies like Jet and Bonobos, and could prove to be a fierce rival. Amazon has been expanding into brick-and-mortar retail with its acquisition of Whole Foods, and is moving into Best Buy’s home installation and services market.”

Joly, the story says, remains focused on the battles ahead: “Once you’ve had a near-death experience, arrogance, if you had it in your bones, has disappeared forever.”
KC's View:
Interesting story. I’d suggest that every retailer, even if has not had that near-death experience, should act as it if has … and compete accordingly.