Friday, July 03, 2015

Hubert Joly Becomes Chairman of Best Buy

Today, I wanted to share with you the admiration I have for a French business leader that succeeded in getting back Best Buy on track: Hubert Joly. Indeed, it is rare to see a French businessman selected by a large US corporation to run its business. And when Hubert Joly took over the position back in 2012, a lot of people were questionning the move.

Let's keep in mind that Best Buy was going in limbo at this date, facing so many challenges that a lot of companies selling electronics had to face:
  • The rise of the Internet competition: Amazon among other companies were earning market shares.
  • The plummeting sales of the market, with lower new technologies coming up (after the spikes of laptops, smartphones, tablets, among others)
  • Digitalization of a part of the offer: DVDs, CDs, books

Let's not forget that last year, Radioshack, another tycoon of the electronic gear retailing market shut down last year. It could have been the case of Best Buy for sure without a strong makeover. Today, clearly Best Buy's case study is a model for most of the electronic gears retailers needing to adapt their business model to the changing environment. 

What was the recipe of success for Best Buy?
  • Cut costs to invest in pricing: Best Buy made for $1 billion in cost saving, allowing the company to set more aggressive pricing to be competitive against Internet competition.
  • Put equity in stores: Best Buy rework its retail network by closing some stores, opening ATM machines in train stations and airports, and rethinking the layout of stores, to promote shops in shops like Samsung's.
  • Work with its salesforce on customer relationship management and customer experience: The Geek Squad, The Blue Shirt personnel, focused
  • Embrace omni channel retailing, and propose early the sharing of inventory information between the online channel and the stores, allowing same day delivery in most cases. I believe it was one of the first retailer to attach online sells to the geographical region, in order to make sure the stores understood online sales were not a threat.