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Best Buy Case Presentation
Transcript of Best Buy Case Presentation
Strong market presence
allows competitive advantage
It is one of the
highest value retailing company
in the world.
when comes to electronics category.
Acquired good assests
Constrained credit availability
& financial resources
Gradually decline in brand awareness
Growing online sales
Growth in electronics industry makes it look more attractive for expansion investment.
Intense competition from
mega retailers & online business
Small retails emerging
rapidly since the attractiveness is tempting
Small products more desirable
and easy to purchase online
The outlook for the Consumer Electronics Stores industry looks bright, with revenue forecast to increase at an average annual rate of 3.1% to $92.2 billion in the five years to 2016. Improved economic conditions will likely boost consumer spending, encouraging consumers to spend more on industry goods. In fact, revenue is projected to increase 2.4% in 2012 alone.
Best Buy’s Turn-Around Strategy (2013)
Abhishek Bdr. Shah (st115325)
Anansit Pithayapungsakorn (st115388)
Jadeseda Palotaitakerng (st115402)
Raghavendra Mahto (st115346)
Tarinee Jearanaiwongkul (st115382)
Joly’s vision, Best buy was trying to
“be all things to all shoppers”.
Retail stores and Online channel - Best buy has over 1,000 stores that can act as
distribution centers for online orders.
“Best place to work”
: employee-listening program, ROWE and its support gay, lesbian, bisexual and transgender equality
Only 1.3 percent of customers who visited Best Buy’s website actually made a purchase.
Reinvigorate the customer experience by a
commitment to customer-centricity
Identify customer by objectives into
four overarching segment
(Urban Trendsetters, Upscale Suburban, Empty Nesters and Middle America).
Has a high percentage of customer perception but
less market share than competitor
in electronics industry.
Apart from its own financial demised, these competitor can kill Best Buy.
It will take some portion of the whole market share but not enough to make a kill to Best Buy.
Electronics parts can’t be substitute
Consumers have choices to buy
1966 1983 1987 1990 1995 2001 2002 2008 2012
51 Billion as Revenues
Geek Squad &
Appointed as CEO
Best Buy - Slumped Profits
A decrease in product sales over the past several years
A loss of customers to on-line shopping sites, such as Amazon
Profit from sales not being large enough to support retail stores
More Customer Centric
Build Exclusive Brands
Long Term Strategic Plan
The low-cost king.
– The original online empire.
– Premium gadgets and trendy stores.
Economies of scale is critical for BB
Customer loyalty is critical for this industry
Electronics products have a short life cycle
Retail store an "Experience Centre"
Information Density -
Online Privacy Monitoring
Less spending -
Flat electronic Sector sales
Market Penetration Through Promotion
Capitalize on their strong loyalty programs
Promotional offerings to attract customers
Buy back guarantee
30 day trial offering
On site purchase offers
IKEA store eatery units proves to be successful in attracting customers , similar settings can be adopted by Best Buy with Starbucks or Subway.
Rental Incomes - Strategic Locations
Targeting Impulse Buyers
"IKEA sold more than one million meatballs at its Dublin store last year"
5. Improving Financial Outcomes
Improve inventory cost settings
Cut unprofitable product lines
Reduce space consumption - Consolidation of stores
6. Improving Online Presence
Internet marketing & services
Capitalize on Geek Squad's expertise
Exploit Amazon's lack of focus on electronics
Both party is at stalemate of bargaining.
Partner of the Year
"21 million units recycled in 2013"
Retail chains have a big, costly and tough job ahead.
- Tackle e-commerce
- Best Buy, Target And Wal-Mart Are Just Showrooms For Amazon, eBay etc.
Automatically Prices Down
2. Dynamic Pricing Strategy
"Price of an item based on consumer demand, & price fluctuations at a competing retailer"
What value do you offer above what Amazon does?
Retail is about
creating unique customer
where customers perceive pricing to be fair, but not necessarily the lowest.
When a price in store is 1% to 5% more than what a consumer could get anywhere - likely to purchase the product.
When the price is 6% to 10% more.
In an industry where profit margins are thin, retailers are basing their prices on the behaviors and habits of their shopper.
"Based on service and assortment and experience; and making the path to purchase easier.”
Partnering with vendors
to drive value
1. Sales per visit less and its not a one stop shop
2. Online retailers competitive prices
For example, Amazon slashed its product margins from 2.8 percent in 2008 to 0.6 percent n 2011.
External Environment :
3. Intense competition in Electronics
4. Physical Store Cost, High Inventory Cycle and Less Profit
5. Sales and Stock price go down
Sales & shares of Best Buy have slumped compared to its potential competitors
BCG Growth-Share Matrix
Source: Forrester's North American Customer Life Cycle Survey
Specialty retailer of consumer electronics
products, gadgets and entertainment software.
In store and online at fair prices
Offer additional services
- Like extending warranties
- Geek Squad Service
- Expertise of trained employees
Expand Services Like
Reducing Fixed Cost
Reaching to More Customer
The “try before you buy” experience
Why it will work?
"Experience, Convenience & Price"
Customer centric focus
Mobile store offers convenience for servicing
Membership & recycling program serves to locking in customers
Competitive pricing will boost the sales
Additional revenue from the partner
Consolidation of stores : Reduction in
Reduction of overhead cost