Friday, March 30, 2012

Best Buy: On the Right Track?

Recently, Best Buy announced a new strategy. They plan to shutter 50 stores and migrate towards smaller stores focused on mobile and tablet sales and service.

As I noted in an earlier post on showrooming, the traditional retail model is under attack by the internet and new approaches will need to emerge for brick and mortar operations. Local companies need to figure out the unique advantages that they derive from a local presence, and to build their operations around those advantages. In the showrooming article, I mention one approach that could be used by Target (and Best Buy), but it's certainly not the only approach.

Best Buy, may be onto a winning combination. This is first and foremost an emphasis on service, and only incidentally on mobile and tablet sales. One of the overwhelming problems with our fast-changing electronics world is in end-user support. This includes training, installation, repair, and recovery from the inevitable viruses. Furthermore, this is a problem that local providers can serve better than internet web sites. The best solution is one that's immediate, and personal. A location that you can take your virus-laden computer to and get immediate help. A place that helps you recover your lost photographs. A place that helps you access necessary warranty service.

On the product side, the mobile and tablet world has a lot of appeal. Technology in this area is rapidly evolving and is tied to cellular phone contracts. This means a frequent replacement cycle and ongoing opportunity for sales. However, it is not clear how lasting this opportunity is for local retailers. As long as the high rate of change continues (for the next few years?), hands-on selling makes sense. Consumers will need to touch, feel and be trained on the new technology.

At some point, however, the changes will slow. Each year will only bring incremental changes in equipment and minimal changes in software. At this point, its not clear that local stores will have advantages over internet-based solutions. From this longer term perspective, the physical goods opportunity might be more related to the services emphasis. It might include cables, adapters, replacement batteries, and mounting kits for video systems. This could include everything that you need to get up and running when you purchase or repair your electronics online.

To some extent, this resembles Radio Shack, but the total vision is that of Radio Shack plus Best Buy's Geek Squad. The mobile and tablet emphasis does make sense as an immediate emphasis, but it may only be a step along the road.

The best buy logo is copyrighted and trademarked by Best Buy. This specific image is taken from wikipedia at http://en.wikipedia.org/wiki/File:Best-buy-logo.png .

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