Best Buy Testing Shops In Shops At Macy's

Best Buy announces it will open corners in 10 Macy's location starting this holliday season for a testing period ending at the end of 2016.

The goal is supposed for Macy's to boost its electronics category which has been going in limbo, and for Best Buy, to benefit from the large foot visit of Macy's in order to find new real estate space with added value.

The move seems obvious, and the benefits for both companies evident. Nevertheless, I am not really convinced about how well the test will go. Especially as Carrefour has already made some tests of a partnership with Virgin to manage its cultural goods category, with very few success. Obviously, the cultural good category was undergoing major changes with the digitalization which has already started, and Virgin was about to shut down in France in the new few years.

But the interesting question is: Can a retailer have a corner? Does Best Buy's brand and added value could be strong enough to be successful at Macy's? Does Best Buy's category management expertise is strong enough to create more value than Macy's skills?

It will be interesting to see the results though, especially as Best Buy's makeover is so far working great.

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.

Some Thoughts On How Best Buy Can Get Back On Track #Bestbuy

Best Buy has been struggling the past few years, as a lot of electronic goods retailers. Among the reasons of its issues are:

• Tougher competitions with online competitors like Amazon having aggressive pricing
• "Showrooming", which is linked to the online competition: people go in store to touch the products, get information, than buy it online to competitors
• Less disruptive innovation (tablets, Led TVs, blu ray, digital cameras...) than the last 2 decades. Also, and linked to it, we are not anylonguer in an equipment market, but in a renewing one, which implies less volumes.
• Digitalization of cultural contents, which are decreasing the sales of DVDs, CDs, and soon video games.

Best Buy is in the same situation than other retailers, like Fnac in France, which had to adapt to the competition, and a lower demand. Obviously, Best Buy still have strong arguments to face competition:

• A strong brand, which people knows and trust
• A large retail network, which allows Best Buy to have proximity with its customers.
• A know how in terms of logistics, and a size that allows it to master its operational costs.

I believe that Best Buy however need to move forward and make adjustment to its strategy in order to  find back growth:

• Find new product categories linked with its brand image: That is what the Fnac has done in France, selling kitchen applicances. It will allow them to master the decline in DVDs and CDs sales.
• Invest in instore experience: There are two ways they should do so: Educate its sales person. We are living in the information age, where most customers know more about products than most sales persons. Hence, in order to create value to the store visits sales person needs to provide great advice and information about products. Also, Best Buys stores should emphasize more on product demonstrations, to enhance shopper experience and trigger sales.
• Lowering instore stocks to get more cashflow. Internet retailers are thriving on cashflows as they have cheaper infrastructures. Hence, instore inventory should be lower in order to get back some cash and hence profitability.
• Embrace multi channel potential. And this by 2 ideas. First: get some lockers to develop click & collect activities. It will create some traffic from online shoppers, and hence potential instore sales. Secondly, master "showrooming". People want to buy it online after having visited the store? Fine, but on bestbuy.com. Marketing materials must hence be developped to make sure we track these customers.

Is There A Future For Electronic Goods Retailing? Some Of My Thoughts

I recently read an article about the good health of Best Buy's Stocks. Surprisingly, even though the competition with online retailer becomes tougher and tougher, Best Buy succeded in delivering promising results. The question that this article ask, and the same that I ask to @tbayart , was if brick and mortard electronic goods retailer still have a future. 

Indeed, in this specific field, the competition of the Internet is very important. Most of the traditional store chains are not able to compete with prices, and the showrooming hype makes it even worse. The margin rates are historically low, and the price competition with online retailers which don't have the real estate cost makes it even tougher!

Some people even believe that traditionnal retailers are condamned to shut down eventually. Actually, I do not really agree with this version.

I may look like a trailblazer, but I have envision what is going on right now almost ten years ago: the show rooming trend. But at this time, I did not picture it as a bad thing, but actually a great opportunity to improve customer relationship, and the added value of the retailer. Here is sort of what I saw:

• Stores would have very low stocks as people would tend more to buy goods to be delivered home.
• There would be no cash desks, people would buy with cards and have automatic cash desks, which would lower the cost of cashing in.
• There would be fewer products, to simplify customers' choices, but they would be presented in a manner that customers would be able to test them.

Of course, my vision now would have changed a little bit. Because the world has evolved a lot (at this time I could not see how mobile devices would change the world, nor what the competition landscape would have been), and also because I gained experience and expertise about retailing and marketing.

But I still believe there is a lot of room for brick & mortar retailers. And the main reason is that those kind of products requires a long decision making process, a high implication due to the cost, and a great knowledge of the products due to their complexities.

So I still believe there is room to develop a profitable business modell, which would actually be based on the showrooming trend which most of experts blame.

• Maybe there would be less stores, and further from downtown: Maybe like Ikea with a big surface, which would help to show out the products.
• Maybe there would be no stocks, or actually like ikea, on the opposite, there would be no warehouses the stocks being in the store.
• People would buy on their sell phone their products, which would lower the cash desk cost.
• Maybe there would be lower inventory (I believe that the market becoming mature, the product ranges start to be cut, which is a good thing), which will lower the cost of inventory.

I may not have all the information needed to develop the whole concept, but trust me, there is room.

How To Leverage The Potential Of Web to Store?

I'd like to thank PPC, a famous French blogger and friend, that tweeted a grat article (in French) on how to leverage the potential of Web to Store.

Indeed, a lot of retail professional complains on the new hype of "show rooming", the fact that customers tend to visit stores to see and touch products, get information by the sales person, and then compare prices at home to finish up buying at home, most of the time on a competitor's website.

The show rooming trend is hitting hard some retailers working on the cultural goods, like Virgin in France, Barnes & Noble in the US, and also the high tech retailers, like Best Buy, or Darty in France.

Nevertheless, there are also ways to leverage the Internet in order to create foot traffic in stores. This is what the article calls "the Web to Store".

There are 4 ways to use the web to store approach:

1. Couponning: Propose to customers to print online coupons to use in stores.
2. Store locator: Allow customers to prepare their visits on line by giving them extensive information on how to get to your point of sales.
3. Click & Collect: The shopper shops on line, but get its product at the point of sales. The advantage for both the customers and the retailer is that you save expenses on the delivery trip. The retailer may also trigger additional sales thanks to the visit.
4. The shopping preparation: Sometimes the web is better to get information, and to finish up the work in store. I believe that works a lot for purchases with a long decision making process, that will need the advocacy of a sales representative.

Despite the fact I believe web to store may help one store to raise its sales and in overal, grow the whole business (both online and in store), I believe that in overal, the rise of Internet will destruct in the end the performances of traditional stores. But in the end, companies that will be able to set a strong position online with a great quality network of stores have a great advantage upon competition. 

What do you think about it?

Best Buy: Innovating In The Pick Up Options For Optimizing Multichannel Advantages

Multichannel is becoming a norm nowadays. Either brick & mortar companies are going online, or pure players are finding ways to reach their customers in the real world thanks to pick up options. What is for sure is that multichannel is starting to become a norm.

But there is still room for improvement as the Internant and brick & mortar world are still struggling to click.

Best Buy hence has innovated:

• Customers may now pick up their products at the company's warehouses. For a national chain like Best Buy, it is very interesting to provide this service, as they may own several warehouses across country. Pick up at the warehouse may also decrease the logistic costs, as some part of the merchandise will not need to transit through the stores. The consumer electronics retailer also is letting customers pick up purchases directly from its warehouses to avoid delivery charges and scheduling conflicts for large items such as appliances, or to save time on orders that must be shipped to a store.

  Best Buy says it launched the new delivery options, which it calls Store Pickup Plus, to expand on the free shipping promotions it periodically offers online, as well as to allow consumers to avoid shipping fees, receive products more quickly, eliminate concerns about package delivery and increase confidence that products will be available.

• Thanks to a top of the line supply chain information system, they are able to tell to customers to pick up some of their orders 45 minutes after having ordered them online.

Now, I wanted to add something else about multichannel retailing. In France, drive ins are getting very popular for hypermarket chains. Some other type of retailers have started to use this system, like an optician in the north of France. But what about ecommerce? Wouldn't it be an efficient system to equip warehouses of these type of drive ins, in order to turn their warehouse into stores?

What do you think about it?

Will Twitter Replace Call Centers?

At the early stage of the rise of Twitter, a lot of expert as myself have seen the great potential of Twitter to deal with after sales services. It works somehow like a mix between a FAQ (frequently asked questions) and an email inbox.

Some companies like Best Buy have already adopted the system with success. Also, we have seen how good Air France has used this tool to deal with the Icelandish volcano crisis to propose new flights to its Twitter followers.

During the 90s and the 2000s, the call center industry has skyrocketed. Thanks to new routing technologies, setting up a call center to deal with customer disatisfaction was a very effective way. Also, it was a great way to enhance customer relationship management for direct sales company, and the new coming E commerce actors.

But as every technology, it is challenged when a new one appear. And therefore, I was wondering if it was possible to switch a call center activity to a Twitter feed.

Now let's start with what is sure: in a near future, all companies will need a Twitter account to deal with customers/prospects questions.

The only problem for companies is that it will once again complexify the way to deal CRM, and customer relationship manager will have a lot of questions... In fact, call centers will cost more and more money, and it will certainly lose its competitive advantage upon owning a salesforce or a retail chain. But human voice is one of the most important medium for human interractions. And therefore, if you want to keep a strong customer relationship, it is important not to avoid this very important factor.

Customers are fed up to deal with machines, and human would rather speak to an actual person instead of dealing with a machine.

Here is my conclusion:

• Call centers will still exist, and it will actually be a strength for businesses which owns some. Nevertheless, their activity will probably slow down.
• Twitter will for sure take some of the flow of questions of customers. Not only Twitter, probably Facebook will too.

What is for sure, it is that both will be reunite with the arrival of the mobile area: You will use your smartphone either to find on Twitter your response, or to call a call center if you haven't find what you were looking for.

What do you think about it?

Best Buy To Emphasize Its Multi Channel Solutions

Best Buy has always been a trailblazer when it comes to the Internet and also customer relationship management. Hence, its CRM strategy has been applauded for leveraging customers data to adapt their store concept to local specificities.

It is common for electronics retailers to have both a brick & mortar presence while owning a e commerce website. Nevertheless, most of the time, it is hard to make both entities coexist. Especially while a brick & mortar company is entering the e commerce sphere.

Best Buy has been able to make the best out of it, and for this new holiday season, it is going a step further. Best Buy is planning on improving its “buying on line, picking up in store” option. The product will be available in store 45 minutes after it has been purchased on the website.

Implementing such a concept requires perfect mastery of the stocks and supply chain. It implies Best Buy will be able to have an accurate knowledge of store’s stocks, warehouse ones and logistics schedule.

Prior to Best Buy, Circuit City had released the 24 minutes guarantee, shortly before filing for bankruptcy (I don’t know if there is any link between both statements).

A new idea is also the fact they’ll let customer pick up their goods right from the warehouse! Once again, this idea implies to design desks in the warehouse.

The idea is smart and great. They are making the best out of multichannel retailing. I believe that some French retailers should think about it.

Can A Internation Company Settles In A Country Thanks To A Website?

E commerce is becoming more and more a mature market. Of course, sales growth is still spiking with double figures, but you can see some main companies taking leadership whereas smaller actores are being bought.

We can see that the crisis has probably forced some global retailing actors to make new decisions to seek growth while their sales were plummeting. In this sense, we have seen Best Buy landing in Europe by opening stores in the UK. Now opening new branches in mature market could be pretty risky, and moreover pricy. I believe that Internet could play a key role for those international companies to settle down.

Indeed, Best Buy has already a strong image and know how in ecommerce website. They have a powerful potential in terms of search engine optimization, thanks to its international website. It could be hence easy to get awareness by promoting their website and launching their activities thanks to this medium.

As a second step, of course, they should launch real retails. I believe this is what actually is going to happen: Best Buy is going to open a website, and communicate on it, which will help them open wholesales in Europe, before opening retails.

Best Buy Lands In Europe

Best Buy is obviously the leader of the electronic goods retail in the United States. It owned in 2009 22.2% of marketshares, and sold for about $50 billions.

Here are some of the key factors of success of Best Buy:

• A customer centric company: This is for sure one of the best CRM case study ever. They have implemented a strategy allowing them to leverage their salesforce insights, and to create different store concepts to suit the most the zone where they have picked to settle.
  Their store concepts: Best Buy doesn’t stop to try new store concepts, to be on top of the competition.

Customer service: Once again, they have created with the Geek squad a service which provides them with a legitimacy in the high tech world.

Best Buy To Face A Great Challenge
Now the biggest challenge is that Best Buy is entering new markets where the competition is already pretty tough with large companies. Also, the market is actually plummeting in Europe. Nevertheless, Best Buy has strong arguments to establish a strong presence in Europe.
Also, Best Buy has become strong thanks to its centralized approach. They control everything, and everything is standard. But in Europe, you have great differences from a country to another, in terms of culture, customer decision making process, or even product range. This implies to have more flexibility to adapt to the local demand.

Especially, I believe they should focus a lot on creating a great ecommerce website as they have in the US to make sure to have a competitive advantage. Indeed, not so much electronic goods retailers have been able to make the best of both their online and retail presence.

I believe that thanks to their customer centricity strategy they will be able to face the competition. Let’s not forget that in 2003 when they have set this new strategy, Best Buy was struggling against Wall Mart which was cutting the prices. In order to get out of this negative spiral, they have decided to focus on customer service, providing essential extras Wall Mart would not.

Best Buy To Make Acquisitions In Europe?
It is probable to move fast in the market that Best Buy will be eager to make an acquisition, or at least a partnership.

• We have already discussed on this blog that Carrefour is looking for a partner to boost its ecommerce strategy.
• PPR’s retails Fnac and Conforama are in the market.
• Even Darty would be a potential acquisition, as Best Buy is way bigger than them.
• We have seen that Best Buy was thinking about buying Pixmania...
  

I am glad as a customer that Best Buy is coming into Europe. Now the task is tough, and it will be interesting how they’ll be able to breakout while the market is already so tough. What do you think about it?

Best Buy: Innovating In The Pick Up Options For Optimizing Multichannel Advantages

Multichannel is becoming a norm nowadays. Either brick & mortar companies are going online, or pure players are finding ways to reach their customers in the real world thanks to pick up options. What is for sure is that multichannel is starting to become a norm.

But there is still room for improvement as the Internant and brick & mortar world are still struggling to click.

Best Buy hence has innovated:

• Customers may now pick up their products at the company's warehouses. For a national chain like Best Buy, it is very interesting to provide this service, as they may own several warehouses across country. Pick up at the warehouse may also decrease the logistic costs, as some part of the merchandise will not need to transit through the stores. The consumer electronics retailer also is letting customers pick up purchases directly from its warehouses to avoid delivery charges and scheduling conflicts for large items such as appliances, or to save time on orders that must be shipped to a store.

  Best Buy says it launched the new delivery options, which it calls Store Pickup Plus, to expand on the free shipping promotions it periodically offers online, as well as to allow consumers to avoid shipping fees, receive products more quickly, eliminate concerns about package delivery and increase confidence that products will be available.

• Thanks to a top of the line supply chain information system, they are able to tell to customers to pick up some of their orders 45 minutes after having ordered them online.

Now, I wanted to add something else about multichannel retailing. In France, drive ins are getting very popular for hypermarket chains. Some other type of retailers have started to use this system, like an optician in the north of France. But what about ecommerce? Wouldn't it be an efficient system to equip warehouses of these type of drive ins, in order to turn their warehouse into stores?

What do you think about it?

Credit Offers To Boost Sales During Crisis

Best Buy is famous worldwide for using data to make strategic decisions. In the past they've already used some data mining to reorganize their stores's sections, to fit with the local specificities (as presented in Pierre Volle's book about customer relationship management).

As the crisis is still going on the financing question is key. That is the result of a Best buy study on their sales since the crisis has started. Indeed, over 1000 dollars products like TVs and home theatres are impacted by the current economical issues.

Thanks to this study, that pointed out this fact, Best Buy launched a new financing programs enabling customers to buy via a credit.

This article brings up two very important fact. First of all, it shows how customer relationship management program can drive strategic decisions. Secondly it shows how financing is a very important factor of consumption and, beyond it, of customer relationship management.
I have actually dedicated a blog article about how credit could be a customer relationship tool, about 6 months ago. This is even more true right now. As consumption is difficult, companies should emphasizes on how to help customers to consume. I believe financing is going to be an important sales trigger within next few months.